What to Do Before You Sign a Dispensary Lease
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What to Do Before You Sign a Dispensary Lease

A dispensary lease is often the largest financial commitment an operator makes before opening. Signing too early or without proper safeguards can lock a business into delays, unplanned costs, or non-compliant locations. The work done before signing matters more than the lease itself.
Article Summary
  • Dispensary leases carry regulatory and operational risk beyond standard retail
  • Site control should be secured without premature financial exposure
  • Local approvals and feasibility checks must precede execution
  • Well-structured contingencies protect capital and timelines
Overview

Why Dispensary Leases Are Different From Standard Retail

Cannabis leases are tied directly to licensing, zoning, and inspections. A location that works on paper may fail in practice due to buffer rules, neighborhood restrictions, or build limitations. Treating a dispensary lease like a typical retail lease exposes operators to avoidable risk.
Zoning

Confirming Zoning and Buffer Compliance

Before signing, the site must meet all zoning and buffer requirements. Distance rules related to schools, parks, or residential uses are strictly enforced. Verbal assurances are not enough. Written confirmation from the city is critical.
Control

Securing Site Control Without Overcommitting

Operators often need proof of site control to advance licensing. This does not always require a fully executed lease. Letters of intent, conditional leases, or delayed rent obligations can provide flexibility while approvals are pending.
Feasibility

Evaluating the Space for Dispensary Use

Not every compliant address is operationally viable. Ceiling heights, access points, electrical capacity, and security retrofit requirements matter. A preliminary feasibility review helps identify hidden build-out costs before committing.
Terms

Negotiating Lease Terms That Match Cannabis Timelines

Standard rent commencement dates often do not align with cannabis approval timelines. Lease terms should account for permitting, inspections, and delayed openings. Rent abatement and contingency clauses are common tools for managing risk.
Risk

Understanding Assignment, Use, and Exit Provisions

Cannabis-specific use clauses, assignment restrictions, and termination rights can limit flexibility. Operators should understand how the lease handles license loss, regulatory changes, or delays. Exit options matter before problems arise.
  • Protection
    Reduce financial exposure
  • Clarity
    Confirm site viability early
  • Flexibility
    Align lease terms with approvals
  • Confidence
    Sign with fewer unknowns
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