Medical Marijuana – Part 2 – Issues in Leasing Real Property

As referenced in Part 1 of this series, California law on medical marijuana starts with a determination of whether a person qualifies as a “Qualified Patient” under Prop 215. As long as the person is in compliance with the provisions of this law, they have limited immunity from criminal prosecution (at the State level).  Subsequent related laws extended this limited immunity to Collectives and incorporated entities that cultivate and/or distribute medical marijuana. 

1.    Must I rent to a person that is a Qualified Patient under Prop 215?  The answer appears to be a solid no at this time.  Nothing in California can compel you to rent your property for a use which includes the use, growing, cultivation, or distribution of medical marijuana. Legally any marijuana use is illegal under Federal law and no property owner can be compelled to allow an illegal action on their property.

2.     Should I rent to a person that is a Qualified Patient under Prop 215?
If you are not concerned about the risk of Federal enforcement, there are many pros and cons that will influence your decision whether to rent to a person or company who will be using or growing marijuana on your property. On the pro side, scientific evidence seems to indicate that medical marijuana plays a valuable role in pain management and other medical therapies. Property owners who allow this use may find that they can get better rents and longer tenancies.  On the con side,  any smoking including marijuana may create a nuisance for other tenants and neighbors. Further there has been some evidence of increased risk of criminal activity where marijuana is grown or kept.

3.    Can I be sued for Discrimination if I refuse to rent to a Qualified Patient? Again the answer is no. Discrimination is determined under the Federal Fair Housing Act.  Since marijuana use is illegal federally, it cannot be a basis to claim discrimination when housing is denied to a marijuana user. There is no California law that establishes medical marijuana users as a protected class of persons.  So refusing to rent is not a discriminatory act.

4.    Would the results be the same for Cultivation and Distribution operations? Yes, these are illegal federally and refusing to rent to a marijuana cultivator or distributor is neither illegal or discriminatory.

5.    Is there anything pending that would change these results?
State Law:  California law already prohibits smoking medical marijuana anywhere tobacco is banned, which includes most public places. However, many are concerned whether this ban would stand if California actually legalizes marijuana use.  A new bill from Assemblyman Jim Wood, D-Healdsburg, would extend to medical marijuana a 2011 law that permitted landlords to prohibit the smoking of cigarettes and other tobacco products on their rental properties. The bill sponsor, the California Apartment Association, said it is important to give landlords explicit authority to forbid pot smoke on their properties, since it can create tension among tenants.

Federal Law:  Currently the only action that would reasonably change these answers would be federal legalization of medical marijuana use. While this is often discussed, there appears to be no realistic prospects for any such law change soon. Many people believe that the gradual legalization of recreational marijuana, as in Washington and Colorado, coupled with expanding State regulations of medical marijuana around the Country, will eventually lead to federal legalization.  While  legalization would de-criminalize marijuana use, it would remain to be seen whether any such legislation would compromise or eliminate landlords’ ability to prohibit medical marijuana in their properties. It is likely that the ability to ban smoking would c

6.     If I do decide to lease my property to a tenant who will use or grow medical marijuana, must I do anything special?  You may need to modify your Rental Agreements to deal with this situation. Federally, marijuana use remains a crime so the Agreement must provide a carve-out from this law. Further, you must provide for where use and growing occurs and who can do so.  You don’t want your other tenants or neighbors to believe that they can freely use marijuana on your property.  And, you must provide an escape provision whereby you can terminate the Agreement or the continued use if you are confronted with claims that you are allowing a “nuisance” on your property or other claims by offended persons. I am not as yet aware of a standard form of medical marijuana rental agreement although I would expect these to become available soon.

Next:    Part 3 – How should I respond if an existing tenant is growing Marijuana?