Marijuana And Rental Property……A Hazy Situation.

We’ve watched attitudes toward marijuana use, both medicinal and recreational shift greatly in recent years. Eight states and the District of Columbia have passed legislation allowing for recreational marijuana, another twenty states permit its use for medicinal purposes.  Oddly, marijuana is still considered an illegal substance under federal law.

This has created a hazy situation for landlords, property managers, and homeowners associations trying to decide whether or not to allow marijuana use. Marijuana use in rental properties seems benign enough to allow–but is it?

Here are six things to consider before creating a policy on marijuana use in rental properties:

  • Is there a mortgage on the property? This is important because most loan documents contain language that requires the borrower to comply at all times with both state and federal laws. Because it’s still banned by the federal government, allowing marijuana use in rental properties could result in a breach of your loan documents.
  • Have you accepted any public subsidies for your property? This includes everything from tax credits used for building renovations to residents who pay with Section 8 vouchers. These programs typically require full compliance with state and federal laws, so marijuana use in rental properties could be considered civil or criminal fraud.
  • Who else could be at risk? It isn’t just the property owner who could be held liable for breach of state or federal laws. Homeowners associations, property managers. and other agents acting on behalf of the owner could also be held liable. All stakeholders should be involved in the conversation before determining whether or not to allow marijuana use in rental properties.
  • Does your insurance company cover damage caused by illegal activities? Review your policy closely. For example, Colorado experienced a spike in apartment fires after it legalized recreational marijuana. Many of the fires were caused by tenants trying to condense marijuana into a concentrated form using butane. Your insurance company may not cover damages determined to be a result of marijuana use in rental properties, even if local laws allow it.
  • Are you willing to pay for any costs associated with smoke damage? Units exposed to smoke–from marijuana, cigarettes, or otherwise–cost more to recover and maintain. Over time, smoke becomes embedded in the walls, carpets, and other permeable materials. It can require quite the effort to remove evidence of smoke altogether. This not only impacts the existing residents, but also future residents. Anyone who has asthma, emphysema, or other lung conditions may have difficulty breathing in a unit that has been exposed to smoke.
  • How will marijuana use affect other residents? Unfortunately, smoke and smells cannot be contained to a single unit. Not only could this be a nuisance to other residents, but it may also impact their health. A growing body of evidence suggests that secondhand smoke easily infiltrates nearby units, and secondhand smoke can be as harmful to others as it is to the person who’s smoking! Allowing marijuana use in rental properties may open landlords, property managers, and homeowners associations to complaints–or worse, lawsuits if someone claims that secondhand smoke has caused them adverse health conditions.

State Laws on Marijuana Rental Properties

As always, you’ll want to examine local, state, and federal laws closely before you determine whether or not to allow marijuana use in rental properties. Laws can vary drastically from state to state.

In Michigan, for instance, private property owners can refuse to rent to anyone who smokes or cultivates marijuana on the premises, as long as that’s stipulated up front in the lease agreement. In Massachusetts, landlords cannot prohibit the consumption of marijuana edibles or other non-smoking forms. In Rhode Island, no landlord may refuse to lease to or otherwise penalize someone for his or her status as a medical marijuana cardholder.

Once you adopt a policy as a landlord, be sure it’s enforced consistently and uniformly. You can’t just pick and choose, because then you could face discriminatory accusations.

Laws regarding marijuana use in rental properties can be overwhelming for landlords or homeowners, particularly as the regulatory environment continues to change. An experienced property manager will be well-versed in these regulations and can help keep you protected.

 

Matt Pelton

Matt is an Ohio licensed Realtor with 20+ years experience in residential and investment real estate sales, leasing, property management, BPO’s and providing pre-purchase consultations. Currently working as Sales Manger at Real Property Management. You can contact him directly  here or on twitter @CincySalesGuy

 

Real Property Management is the nation’s leading property manager. For over 30 years, Real Property Management has developed intelligent solutions for thousands of individual property owners, investors, tenants and Realtors.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.