The cannabis industry–both recreational and medicinal–is one of constant development, with a litany of obstacles. Even since December of last year when we began our series on the legalization of marijuana and its correlation to the real estate industry, new wrinkles have emerged, which may have an effect on future cannabis real estate deals.
California rang in 2018 as the largest legal marketplace in the country for recreational marijuana when it implemented the Medicinal and Adult-Use Cannabis
Regulatory Safety Act (“MAUCRSA”). As we discussed in Part 1 and Part 2 of this blog series, while California’s real estate industry is budding with recreational marijuana, negative side effects are inevitable. In this Part 3 of our five part blog series on the legalization of marijuana and its correlation to the real estate industry, we discuss what has changed since January 1st, what still needs to be done, and how the real estate industry has been impacted.
When it comes to real estate, every large U.S. city is in some ways its own unique ecosystem. Still, a local measure can set a standard that other municipalities take note of and potentially emulate. In their recent client alert on dueling proposals for commercial rent tax measures, colleagues Richard E. Nielsen, Craig A. Becker and Robert C. Herr examine just such a local ballot measure, as the San Francisco electorate will decide between a 1.7% or 3.5% tax on commercial rentals in June.
The Real Estate Bloom
The real estate industry is booming in states where marijuana is blooming—that is, in states that have legalized the medicinal and recreational use of marijuana. Here is a quick overview. In November 2016, voters in California, Maine and Massachusetts, all approved the legalization of recreational marijuana use. On January 1, 2018, California’s law will go into effect, and the state will start issuing temporary licenses to cannabis businesses. On December 6, 2017, Los Angeles approved a series of cannabis regulations, making it the largest city in the United States with legal recreational marijuana. Massachusetts will implement retail marijuana sales on July 1, 2018. While Maine has plans to open retail marijuana stores in the summer of 2018, it is unclear exactly when their laws will go into effect. Continue Reading ›
The recent Spanish Peaks decision from the Ninth Circuit (covering Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington) deepens the split in case law on the ability to strip off leases in a landlord/borrower bankruptcy. This decision, which joins the Qualitech decision from the Seventh Circuit (covering Illinois, Indiana and Wisconsin), may significantly impact and complicate sales in bankruptcy of real property for lenders and non-debtor tenants alike.
The Financial Crimes Enforcement Network (FinCEN) announced on August 22, 2017, that it is expanding its earlier
Geographic Targeting Orders (GTO) that require U.S. title insurance companies to identify the natural persons who are behind shell companies used to buy high-end residential real estate. The GTOs now will include the City and County of Honolulu, Hawaii.
In addition, the GTOs will capture a broader range of transactions and include transactions that involve wire transfers. This addition comes after the recent enactment of the Countering America’s Adversaries through Sanctions Act.
On August 11, the U.S. Court of Appeals for the Fifth Circuit decided the case of BC Ranch II, LP, et al., v. Commissioner of Internal Revenue, which involved charitable tax deductions based on the creation of conservation easements. After reviewing the record, the Fifth Circuit, in a split decision, disagreed with both the Commissioner and the Tax Court, placing heavy stress on the Internal Revenue Code’s public policy goals:
[T]he hope of adding untold thousands of acres of primarily rural property for various conservation purposes – acreage that would never become available for conservation if land-owning potential donors were limited to the traditional method of conveyance.
Search “Death of Retail” on Google.com and, as of July 26, you will get approximately 855,000 hits, many of which stress the negative impact that online sales and Amazon, in particular, have had on traditional retailers. However, predicting the future of the retail industry cannot be reduced to an easy slogan. Amazon itself is a retailer, and it is facilitating sales on its site by other retailers, including many that previously had difficulty bringing goods and services to market. Moreover, retail sales overall rose almost 4% in the past year, and the National Retail Federation expects growth to continue due to low unemployment and a strong stock market. Clearly, the retail industry is not in a meltdown, but it is experiencing great change, and the industry must adapt.
Data centers trigger visions of windowless, concrete boxes located at the periphery of suburban office parks. That perception may fade in the coming years. With new technologies, such as cloud computing, blockchain platforms, the Internet of Things, artificial intelligence, big data and mobile apps demanding instant access to data, the industry is seeing global growth and innovation, including “micro” centers closer to end users, underwater and floating data centers, “mega” centers and green data centers.
The California Supreme Court’s recent Ardmore decision expanding the applicability of California’s Documentary Transfer Tax Act will no doubt be the source of future litigation. In their recent client alert, colleagues Craig A. Becker, Richard E. Nielsen, Breann E. Robowski and Dianne L. Sweeney examine the issue.
Gravel2Gavel Construction & Real Estate Law Blog