OAKLAND — Two big Oakland buildings that were transformed into cannabis cultivation centers have been seized through foreclosure by a lender that aims to revive a once-thriving marijuana business at the sites.
The Cannery and The Tinnery, the two buildings that were seized by a finance firm, have been mired in a long-running dispute over the operation of massive diesel generators that were being used to power pot production inside the structures.
A few weeks ago, in late September, the former owner of the property, a group led by Kenneth Greer, a Denver-based real estate executive, removed the diesel generators that had offended community groups and environmental activists.
The generators were used as power sources for tenants who were going to cultivate marijuana, Greer stated in a filing in January 2020 in connection with an Alameda County Superior Court civil lawsuit.
An affiliate of Canada-based Romspen California Mortgage, the lender that now owns the buildings, intends to revive the cannabis complex so it is operating properly again, according to Kevin Saavedra, a consultant for the new property owner.
“There were a bunch of unpermitted generators on the property,” Saavedra said. “Those are gone and they are never coming back.”
Instead, a PG&E-provided conventional power supply will provide the utility service that the cannabis cultivators require for viable businesses, Saavedra said.
“The cannabis facilities used to have hundreds of jobs and they generated a lot of tax revenue for the city of Oakland,” Saavedra said.
Greer stated in the Alameda County court filing that his group was providing power to all tenants by renting huge diesel generators.
“Upon request from a tenant, we order a generator,” Greer said in the court papers. “Generators are only provided when a tenant is prepared to test installed cannabis grow equipment.”
The Bay Area’s Air Quality Management District said in a July 2022 filing that it believes the Greer-led property ownership group violated the agency’s regulations by unauthorized and improper use of the diesel generators, an operation that began in April 2021.
“Defendants’ violations have resulted in the emissions of regulated air contaminants, contributing to the production of air pollution in the jurisdiction of the district and thereby threatening human health, safety and the environment,” the district stated in an Alameda County court filing.
Greer and his group bought the buildings in separate transactions a few years ago. A Greer company, Denver-based Green Sage, operated the cannabis business inside the buildings.
In 2016, a Greer-led group paid $16 million for The Oakland Tinnery at 5601 San Leandro St. in Oakland. In 2017, a different Greer-headed group paid $6 million for The Oakland Cannery at 5733 San Leandro St., just down the block.
In 2019, Romspen California Mortgage provided $54.5 million in financing to different affiliates led by Greer, Alameda County property records show.
The collateral for the mortgage — which greatly exceeded the combined amounts that the Greer groups paid for the properties — was The Oakland Tinnery and the Oakland Cannery buildings.
In December 2021, Romspen, the lender, filed a notice of default against both of the East Oakland buildings. The timing of the loan default means that the battle over the diesel generators was ongoing at the same time that the mortgage for the two properties had flopped into delinquency.
By the time an affiliate of Romspen, RIC San Leandro, had seized the property on Sept. 23, the unpaid debt on the loan had ballooned to $72.6 million, the county documents show.
RIC San Leandro, however, paid only $25 million to grab the property through foreclosure. The generators were removed around the time the foreclosure was officially completed and the Greer-led groups no longer owned the two buildings.
In a post on the Green Sage website, the company touted its purchase of the buildings. The post described The Oakland Tinnery as an “iconic art deco property” totaling 278,900 square feet and The Oakland Cannery as a “historic building” totaling 162,500 square feet.
“The Cannery is a state-of-the-art multi-tenant facility built out for cannabis cultivation, research and testing, and manufacturing and production,” Green Sage stated in its post. “The Tinnery is a state-of-the-art cannabis facility for some of California’s largest and most established cannabis companies.”
Now, the resources that the lender can bring to bear means the cannabis businesses can get back on their feet again.
“We want to get this cannabis project operational again,” Saavedra said. “The lender is going to stabilize the situation.”
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