Yes. Renting property to a business is not engaged in that business. Just need to make sure the arrangement does not cause you to be engaged in the sin business, like having rent based on profits of the business.
Ask A Question
Can a QOZB rent property to a person or entity engaged in a sin business on the premises?
How should cannabis be treated in this scenario?
Answers
First off, Cannabis is not a listed sin business. So renting to someone or entity in the cannabis business would not harm the Opportunity Zone status. If you do rent to someone involved in a defined sin business, you are still OK as long as you have no revenue or profit sharing as part of rent. If you have a fund with multiple Opportunity Zone businesses, having an Opportunity Zone business that is a defined sin business will likely disqualify the fund.
Probably not good. But I'm not certain. It’s not on sin list, but neither is bank robbery.
Cannabis is not per se a sin business, as it's not listed in the list of sin businesses and is thus open to interpretation. A real estate owner using the OZ can get the benefits for her/his development. The fact that the user might not qualify as a QOZB is a separate matter.
Cannabis is not an enumerated sin business. QOZBs can probably rent to sin businesses, especially if the sin business is being run by an unrelated tenant, but it's a bit unclear how the anti-abuse rules would treat a lease from a QOZB to a related sin business. That scenario is probably kosher as long as the sin business itself does not claim QOZ benefits and the lease is at arm's length.
Yes. The rent of premises is a different and separate business to the business operating in the premises. Cannabis is not listed as a sin business. The rental of premises to a cannabis business as long it is not a triple-net lease should qualify.
DISCLAIMER:the information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal and financial experts prior to participating in any aspect relating to Opportunity Zones. Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.