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Commercial Leasing In Brief: Landlords should think to the future to regulate cannabis-related uses

1 minute read

As Canadian society and governments of all levels continue to adapt to the legalization of cannabis and its impact on our everyday activities, landlords should take some time to consider some relatively ‘standard’ provisions in their commercial lease forms and how they may also need to be adapted to keep up with these changes.

This issue appears to become even more pressing as Health Canada has recently announced the approval of the gradual introduction of certain cannabis edibles and related products into the marketplace as early as December 2019.

Several examples of questions for landlords to consider come to mind in this regard:

  1. Consider use clauses in leases including those pesky ‘ancillary uses’. As the regulatory environment continues to develop, what if restaurants and/or bars begin selling cannabis products? Will your current lease provisions adequately address this prospect?
  2. Consider existing restrictive covenants granted to tenants. Could the typical list of ‘restricted uses or tenants’ in your lease restrict cannabis-related uses specifically or by implication in the future? Are you eliminating potential future tenants as a result of overly restrictive language or are you potentially alienating others?

While finding concrete answers to these questions is not an easy task in this rapidly changing regulatory environment, it is a subject worth considering for landlords now to avoid potential problems or gaps in their lease forms down the road. Ultimately, a reasonable goal for landlords may be to attempt to retain as much discretion and flexibility in such lease provisions as possible in order to continue to adapt to this issue.

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David D. Lyons

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