Medical Marijuana Laws Impact All Real Estate Transactions: An Overview
To get an appreciation of the evolving national situation regarding marijuana decriminalization, all one needs is to take a look at the state-by-state recaps of statutes. The National Conference of State Legislatures has compiled such a list of the 24 states and the 24 very different legal approaches to this national decriminalization trend.
Which means that multifamily property owners and managers in those states have delicate times ahead, legally speaking. The questions come much faster than the answers: what is a landlord’s liability? Do no-smoking provisions in leases prevail? Could a landlord be charged with discrimination if seeking to keep property marijuana-free?
Staying on top of this budding issue (sorry) is NAR’s Megan Booth, Senior Policy Representative, liaison to IREM and CCIM. Her presentation to NAR Expo 2014 kicked off with her introduction as “marijuana (policy) guru” for NAR.
“NAR does not have a position on marijuana legalization or decriminalization. We have no intention of taking a position on it. Instead, what we’re trying to do is make sure our members informed about the laws and about the implications to properties,” said Booth.
The implications lie mainly in the area of leasing and management, said Booth. It impacts apartments, office buildings, industrial, retail and leased or managed single family homes. Additionally, managers of community organizations or homeowners associations face the issues associated with the changes to state marijuana laws.
Red Tape In Full Force
Booth continued, “If you do any federally assisted housing, take vouchers, Section 8, 202, [there are] huge implications. The guidance that has come out from HUD […] is frankly schizophrenic. They tell you that all HUD housing is drug-free, then they did a memo about a year and half ago saying ‘well, if it’s a new tenant and they want a medical accommodation, maybe’. Its’ very wishy-washy,” said Booth.
Significant Financing Obstacles
Given that the use of marijuana remains illegal at the federal level, the capital markets for development of retail dispensaries face unique snarls. Federal regulations imposed on banks who underwrite such developments include onerous reporting and compliance regulations, so many and so severe that the American Bankers Association today gives guidance to its members to not lend at all to such developments, owing to the great risk of falling out of regulatory compliance. Booth said the ABA is calling for a change in the law at the federal level before it will reconsider its position.
This information-packed session on this critical legal area for commercial real estate covered far more than the above, and you can get a full recording of the NAR Expo 2014 Ssession Medical Marijuana Laws Impact All Real Estate Transactions: An Overview at PlaybackNAR.com.