New marijuana laws create hazy situation for landlords & property managers

This past November, voters in California, Massachusetts, Maine, and Nevada voted overwhelmingly in favor of recreational marijuana. These four states joined Colorado, Alaska, Washington, Oregon, and the District of Columbia, which had already legalized the use of marijuana for recreational purposes. Another two dozen states now permit the use of medical marijuana.

However, marijuana is still illegal under federal law. The supremacy clause in the U.S. Constitution says that states must not (and cannot) enact law that conflicts with federal law—but states have been doing it nonetheless. Until now, the federal government’s marijuana policy has been to essentially turn a blind eye.

This has created quite the hazy situation for landlords and property managers trying to create a marijuana policy that complies with both state and federal laws. On one hand, federal law technically reigns supreme. On the other hand, most housing laws are enacted at the state and local level. A marijuana policy that complies with one set of laws can lead to the violation of another set of laws, and vice-versa.

As you’re trying to decide whether or not you should allow marijuana use on your property, your marijuana policy should take a few things into consideration:

• If you have a mortgage on the property, your loan documents may require you to comply with both state and federal laws at all times. Allowing marijuana use on your property could expose you to risk if someone determines that you have breached the loan documents.
• Similarly, if you have accepted any public subsidies for your property (from historic and low-income housing tax credits to Section 8 tenants), you are most likely required to comply with both state and federal laws as a condition of those subsidies. The use of marijuana on your property could result in an allegation of civil or criminal fraud.
• The property owner is not the only person who can be held liable for the breach of state or federal laws. That risk extends to property managers and other agents acting on the owners’ behalf.
• Insurance companies generally do not cover damage caused by illegal activities. After Colorado legalized recreational marijuana, there was a spike in apartment fires caused by tenants trying to condense marijuana into a concentrated form using butane.
• Units exposed to smoke (not just from marijuana, but also cigarettes and cigars) cost more to maintain.
• Marijuana smoke may be considered a nuisance to other tenants, and could open up a landlord or property manager to complaints—or worse, claims that secondhand smoke has caused adverse health conditions among the property’s other residents.

At the outset, it seems like a no-brainer to ban marijuana use at your rental properties… if only it were that easy. A full-fledged ban may not be allowed under state laws, either.

Can You Ban Marijuana Use on Your Property?

When determining which course of action to take, landlords and property managers must start by fully understanding their state laws regarding the recreational and medicinal use of marijuana.

If your state HAS NOT legalized recreational or medical marijuana, you can simply prohibit all use and cultivation on your property. That’s the most straightforward scenario. However, it’s undeniable that attitudes towards marijuana are shifting; even if it is considered illegal, courts may be lenient. Instead of defaulting to your lease’s traditional anti-drug or illegal activity provisions, consider adding specific language to your marijuana policy that describes it as a prohibited substance.

A strict example of a lease provision would look something like this:

Usage of cannabis and any other federally prohibited drug is not allowed on the premises. Further, tenant and their guests may not engage in any illegal drug-related activity, including but not limited to medical cannabis on or near the premises. Landlord may terminate this agreement if tenant and/or guests engage in such activities. If this provision is violated, tenant will be subject to charges, damages, and eviction. Tenant forfeits their security deposit if there is any evidence of cannabis use on the premises.

Any tenants found in violation of that clause will find little basis to argue with the landlord in court.

If your state HAS legalized recreational or medical marijuana, you might still be able to ban its use on the premises. After all, marijuana is still a federally banned substance. In order to do so, however, you’ll absolutely need that strict language included in your lease—and you’ll want to make sure that your state laws allow you to prohibit its use, as state laws can vary widely.

For instance, Michigan does not require private property owners to lease property to anyone who smokes or cultivates marijuana on the premises, as long as it is clearly prohibited in the lease. Massachusetts allows landlords to regulate smoking and cultivation of marijuana through lease agreements, but landlords cannot prohibit consumption of marijuana edibles or other forms of non-smoking consumption. Meanwhile, Rhode Island’s medical marijuana act explicitly states that no landlord may refuse to lease or otherwise penalize a person for his or her status as a medical marijuana cardholder. Three states, three different laws—no wonder landlords are confused!

Once you have a strong grasp of what is and isn’t allowed under your state’s marijuana laws, create your own marijuana policy and implementation strategy. Start by deciding if you want to allow smoking of any kind in the building. Most states allow landlords and property managers to ban smoking on the premises, as long as consumption is allowed in other forms (e.g. by vaporizer, edibles, oils). Be sure your lease states which forms of usage are allowed on site.

Can You Ban Growing Marijuana on Your Property?

When it comes to cultivation, you may want to require tenants to receive written consent from the landlord before growing cannabis on the premises. The language of the written consent may also request that the landlord or property manager be able to inspect the unit from time to time to ensure that tenants are not growing more cannabis than is legally allowed.

Something to keep in mind: Cultivation often requires higher electricity and water usage—and plants require a lot of moisture, which can be harmful to the building. So you may have very legitimate reasons to prohibit cultivation on the premises.

After you have a marijuana policy in place, be sure to enforce it consistently among all tenants. “I would advise a landlord that you need to uniformly enforce the rule,” says Michigan lawyer Matthew Paletz. “You can’t just pick and choose, because then you could face some discriminatory blowback.”

Hopefully, landlord-tenant disputes about marijuana use will arise infrequently. We find that the biggest complaints typically come from other tenants who are concerned about marijuana smoke or odors. If you find yourself in this situation, act quickly in devising a solution that works for all parties—for example, perhaps that marijuana user would happily switch to edibles, or could just smoke outside. The last thing you want is for the situation to escalate, leaving multiple tenants on edge.