Question: I own real property that is zoned for an Arizona medical marijuana dispensary or cultivation site. How can I increase the chances of obtaining a tenant that will actually obtain a dispensary registration certificate and become a long term paying tenant?
Answer: Easy. Lease your property to more than one prospective dispensary owner. Consider the following two scenarios:
Scenario 1: You lease to prospective dispensary owner number 1. The prospective tenant includes a clause in the lease that allows the tenant to terminate the lease if the tenant does not obtain a dispensary license. The tenant does not obtain a license. Long term rental income = $0.
Scenario 2: You lease the same site to 20 prospective dispensary owners. Each prospective tenant includes a clause in the lease that allows the tenant to terminate the lease if the tenant does not obtain a dispensary license. One of the 20 prospective tenants obtains a license to operate an Arizona medical marijuana dispensary. Nineteen prospective tenants leases are canceled. Long term rental income = big $$. Of course, each lease should have appropriate language in the lease that notifies each prospective tenant that its lease only becomes effective if the tenant actually obtains the dispensary registration certificate.
Update: A visitor to this website sent me the following message:
“I thought of this a couple of weeks ago and checked with the AZ Department of Health Services. The first person I spoke with was an employee of the department. She told me that multiple license applications with the same address would all be rejected. I then spoke with Laura Oxley the head of the department. She said it was a good idea, but I should speak with Tom Salow the department attorney for medical marijuana. Tom said that what I was proposing was currently acceptable under the guidelines, but he expected the guidelines to change making it unacceptable in the next revision.”
If Tom Salow’s statement about is true, why would the Arizona Department of Health Services reject multiple applications for the same location? It would not make any sense. The only purpose behind such a rule would be to make it more difficult for prospective dispensaries to find a suitably zoned location and to cause a lot of landlords to waste time entering into leases with tenants that will never get a dispensary registration certificate. If DHS changes the rules to reject applications for the same location, it would be another instance of the Arizona Department of Health Services bureaucrats/desk jockeys being the problem, not part of the solution.