When Cannabis Deals Go Wrong: What to Expect from an Unlawful Detainer

What to Expect When Your Cannabis Property Faces an Eviction Notice

In a challenging cannabis real estate market, few documents create more anxiety than an unlawful detainer, commonly known as an eviction notice.

Over the past several years, many cannabis operators have found themselves locked into leases that no longer reflect market reality. Rents agreed to during peak optimism now sit far above current demand. When revenues tighten and rent payments slip, landlords often turn to the most direct remedy available: an unlawful detainer.

This article is not legal advice. It is a practical, experience-based overview of what to expect when you’re expecting an eviction notice, informed by real-world cannabis transactions and distressed property scenarios we have seen firsthand in California cannabis real estate, as well as when clients buy or sell a cannabis business.

Why Unlawful Detainers Are Increasing in Cannabis Real Estate

Cannabis real estate has always carried unique risk. Properties are often highly specialized, zoning is restrictive, and alternative tenants are limited. During the expansion phase, landlords priced that risk aggressively. Today, the market has shifted.

Several factors are converging:

• Lease rates signed at peak valuations no longer reflect current market rents

• Operators face margin pressure from taxes, competition, and price compression

• Capital is tighter, making it harder to cover short-term cash flow gaps

When rent is not paid on time, landlords often act quickly. As seen recently across San Francisco and other urban cores, unlawful detainers are becoming more common as property owners seek to regain control of underperforming assets.

What an Unlawful Detainer Really Means

An unlawful detainer is not a negotiation tactic. It is a legal process initiated to recover possession of a property.

Once filed, timelines move faster than many operators expect. Missed deadlines, poor communication, or false assumptions about leverage can dramatically reduce options.

From a real estate perspective, the filing signals that the landlord has decided that repossession is preferable to continued performance under the existing lease.

Common Misconceptions Cannabis Tenants Have

One of the most common mistakes cannabis tenants make is assuming the landlord wants them gone. In many cases, the opposite is true.

Landlords understand that cannabis tenants are difficult to replace. However, they also understand leverage. An unlawful detainer often resets the conversation by forcing action.

Another misconception is that “at-market rent” arguments alone will stop the process. Market conditions matter, but contracts still govern outcomes unless both parties agree otherwise.

What Typically Happens Next

While every situation is different, there are common stages cannabis tenants experience once an unlawful detainer is filed:

• Short response windows that require immediate attention

• Pressure to cure defaults, often including back rent, fees, and interest

• Negotiation opportunities, but only after credibility is restored

• Potential lockout or surrender, if no resolution is reached

In retail and industrial cannabis properties, these situations often move faster than residential cases, particularly when landlords believe the tenant’s business viability is deteriorating.

Why Cannabis Properties Are Especially Vulnerable

Cannabis buildings are not generic real estate. They are location-specific, license-dependent, and capital-intensive.

That cuts both ways.

On one hand, landlords cannot easily re-tenant the space. On the other hand, tenants cannot easily relocate. This mutual dependence is why unlawful detainers in cannabis often end in restructured leases, negotiated exits, or distressed sales, rather than simple evictions.

What Experienced Real Estate Advisors Look For

From a professional standpoint, when a cannabis tenant receives an unlawful detainer, several questions immediately matter:

• Is the lease fundamentally mispriced relative to today’s market?

• Is the tenant’s business viable at a corrected rent level?

• Does the property have alternative cannabis or non-cannabis use potential?

• Is a sale, assignment, or surrender more rational than litigation?

These are not legal questions. They are economic and strategic questions that determine whether a path forward exists.

The Hard Truth: Few Operators “Survive” an Unlawful Detainer Alone

Many tenants attempt to handle eviction notices internally, hoping the issue resolves itself. In practice, most successful outcomes involve early intervention, realistic valuation, and third-party mediation.

Unlawful detainers tend to expose deeper issues: overleveraged businesses, outdated rent assumptions, and capital structures that no longer work in today’s market.

What This Means for Cannabis Operators and Property Owners

For operators, an unlawful detainer is a signal to act decisively, not emotionally. For property owners, it is a reminder that aggressive enforcement can preserve value, but only if followed by a realistic repositioning plan.

In many cases, the best outcome is not eviction. It is alignment around market reality.

Conclusion: Expect the Notice, Prepare for the Outcome

Unlawful detainers are becoming a defining feature of the current cannabis real estate cycle. They are not a sign of failure. They are a sign of market correction.

Understanding what to expect, how fast things move, and where leverage truly lies can mean the difference between a controlled transition and a forced exit.

If there is one takeaway, it is this: when cannabis deals go wrong, ignoring the paperwork only makes it worse.