Michael Rosenblum Discusses Cannabis Net Lease Risk to Landlords

Thompson Coburn partner Michael Rosenblum discussed potential hurdles landlords face from deals with tenants dealing with marijuana products in an interview with GlobeSt.com. Michael details the challenge of increased interest rates and the federally illegal nature of the businesses.

“Because interest rates have often gone up since the mortgage was obtained, a lot of landlords don’t want to refinance,” Michael said. “A lot of times the deal fell through because the landlord wasn’t allowed to rent to cannabis under loan documents.”

Initially, many landlords got rent premiums — maybe 50% to 100% extra over going rates — thinking them a form of protection, Michael added. The comfort didn’t last long because the large upcharges increased the financial pressure.

“Most of them looking back on it I think regretted it,” he said. “They would have been better off charging 110% and gotten a higher quality of tenant, because so many of the cannabis companies ended up going under.”

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