What are the problems associated with having a cannabis business in my rental space? I’m the landlord, and my present insurance company is giving me a rough time about having a cannabis business in my strip mall. They do not want to renew the policy. Can you enlighten me?

Yes — this is a very real and growing issue. As a property owner/landlord, having a cannabis tenant in your rental space (such as a dispensary, grow operation, or manufacturer) can create complications with your insurance, financing, and liability exposure. Here are some facts you should know:

Insurance Company Concerns

Elevated Risk Profile – Cannabis businesses often deal in cash-heavy transactions, which raises theft and crime risks. Dispensaries, in particular, are prime targets for burglary.
Fire & Property Damage Risks – Marijuana grow operations use high-intensity lights, irrigation, and HVAC, which increase the chances of electrical fires, mold, and water damage.
Product Liability Exposure – Insurance companies worry about being drawn into lawsuits if someone claims injury or illness from a cannabis product on your property.
Federal vs. State Conflict – Because cannabis remains federally illegal, some insurers will not knowingly cover landlords with cannabis tenants, fearing federal scrutiny and backlash.

Because of these things, your current insurer may choose to:

Refuse to renew your policy,
Exclude coverage for cannabis operations, or
Charge a significantly higher premium.

Mortgage & Financing Issues

If you have a loan on your property or are refinancing, your lender may prohibit leasing to businesses involved in the cannabis industry. Most banks and financial institutions have federal backing, and since cannabis is federally illegal, they don’t want to be tied to it or have anything to do with it. This can create a conflict if you plan to lease space to a cannabis tenant but still need to comply with your current mortgage agreement.

Lease Agreement Problems

Default Clauses – Many standard leases prohibit “illegal activity.” Even though cannabis is legal in Minnesota, it is illegal federally, which technically could be considered a violation.
Insurance Requirements – If your lease requires tenants to carry liability insurance and name you as an Additional Insured, your cannabis tenant may struggle to find coverage with limits that satisfy your requirements. An example of this would be requiring a $5 million umbrella policy.
Property Use Restrictions – Common-area issues (odor, ventilation, security) can affect other tenants in the strip mall, leading to problems and complaints.

Liability for the Landlord

If your cannabis tenant is sued, plaintiffs (attorneys) may try to bring you in as the property owner. If this happens, at a minimum, you will need to provide defense costs. Common examples:

A customer slips and falls in the dispensary.
A neighbor claims the smell from cultivation interferes with their business.
A fire from the growing equipment damages surrounding units.

Without specialty cannabis landlord insurance, your current policy may deny coverage for claims related to cannabis.

Solutions for Landlords

Specialty Cannabis Property Insurance – Some carriers specifically write policies for landlords with cannabis tenants; we do. These policies address theft, fire, odor, and tenant liability.
Require Tenant Insurance – Make sure the cannabis business carries General Liability, Product Liability, and Property Insurance with sufficient limits, naming you as Additional Insured.
Security Upgrades – Install better surveillance, reinforced locks, and lighting. Many insurers will require these before they will cover the property.
Do Lease Modifications – Spell out cannabis use, odor control, security, and indemnification provisions/hold harmless in the lease.

✅ The bottom line for you:
Your insurance company is giving you a rough time because standard carriers don’t want cannabis exposure. You may need to work with a broker who specializes in cannabis landlord coverage — that’s where we come in by placing your policy with carriers who accept this type of risk. It usually costs a bit more, but it will protect your strip mall or rental property investment while allowing you to keep your cannabis tenant. Please call 952-222-8073 for professional assistance.