Cannabis multistate operator MedMen Enterprises argues in its response to a lawsuit that it shouldn’t have to pay the almost $1 million it allegedly owes in back rent because marijuana is illegal under federal law.
Real estate firm Thor Equities Group charges in a lawsuit filed in New York federal court that Los Angeles-based MedMen defaulted on rent payments agreed to in a 2019 lease, Law360 reported.
New York-headquartered Thor Equities said in the July lawsuit that MedMen failed to pay rent on a Chicago property in August 2021.
The real estate firm alleges MedMen owes more than $950,000.
MedMen, in its response, acknowledged it had signed a lease and stopped paying rent.
But the lease isn’t protected by federal law, MedMen argued, because marijuana is federally illegal.
MedMen said in the motion that, “as Plaintiff well knows, however, it is not entitled to judicial enforcement of the Lease and the Guaranties or the damages it seeks because the distribution and sale of marijuana and the lease of real estate for such purposes is still illegal under Federal law.”
Some in the marijuana industry worry that MedMen’s argument will discourage landlords and make it more difficult for cannabis companies to lease real estate.
Kristin Jordan, founder and CEO of cannabis real estate brokerage Park Jordan, told The (Syracuse) Post-Independent that the argument is “absurd.”
“My fear is that the longer this drags on,” she said, “the more attention that it gets, the more fear and concern that will ripple through the industry.”