OK to Evict Cannabis Cultivator After Lease Negotiations Break Down

What Happened: An indoor cannabis cultivator operated under an oral lease while negotiating the terms of a written agreement. But after two years of fruitless negotiations, the landlord decided enough was enough and served the tenant a 30-day notice to quit. When the tenant refused to leave, the landlord went to court, winning not only an eviction order but also $180,000 in holdover damages. The tenant appealed.

Ruling: The California appeals court upheld the lower court’s ruling.

Reasoning: The landlord claimed that the arrangement was a month-to-month oral lease that either party could terminate at any time upon 30 days’ notice. The tenant disagreed, citing a state law establishing the presumption that a tenant in lawful possession of property for use of “agricultural lands” for “agricultural purposes” after a lease expires does so under a one-year holdover tenancy. While conceding that cannabis cultivation is an agricultural use, the court ruled that the landlord rebutted the presumption of a one-year tenancy. According to the court, “the record contains substantial evidence that, while the negotiations for a written lease were ongoing, the parties mutually understood the oral lease was for a month-to-month term and that it would be terminated unless the written lease was eventually signed.”  

• 65283 Two Bunch Palms Building LLC v. Coastal Harvest II, LLC, 2023 Cal. App. LEXIS 346, 2023 WL 3268852