As more and more states in the U.S. begin the process of legalizing marijuana, or implement less restrictive marijuana laws, the real estate industry has had to keep up and navigate this new and constantly evolving market.
While some states have already legalized recreational use of marijuana, other states, like Texas, have only approved medical use of marijuana in the form of CBD oil for certain conditions. Texas currently has just 3 legal medical marijuana growers in the state. Hemp products in the state may contain 0.3% THC or less, while states where marijuana is legal have THC potency as high as 30%. Legalization advocates continue working towards less restrictions on marijuana usage at the state level and at the federal level.
See resources: http://www.texasmarijuanapolicy.org/
U.S. Legalization Map updated July 2020
Marijuana usage, production, and distribution, even for medical purposes, is still illegal at the federal level as the FDA has marijuana listed as a Schedule I narcotic. Bill H.R. 420 has been put before congress requesting marijuana be taken off of the list of Schedule I narcotics and regulated the same as alcohol. So far, it hasn’t gone anywhere. So, what does this mean for states where use is legal, and what does it mean for parties interested in buying, selling, or leasing real estate involving marijuana in those states?
In short, your property is still subject to federal forfeiture laws and you could face criminal charges for your involvement by a federal court, even if the marijuana operation being run on your property is legal in your state. An example is the case of Janetski vs U.S. In this case, the owner of a commercial property “knowingly” leased it out to a marijuana grow operation that was legal in their state. The owner of the property was sentenced to one year and one day in a federal prison, had his property seized, and paid a $100 fine due to his knowledge of the use of his property.
Best advice if you are interested in buying, selling, or leasing property involved with a legal marijuana operation in your state:
- Consult an attorney who is knowledgeable in law affecting marijuana-related real estate in your state.
- Know the history of the property you are buying. Indoor marijuana grow operations require a lot of electricity which increases the possibility of DIY wiring throughout the property. It also creates of very damp environment ideal for mold growth, which may or may not show up on an inspection. Knowledge of a property previously used to facilitate a grow operation must be disclosed in a real estate transaction involving the property.
If you are leasing, consult an attorney and know the fair housing laws in your state as they are constantly evolving related to medical marijuana usage in connection with a disability. You can prohibit all forms of smoking on your property, but there are many non-smoke forms of medical marijuana. While federal fair housing laws currently do not offer protections for medical marijuana usage, it’s good to know whether you could face repercussions for discrimination at the local level for denying tenancy based on medical marijuana usage. See resource: https://magazine.realtor/commercial/feature/article/2016/04/marijuana-clauses-your-lease-should-include