Fined for Leasing to Cannabis Dispensary
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Couple Fined for Leasing to an Illegal Dispensary

This Highlights the Need for More Awareness

A couple in San Diego has been ordered to pay a fine of $388,000 to the city after leasing a storefront in San Ysidro to an unlicensed marijuana dispensary.

The County computed the total civil penalty by multiplying the $1,000 per day fine with the 388 days that the dispensary operated.

City lawyer Mara Elliot said; “The ruling against Quirino and Bertha Gutierrez underscores the fact that the landlords are no less culpable for the violations committed by their tenants. She said, “The city will prosecute these erring landlords with equal vigor.”

Elliot also stated that landlords leasing property to a dispensary—even if they are unaware of the legality of the operations—will shoulder part of the liability.

“We will hold you accountable to the fullest extent of the law,” she said.

Quirino and Bertha Gutierrez are certainly not the first landlords and lessors who have been fined for allowing their spaces to be turned into a cannabis dispensary without first securing a license from the state. In fact, based on the records of the City Attorney’s Office, San Diego has already collected $7,862,353 in fines.

The operator of the illegal dispensary, Ziad Putrus, was also ordered to pay the city $100,000 for the infraction. However, the city did not ban him outright if he plans on operating another dispensary in the future, provided that he secures all the proper licenses to legalize his business.

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San Diego legalizes the retail of recreational marijuana

San Diego legalized the retail of recreational marijuana at the start of 2018. One of the effects of the law was that people have become more receptive to cannabis and the stigma is slowly being puffed away. However, business owners are prohibited from distributing marijuana without securing a license from California.

Licensing is mandated by The Medical and Adult Use of Cannabis Regulation and Safety Act or the MAUCRSA, obtaining licensing is difficult due to the 26 steps the potential operator needs to undertake from the Bureau of Cannabis Control, Department of Food and Agriculture and the Department of Public Health, before they can get their license.

To date, there are 17 legal cannabis dispensaries in San Diego. As of the first quarter of 2018, California has collected $60 million in taxes from the industry.

Compared to big cities like Los Angeles and San Francisco, San Diego is much more receptive to adult use of marijuana. In fact, there’s already an established supply chain in the city from seed to shelves.

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However, the fact that the city has already slapped almost $8 million in fines to landlords and lessors indicates that there’s much more to be done in raising awareness among real property owners about the need to do their own due diligence when leasing their properties to dispensaries.

For instance, the property of the Gutierrez couple is located in the red zone where marijuana dispensaries are prohibited. A few inquiries would have alerted them to the fact that the Luxury Care Healing Center operated by Ziad Putrus was illegal.

Some Viable Solutions

The Gutierrez are not the only one subject to these policies. Finding the right solution to further make real estate property owners aware of their probable liabilities has shown to be a difficult undertaking to say the least. In most cases, the best solution for a real estate property owner leasing to a cannabis dispensary, is to be very diligent in their research prior to executing the lease contract.

Speak to a qualified real estate broker that knows the ins and outs of this industry in correlation to real property. And make sure that you take time to understand your liabilities before it is too late. The old model of “take action first and apologize later” will not bode well for those willing to take the risk. The real life example provided by the Gutierrez should be a major warning sign to all commercial real estate owners and manager looking to cater to this industry.

Do you have questions or a solution to present to our audience? Feel free to comment on this article, in the space below. Our readers and our team is interested in insightful information you can provide. Let’s engage!

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