Title Insurance for the Cannabis Industry in Pennsylvania

The Cannabis industry is rapidly growing and there is significant interest from both the private and public sectors to move things forward. For the former, it’s a business opportunity to take advantage of growing demand for cannabis-based products. For the latter, the potential tax revenue that can be collected by those private enterprises is attractive.

Since there is no federal law providing blanket legal standards, we are left with individual state laws and regulations on how cannabis can be grown, sold, etc. Some states are further along than others in working through the proverbial ‘red tape.’ Others, like Pennsylvania, are one of those states that are still figuring things out.

Title insurance has certainly been caught in the fray.

As a Schedule I drug under the Controlled Substances Act, it is a federal crime to possess, use, sell, or distribute marijuana. Therefore, handling funds or settling financial transactions for cannabis-related businesses could be considered assisting in unlawful activity. This also presents numerous risks of insuring and transferring real property that is associated with unlawful activity, including, for example, the potential to implicate anti-money laundering rules as well as forfeiture laws.

For these reasons, title insurance has been difficult if not impossible to get in states like Pennsylvania, which means that buyers would need to perform their own due diligence on a property and assemble a specialized team of consultants and legal experts to navigate the transaction.

In Pennsylvania, a major change has now made it easier and Principle Abstract has taken a position of leadership when it comes to cannabis related real estate transactions.

Getting Title Insurance for Cannabis Related Businesses in PA is Possible

Until recently, buyers have typically not been able to obtain owner’s policies as most title companies have not been willing to provide coverage options. Principle Abstract has developed relationships with several organizations that now make this possible.

Furthermore, lenders were typically unable to obtain loan policies. However, our office has now been able to successfully offer and close transactions for cannabis companies.

We’ve also been able to develop a solution that allows us to act as escrow agents in a cannabis related real estate transactions in Pennsylvania.

By combining these unique solutions, Principle Abstract is uniquely positioned to assist in most if not all cannabis related transactions throughout the state of Pennsylvania and are now offering consultations to anyone seeking title and escrow support on a transaction.

Additionally, we are members of The Pennsylvania Cannabis Coalition (PCC), a 501(c)6 trade organization comprised of Pennsylvania medical marijuana permit holders. Through our membership with PCC, we can help to advance the progress of the cannabis industry within the state of PA.

More on the Coalition:

Our purpose is to protect and preserve Pennsylvania’s emerging marijuana market.  We help devise policy that regulates the sensible cultivation, distribution, and use of cannabis. We represent the current medical cannabis industry here in Pennsylvania. We advocate for a robust yet economically sensible regulatory framework. We continue to educate elected officials, regulators, and the general public about of the need and benefits of cannabis-derived therapies. Our team includes both industry and public affairs specialists with rich, domain-specific experience at the local, state, and federal level.

Are you currently involved in a commercial real estate transaction for an entity operating within the cannabis industry? Give Principle Abstract a call today and a member of our team will be happy to offer a consultation.

How to Maintain Privacy on Public Land Records

Sales involving property become part of public record. The deed that is recorded with a town and/or county becomes information that sits within public domain. In other words, virtually anyone can quite easily search for your property, either online or in a hall of records where such documents are kept and find your name, eliminating privacy.

Some situations arise where homebuyers require that their names are kept off record. The reasons can be quite varied and while not common, it is something that becomes a necessity during a real estate transactions.

There are several routes that a real estate buyer can take to ensure privacy is maintained on a purchase. In this blog, we explore some of them.

Revocable Trust

According to Investopedia, a revocable trust is a ‘part of estate planning that manages and protects the assets of the grantor as the owner ages.’

By vesting a title within a revocable trust, homeowners can achieve privacy in a pragmatic way. Most homeowners need financing, and revocable trusts can obtain financing from a lender. The result is a home sale where the trust is listed as the buyer rather than the names of the parties that the trust pertains to.

Limited Liability Company

It is possible to purchase property through a limited liability company (LLC.) to preserve privacy. This is not very common, however, since it is harder to secure a loan as an LLC and most home buyers require financing. The caveat here is if the transaction is being handled in cash where financing has been removed from the equation or if the property at hand is commercial property.

Realty Trust

Realty trusts are another tool that buyers can use as a way to purchase real estate privately. They are quite similar to LLCs in that they are mainly used as part of a cash transaction or by commercial property buyers (including buyers interested in rental units.) Like LLCs, realty trusts can also have difficulty securing financing. If a buyer is solely interested in privacy, it is unlikely this will be the preferred route to maintain privacy.

No matter your reason for privacy and how you decide to proceed, it is essential to seek the advice of an accountant and seek legal counsel. No decision should be taken without deep consideration and consultation with professionals to ensure you are proceeding in a way that preserves your best interests. Not doing so may result in serious legal, financial and/or tax consequences.

Principle Abstract is one of the area’s most trusted title insurance providers and conduct each transaction with the interests of the buyer in mind. If privacy is a priority to you on an upcoming real estate transaction, give our office a call and a member of our team will be happy to assist you.

Ready to get started? Give our office a call today.

Tagged as commercial real estate