REAL ESTATE AND LAND USE LAW FOR CALIFORNIA CANNABIS AND HEMP BUSINESSES

Securing and maintaining real estate is one of the most consequential operational challenges facing California cannabis and hemp operators. The state’s layered system of local land use authority — 482 cities and 58 counties, each setting its own cannabis zoning rules — means site selection requires not just a real estate lawyer but one who understands how local approvals interact with state licensing, environmental review under CEQA, and the federal legal status of cannabis that makes most conventional lenders unwilling to finance cannabis real estate. The firm provides the full range of real estate and land use services cannabis and hemp clients need to find, secure, develop, and defend their facilities throughout California.

Recognized By

California's Cannabis Zoning and Land Use Framework

Proposition 64 and the subsequent MAUCRSA legislation preserved local governments as the ultimate authority over whether and where commercial cannabis activity may occur within their jurisdictions. No state cannabis license can be issued unless the applicant first obtains local approval — usually through a conditional use permit, a specific use permit, or a local cannabis license. Because most California jurisdictions still ban at least some categories of cannabis activity, every site selection analysis begins with the local ordinance governing the specific activity in question.

Local cannabis zoning conditions are dense. Common requirements include buffer distances from schools, parks, and churches; density caps within defined areas; operational restrictions on hours and odor; and storefront design standards. Many jurisdictions also require California Environmental Quality Act (CEQA) review before adopting cannabis zoning ordinances, which can add months to the approval timeline and create litigation exposure for the local approvals themselves.

The firm provides services that cover the entire transaction lifecycle: local zoning and CUP analysis; property due diligence; lease and purchase agreement drafting and negotiation; financing structure design (since most institutional lenders will not finance cannabis properties under the federal Controlled Substances Act); CEQA review coordination; and administrative appeals of local denials.

Key Real Estate Legal Issues for Cannabis Operators

Cannabis real estate sits at the intersection of state legality and federal prohibition. Many commercial mortgages and deeds of trust contain federal-law-compliance covenants that can be triggered by leasing to a cannabis tenant, and potentially result in loan acceleration. Cannabis tenants must negotiate lease provisions protecting against termination triggered by local ordinance changes, and must ensure their licenses — which are tied to a specific licensed premises — can be transferred or relocated if the real estate relationship changes.

Environmental issues are a particular concern for cultivation and manufacturing sites. The firm coordinates environmental due diligence covering air quality, water use, hazardous materials, and soil conditions — all of which can affect license renewals and local permit standing. In Northern California, water rights issues are especially significant for outdoor and greenhouse cultivation, and State Water Resources Control Board compliance is a material risk factor.

Land use approvals are themselves contested terrain. Neighbor opposition, CEQA challenges, and political pressure on local councils mean that the entitlement phase often determines whether the project ever reaches operations. The firm represents operators in conditional use permit hearings, planning commission proceedings, and administrative appeals — and represents operators challenging denials when the underlying record will support it.

How Shay Gilmore Helps

Having guided clients through scores of real estate purchases, sales, and leases throughout California, the firm has the expertise to structure the deal, document it efficiently, and bring it to a smooth close. Interdisciplinary strength across cannabis and hemp practice areas means real estate clients receive wrap-around service — ADA compliance, corporate structuring, financing, zoning, environmental review, labor considerations, and intellectual property all handled under one roof. The firm routinely supports business permitting for clients siting cannabis retail stores, cultivation facilities, manufacturing operations, distribution centers, and storage sites throughout California.

Real estate and land use services include:

Cannabis property due diligence
Lease and sublease drafting, review, and negotiation
Purchase and sale agreements
Conditional use permit applications and hearings
CEQA review coordinatio
Local cannabis ordinance compliance
Administrative appeals of land use denials
Environmental due diligence
Property tax and financing structure review

Commercial Real Estate, Land Use and Zoning Expertise

Real estate is central to cannabis value: licenses are tied to premises, and landlord‑operator relationships are heavily scrutinized by regulators, lenders, and local communities. The firm represents owners, tenants, investors, and lenders in acquisitions, sales, leasing, and land‑use matters for cannabis and hemp properties across California.

Recent work includes the sale and purchase of cultivation farms in Northern California; the sale of a cultivation business in the Sacramento region during a period of extreme wholesale price volatility; and landlord‑side financings and restructurings where the landlord is both creditor and essential real‑estate partner to the operating cannabis business. The practice frequently serves as escrow agent in transactions and holdback disbursements, aligning closing mechanics with regulatory approvals and internal seller dynamics.

The firm’s leasing and land‑use work addresses cannabis‑specific issues such as unpermitted prior activity, buffer zones and sensitive‑use restrictions, conditional‑use permits, and local social‑equity rules. It also coordinates real‑estate documentation with licensing filings, loan agreements, and corporate restructurings to ensure that premises changes and control shifts are fully reflected in regulatory records.

The legal hemp and cannabis markets in California face substantial challenges, not the least of which is securing real estate to launch or maintain a cannabis or hemp business. For hemp and cannabis real property deals, proper zoning, access, and community support are critical to site selection. The Law Office of Shay Aaron Gilmore provides advice and insight into real estate, land use, and zoning issues, representing real estate investors, landowners, and cannabis and hemp licensees and applicants in complex real estate transactions, acquisitions, and leases of real estate, including legal services in the following areas:

Lease negotiations (cannabis)
Environmental site assessment counsel
Due diligence for property feasibility (cannabis)
Land use, planning, and compliance
Real estate purchases for cannabis license applications
Real estate purchases for hemp registrations
Environmental concerns
California Coastal Act
Emission of fumes and odors
Title and deed review
Water and power availability/suitability

What Types of Real Estate and Land Use Issues Do Cannabis Businesses Face?

From Shay’s interview for the Master’s series on ReelLawyers.com

View Transcript

In my practice, the types of real estate issues that my cannabis and hemp clients face—particularly with leasing—often involve landlord reluctance. Many landlords are hesitant to lease to cannabis businesses due to concerns about federal illegality.

Additionally, lease terms for cannabis businesses frequently include unique clauses, such as provisions allowing landlords to terminate the lease if cannabis laws change. There are also eviction risks that every cannabis business needs to be aware of, again stemming from the ongoing federal illegality.

To develop and expand your cannabis and hemp commercial operations, The Law Office of Shay Aaron Gilmore also offers advice and counsel regarding:

Adverse possession
Chain of title due diligence
Civil Asset Forfeiture Risk
Lot line adjustments, splits and mergers
Seizure concerns
Variances and easements

Zoning, Land Use, and Site Selection for Cannabis and Industrial Hemp

Cannabis and industrial hemp are the same plant species, but California treats them as entirely separate land uses governed by different agencies, different laws, and different local approval processes. Commercial cannabis activity is licensed by the Department of Cannabis Control under Division 10 of the Business and Professions Code, and local jurisdictions retain broad authority under Proposition 64 to zone, restrict, condition, or outright ban cannabis uses within their borders — often through conditional use permits, buffers from sensitive uses, and caps on the number of licenses per zone. Industrial hemp, by contrast, is regulated as an agricultural commodity by the California Department of Food and Agriculture under Division 24 of the Food and Agricultural Code, and cultivators register with their county agricultural commissioner rather than applying for a DCC license. Critically, California law prohibits growing industrial hemp on any premises licensed by the DCC to cultivate or process cannabis — meaning a single parcel cannot be used for both, and misclassifying a site’s intended use can jeopardize both state licensing and county registration. Counties may also impose their own moratoriums, acreage minimums, or additional land use restrictions on hemp cultivation, which can vary dramatically from one jurisdiction to the next. The firm helps operators, landlords, and investors understand which regulatory track applies to a given project, evaluate whether a parcel is realistically usable for the intended cannabis or hemp activity, and prepare zoning, permitting, and registration strategies before capital is committed to a site.

Focused on Cannabis and Hemp Real Property Matters

Landowners, real estate investors, and management companies need specific legal guidance when it comes to cannabis and hemp issues, and The Law Office of Shay Aaron Gilmore supports clients with legal services for the following:

Landlord-tenant issues
ADA issues for retail sites
Zoning and jurisdictional issues
Conditional and special use permits
Development standards
California Environmental Quality Act (CEQA) compliance

Having guided clients with scores of real estate purchases and sales throughout California, Shay has the expertise needed to negotiate and structure the best deal, then quickly document and smoothly close the transaction. Shay’s interdisciplinary strengths across the cannabis and hemp industries provide real estate clients with wrap-around service, handling related due diligence including ADA, corporate issues, financing, land use and zoning, environmental, labor and employment, and intellectual property. Shay advises owners, lenders, funds and investors on financing strategies and negotiates and documents a full range of loans including construction loans, acquisition loans, working capital revolving loans, and other real estate secured loans.

The Law Office of Shay Aaron Gilmore routinely handles business permitting issues for clients seeking to locate and develop new sites, relocate or expand operations in the hemp and cannabis markets throughout California. Projects that Shay has helped move through the approval process include cannabis retail stores, hemp and cannabis cultivation sites, commercial cannabis manufacturing facilities, cannabis delivery and distribution offices, and cannabis and hemp storage facilities.

Shay also counsels real estate clients in identifying and efficiently resolving environmental issues, including air, water, hazardous materials, and soil-related work. For land use counsel and real estate transactions honed to protect and expand cannabis and hemp throughout California, look no further than The Law Office of Shay Aaron Gilmore.

Representative matters

Represented the seller of a cultivation business in the Sacramento area in a roughly seven‑figure transaction, managing diligence, negotiations, escrow, and holdback disbursements amid internal seller factions and a volatile wholesale flower market.
Acted for the seller of a Northern California cannabis farm in a multi‑million‑dollar sale, developing an ownership‑transfer structure that complied with evolving state guidance and addressed local land‑use considerations.
Advised landlords and creditors in complex lease‑and‑finance structures for manufacturing and cultivation facilities in San Francisco and other jurisdictions, balancing enforcement of rights against the need to secure, preserve, and transfer local and state cannabis approvals.

For real estate development involving cannabis or hemp, using the experience Shay has gained from working with the key players across California, Shay can help your cannabis or hemp business get regulatory and land use approvals, negotiate development agreements, conduct environmental due diligence, secure loans, and work to bring your project to completion. The Law Office of Shay Aaron Gilmore offers an in-depth understanding of these issues for the success of your cannabis or hemp development, operation or investment interests in California.

Related cannabis and hemp business services include:

A complete list of Shay’s recent presentations, white papers, and legal articles is available on the Media page. Shay regularly publishes Real Estate & Land Use updates and insights on his Cannabis and Hemp Law Blog.

Lease and Financing Risk for Cannabis and Hemp Facilities The federal legal status of cannabis and industrial hemp creates two distinct risk profiles for landlords, lenders, and tenants. Cannabis remains a Schedule I controlled substance under federal law, which means landlords face theoretical asset‑forfeiture exposure, conventional lenders generally will not finance cannabis tenancies, and leases must address what happens if federal enforcement posture changes or a tenant loses its state or local license. Industrial hemp was removed from the Controlled Substances Act by the 2018 Farm Bill and is now subject to USDA oversight and California’s CDFA‑administered state plan, which makes conventional financing and insurance more accessible — but hemp leases and financing documents still need to address crop‑failure and compliance risk, including the possibility that a hemp crop tests above the 0.3% delta‑9 THC threshold and must be destroyed, that a county agricultural commissioner suspends or revokes a registration, or that evolving state rules on hemp‑derived products change the economics of a tenant’s operation. In either case, standard commercial real estate forms rarely address these issues. The firm negotiates and documents cannabis‑ and hemp‑specific lease, easement, and financing provisions — including permitted‑use clauses, compliance covenants, regulatory‑change triggers, and remedies for license or registration loss — so that all parties understand who bears which risks before significant capital goes into a site.

The firm provides Real Estate & Land Use legal services to cannabis and hemp operators and investors in:

Explore Our Real Estate & Land Use Services

The Law Office of Shay Aaron Gilmore provides in-depth legal services across all dimensions of cannabis and hemp real estate and land use in California:

Cannabis Zoning & Conditional Use Permits

Site selection, CUP applications, planning commission hearings, setback analysis, zoning variances, and relocation approvals for cannabis operators statewide

Cannabis Commercial Lease Negotiation

Licensing contingency clauses, DCC-compliant assignment provisions, landlord cooperation covenants, and lease drafting for operators, investors, and landowners

Hemp Cultivation & Land Use

CDFA registration, county agricultural commissioner compliance, Williamson Act analysis, water rights, and land use counsel for hemp cultivators

Cannabis Real Estate Due Diligence

DCC license verification, title review, environmental assessment, ADA compliance, and acquisition financing for cannabis real estate transactions