Proposition D, which proposed to limit the number of “medical marijuana businesses” to no more than 135 that have operated since September 2007, passed and has been voted into law. What this means for numerous dispensaries in and around Los Angeles is that they are now presumably operating illegally and their commercial landlords may be contemplating terminating the lease and initiating evictions.
It’s common knowledge that marijuana is still an illegal drug as far as the Federal Government is concerned and the sale and/or distribution of marijuana is a federal crime. Additionally, most standard commercial leases (AIR Form and CAR form) contain language expressly stating that the tenant “accepts the Premises subject to all local, state and federal laws, regulations and ordinances” and that the tenant agrees not to us the Premises “for any unlawful purposes….”
However, when the use of the Premises is expressly stated as a “California Medical Marijuana Dispensary”, landlord and tenant may find themselves in a conflict between the intended purpose of the commercial lease and the lease’s boilerplate provisions regarding local, state and federal laws.
Furthermore, medical marijuana dispensary operators are seeing an increase in the enforcement activities by local and federal law enforcement. In the recent weeks, letters have gone out to dispensaries in Los Angeles requesting the immediate closure of medical marijuana dispensaries, putting a lot of pressure on commercial landlords.
The question for commercial landlords with medical marijuana dispensary tenants then becomes, what is the appropriate course of conduct in completing an eviction under these circumstances. C.C.P. § 1161(4) provides the authority for a landlord to terminate a tenancy wherein the premises is used for an “unlawful purpose.” Presumably, a medical marijuana dispensary, not one of the 135 contemplated by Proposition D, would fall under this category. The next question for the landlord is, how much of a notice period would the tenant be entitled to. (e.g., 3-day, 30-day, etc.)
A landlord may argue that a 3-day notice to cure or quit the premises is sufficient since there are clear violations of local, state and federal laws. However, if the commercial lease expressly states that the use is for a medical marijuana dispensary, a landlord will be hard pressed to argue that the eviction action is based on a breach of covenant as contemplated by C.C.P. § 1161(4). Moreover, a tenant may argue that the intended purpose of the landlord’s eviction action is simply to terminate the lease as all parties may have been aware of the legal issues with operating a dispensary.
Cal. Civ. Code § 1946 mandates a 30 day notice prior to the termination of a commercial lease if the termination is sought prior to the natural expiration of the contract. Even if the lease has not expired, a commercial landlord likely would prevail evicting his/her medical marijuana dispensary tenant upon a 30 day notice of termination given that Proposition D now makes illegal what federal law has always deemed illegal.
Thus, commercial landlords with medical marijuana dispensary tenants may consider initiating an eviction action pursuant to a 30 day notice of termination of tenancy under Cal. Civ. Code § 1946 in order to eliminate potential defenses claiming a defective notice.
If you are a commercial landlord or if you are a commercial tenant facing an eviction, contact one of our commercial lease attorneys today for a free consultation and case evaluation.