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The phones of North Bay real estate agents have been ringing since California law created a regulatory framework for licensing medical marijuana operations, but uncertainties of local and federal law means finding commercial property for these businesses has been challenging.

The signing of the state Medical Marijuana Regulation and Safety Act, or MMRSA (“Mersa”), in October prevents state criminal prosecution and civil asset forfeiture of licensed cannabis operations and the owners of property they lease or buy. But exposure to federal action has remained somewhat nebulous until recently, according to Joe Rogoway, whose Rogoway Law Group in Santa Rosa specializes in cannabis cases.

“There isn’t a fear of the property owner losing the property from leasing to a legitimate cannabis operator,” Rogoway said. For him, the U.S. government position has cleared up. “The federal government at this point is disallowed from investigation or prosecution.”

On May 3, the U.S. Justice Department dropped a lawsuit against the Harborside Health Center dispensary in Oakland. The department in 2012 had sued to seize the dispensary’s property via a process called civil asset forfeiture. Such an action was used to close Marin Alliance for Medical Marijuana in Fairfax in 2011, but a landmark federal appeals court ruling in favor of the dispensary in October stated the department’s prosecutors were going against congressional action in 2014 and 2015 defunding of such enforcement.

“There is an unprecedented amount of safety for owners and operators at the state and federal level,” Rogoway said.

Though MMRSA took effect Jan. 1, the 17 state license types for various stages of cannabis production from plant to patient aren’t expected to be issued until 2018. However, some local jurisdictions have put in place regulations for operations — or bans — based on existing California law, notably Proposition 215, or the Compassionate Use Act of 1996.

Still, marijuana remains listed along with heroin, LSD, ecstasy and peyote as a Schedule 1 “most dangerous” drug, according to the Drug Enforcement Administration.

Until state medical cannabis licenses kick in, California votes decide whether to legalize recreational use in November and local governments decide on permitting certain types of operations, real estate for those businesses can be risky. And that makes a number of local real estate attorneys and real estate agents nervous.

“(Real estate agents) don’t have a habit calling attorneys for real estate transactions,” said Philip Green, partner in San Rafael-based Green & Green (GreenAndGreen.com) and member of California Cannabis Bar Association. “They should be monitoring themselves because of the huge illegal aspect with that. I do not see real estate agents selling buildings to produce meth. It’s just as illegal as meth. They need to have some legal help with that.”

Methamphetamine, along with cocaine, is a Schedule 2 “dangerous” drug, according to the DEA.

Helen Sedwick, whose Santa Rosa-based Bennett Valley Law firm focuses on commercial real estate, said she and a half-dozen of her colleagues in similar practice in the area avoid cannabis clients because of past federal action.

“These deals still happen because these operations willing to pay more to a lender and landlord to compensate for these risks,” Sedwick said.

Complicating factors for transactions have been uneasiness of businesses around cannabusinesses, particularly retail businesses such as dispensaries with a number of people coming, going and sometimes loitering, she said. Because of the nebulous federal legality, a number of these businesses and patients have operated on a cash basis, potentially increasing the risk of crime, she said.

A commercial real estate agent in the Santa Rosa area for a large North Bay brokerage declined to be named for this story but said the challenges in closing deals for a number of the inquiries he has received are getting financing and permitting and finding owners who want to work with the tenants.

“A majority can show decent financial statements, but there is a lack of inventory to place these guys,” he said.

Prior to the wave of inquiries starting in the second half of next year, available industrial real estate had been dwindling because of lack of construction and steady leasing from other industries, he said. Santa Rosa’s specific rules for where cannabis operations can go has made the site search even more challenging, he said.

Charles Wood, who deals mostly in residential real estate, said he has been getting a number of calls from businesses looking for commercial property since MMRSA took effect.

“There are a lot of people from out of state with successful businesses trying to enter market,” he said. “It’s important for city to expand what’s allowable. Business parks would be the next step. There is a small clause in the rules not allow them in business parks. Some business parks have CC&Rs that do not allow indoor agriculture and cultivation.”

In April, Santa Rosa put into effect an interim ordinance allowing commercial cultivation operations in the light industrial (IL), general industrial (IG) and limited light industrial (LIL) zoning districts. A handful of applications have been submitted, according to Clare Hartman, deputy planning director. The city also had regulations for permitting dispensaries, but only two had been permitted since the ordinance was enacted several years ago.

The city is approaching medical marijuana permitting as a land-use issue, she said.

“What’s unique for the city of Santa Rosa from jurisdictions around us is we’re looking at all steps between the cultivator and dispensary,” Hartman said. “If we regulate grow and dispensing but the state requires a third-party transporter or tester, then we have a gap, and a lot of cities don’t address that.”

City planning staff is working toward a revised zoning ordinance to take to the city council as early as September that could put dispensary permitting in the city zoning code and allow for more operations such as testing, transportation and distribution under the various state licenses, she said. The city also is monitoring county of Sonoma staff work on whether cultivation could be permitted under agricultural zoning.