Browse Tag: marijuana legalization

Medical Marijuana Laws Impact All Real Estate Transactions: An Overview

Photo of slide at Medical Marijuana Laws Overview at NAR Expo 2014

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.

Legislative Update With Erin Stackley At NAR Expo 2014

Photo of NAR's Erin Stackley

The Friday morning buzz at NAR Expo 2014 on the commercial track included a legislative update from Erin Stackley, the Commercial Legislative Policy Representative from NAR’s Governmental Affairs.

NAR is always busy on Capitol Hill, and Erin let the commercial-track audience know what’s on the docket:

  • Tax Reform Proposals: “Tax reform is not going to happen in the 113th Congress,” she said.  “But [our] reform proposals, one in the Senate, one in the House, could easily be picked up […] in the 114th Congress”.  She went on to mention the 179D Energy Efficiency Commercial Building Deduction, an existing deduction where she expects passage of an extension during this Congress.   According to the IRS, the 179D deduction allows deductions of up to $1.80 per square foot for owners or lessees of commercial buildings to which property has been installed as part of internal lighting systems, heating, cooling, ventilation or hot water systems.
  • 1031 Like-Kind Exchange:  As this tax shelter approaches its 100th anniversary on the books, efforts of Congress to raise revenue by removing the tax protection are opposed by NAR every step of the way.  “We’re working on getting together surveys and studies, more data and anecdotes on 1031 that we can bring to Congressional offices and say ‘this happened, this created this many jobs'”
  • Legalization Of Marijuana: Given that federal law still opposes the use or possession of marijuana, the break in continuity between federal and state, state and state, state and county and county and county has created an enormous risk area for property managers and owners.  Stackley said “23 states and the District of Columbia have passed various ordinances and laws that are decriminalizing marijuana, wether ofr medicinal use, or small amounts of recreational use. If [a property manager] has a non-smoking policy, does that cover marijuana use?  […] What sort of liability are you opening yourself up to?”  She then made reference to a white paper on the topic, a work of her colleague Megan Booth and IREM.  You can find a copy of the IREM white paper “Marijuana Legalization Laws” after the jump.

To get a full recording of Erin’s Legislative Update, pick up a recording at Playback NAR of the session she appeared at, “Protect Yourselves from Mold, Bed Bug and Code Compliance Issues: Property Management Forum”