Avoid the potential for costly environmental liability associated with purchasing or leasing a property.

If you are planning to launch or grow a cannabis business, it is incumbent upon you to become informed about risks associated with property selection. Not only must you evaluate the typical property condition and utility aspects…you must also consider potential environmental liability.

Grow houses may be located in formerly utilized manufacturing or industrial buildings based upon availability and economics.

To understand and protect against the potential environmental liabilities that accompany a real estate transaction with a cannabis company, it is essential that due diligence be performed on the property being considered. Performing a Phase I Environmental Site Assessment (Phase I) is the key to be eligible for Innocent Purchaser Protection for the buyer/lessee under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Environmental Due Diligence is a formal process that evaluates real estate for potential risk of environmental contamination, such as soil or groundwater contamination associated with former or current uses of the property (Recognized Environmental Conditions–otherwise known as RECs). Even if you are just a Lessee of a property and have not operated on that property you can still be responsible for contaminant cleanup under CERCLA if you do not have an adequate environmental baseline established at the time of your lease. If you purchase the property then you have potential liability under CERCLA as the owner of the property.

If you are considering investing in an existing Cannabis Operation, you might also consider performing an Environmental, Health & Safety (EHS) audit of the operations to assure EHS compliance with applicable permits and good EHS practices.

Most commercial lenders require that a property has a Phase I ESA completed prior to disbursing funds.

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