Title: How’s the Market? Cannabis and title insurance
Author: Ukiah Daily Jnl
Date: 27 April 2018
As state and federal law enforcement agencies try to figure out how best to deal with conflicting cannabis statutes, it can be difficult for some industries to figure out how to position themselves. This should not be the case for title insurance companies, because their primary job is to provide a policy that guards against unknown liens or a flaw in the chain of title (who can prove legal ownership of a property).
This is why I am baffled by recently published statements saying properties in the 28 states that have in some capacity legalized cultivation, distribution, manufacture or sale of marijuana products will not be not be able to purchase title insurance. This includes the purchase and sale of undeveloped land, commercial properties, retail stores, and houses—any property where marijuana has been used (regardless of whether that use is legal under state law).
Title insurance typically deals with issues like easements, old deeds of trust, reconveyances, liens and the like. It does not have anything to do with how property owners use their property.
It’s true that the government can seize property under property forfeiture laws, some of which relate to the Controlled Substances Act. The government can also change a property’s zoning or designation, or red-tag a building rendering it uninhabitable. None of these actions are covered by title insurance. Standard title insurance policies already exclude coverage for this type of government action.