Understanding License to Use Property Agreements for Hemp Growers
There are many aspects to growing hemp according to the laws of individual jurisdictions. A comprehensive license to use property agreements is one of those aspects. These agreements differ from leases and other types of agreements in that they tend to be more restrictive than leases, and are enforceable if the proper legal elements are included in the contract. An agent for the owner of property can enter into a license to use property agreement with a hemp grower, provided the agent has the authority to do so. Before discussing the importance of this type of contract to the hemp grower, let us first consider what to look for if the property owner has not signed the agreement.
First of all, if you’re inquiring whether the owner of the property has signed the license agreement, check the county property appraisers or recorders website for additional information. If you have already entered into an agreement for the use of property (without restrictions), ensure you include the following:
The elements applied to the license contract are that it must be in writing, must include consideration (rent or some form of payment), and must describe exactly what activities will be permitted. The licensee should not use the property for any other purpose. There are other legal aspects to a license, other than just describing the property. The purpose of the license is to allow only those uses specifically described within the license so that there aren’t any other uses of the property outside of the agreement.
The reason why the license agreement is importance to the hemp grower is because it clearly sets out the conditions under which the grower is allowed to use the property. Without the license agreement, the owner of the property is at risk that their property will be used for other purposes. It also allows the hemp grower to rely on the agreement to protect them in the event that the owner were to try to prevent the grower from using the land. In some cases, this will allow the grower to get damages for lost crops. In the event of a license dispute, a hemp grower will want to point to the license agreement as an exclusive remedy against the landowner.
In terms of legal challenges that licensees or hemp growers face when it comes to the property agreements, there are legal limits to how long these contracts can last, what types of quantities of nutrients or water can be used, and how much can be grown at once. This means that the license agreement must specify the exact terms, such as which nutrients and how much, as well as what it means to “grow” the hemp (for example, does it mean just planting it in the soil or expecting it to grow to maturity?). If permits are required for the use of the property, then the license agreement must state that the property is subject to any legal requirements. If the license agreement does not address the matter of the permits, then the license will be implied. In other words, the hemp grower can at least halfway rely on a license agreement, even if it were not reduced to writing.
What would the property agreement look like for large-scale hemp growing? Whether the agreement covers 1 acre or 1,000 of land, the terms for hemp cultivation will be roughly the same. The only difference is that the larger the farming area, the more specificity is needed in the terms. For instance, the license agreement must describe with specificity how many acres are being cultivated, how many hemp plants can be grown on the acreage, the types of strains grown, how many nutrients are used, how much water is consumed, and how much sun the plants need. For larger operations, consultation with attorneys is recommended before entering into a license agreement.
These agreements protect the rights of hemp growers to grow on specific properties, though some states or regions may have specific laws related to the growing of hemp on agricultural land. In some counties (in Texas, for example), the land must be used for agricultural purposes in order to receive the agricultural assessment or agricultural use designation. This means the land cannot be used for industrial or commercial purposes. As such, even if a hemp grower enters into a license agreement with the property owner, if the property is not used for agricultural purposes, the agricultural assessment will not be granted by the county tax appraisers, leaving the owner of the land liable for other taxes.
Government regulations and policies will impact the license agreements for agricultural use, as well as allow farmers the opportunity to address some issues they may face in terms of cannabis cultivation. For example, farmers will want to be able to cultivate cannabis on their land without losing the agricultural use designation. This will depend on the local or state governments granting the assessment or addressing such issues in the license agreement (assuming the state is not outright banning the property owner from cultivating cannabis).
There are many instances in the news where license agreements between hemp growers and landowners have been violated, which has resulted in litigation. Without the license agreement, the grower would have no recourse; however, the landowner (if the agreement is not in writing) will find it difficult to prove that the grower has no right to grow on the land. If the license agreement wasn’t reduced to writing, either party can claim the other doesn’t have a right to access the land. But the license agreement, particularly in regards to hemp growers, is designed to address problems related to defining what constitutes “agricultural use” of the land so as to prevent lawsuits and to clearly establish the parties’ rights to the property.
Creating licenses to use property agreements are important for many reasons, including:
- Clarity in usage rights
- Protection against unauthorized use
- Legal recourse in disputes
As for tips when creating or negotiating license agreements, include the following:
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