Marijuana Tenants Update – March 2018

  • March 15, 2018

In October, 2015, Incline Law Group published a blog about how the state laws regarding medical marijuana, along with the issuance of the Cole Memo, impacted landlord tenant law.  The article compared the dynamics between the California and Nevada State Laws with that of the Federal Government along with the Federal Government’s ability to prosecute those who violate the federal marijuana laws.

Since that time, both California and Nevada have legalized recreational marijuana.  However, the federal government still considers marijuana to be a Schedule 1 drug, making it illegal for both medical and recreational users.  Former Deputy Attorney General James Cole released the “Cole Memo” in August 2013, which provided guidance to federal prosecutors with regard to marijuana prosecution.  The Cole Memo essentially directeMarijuana Leasesd federal prosecutors not to prosecute certain uses of marijuana if the use did not violate the local state law, which has allowed the industry to blossom.  The Cole Memo also provided landlords who rented to tenants that were involved in the marijuana business a sense of security so long as the landlord and tenant complied with local laws.

In January, 2018, current Attorney General Jeff Sessions, announced the withdrawal of the Cole Memo.  As previously mentioned, the federal government has the right to seize property used in the cultivation, manufacturing or selling of cannabis.  This can include real property where the owner is merely a landlord who does not participate in the cannabis business.  Under the guidance of the Cole Memo, this risk had been significantly reduced.  Now, due to the withdrawal of the Cole Memo, it is expected that prosecution of all marijuana related crimes, whether or not legal under state law, will increase.  This means that any landlord who has a tenant in the marijuana industry, or even a recreational user who is growing their own plants for private use, again risks prosecution under federal law, including, but not limited to the government seizing the landlord’s property.

While the Cole Memo was not legally binding, it provided many landlords with enough confidence that they would not be prosecuted for renting to those in the marijuana industry.  However, all leases must now be revisited based on the withdrawal of the Cole Memo or landlords could be subject to criminal penalties.

If you have questions about your lease and what your legal risks may be, please contact our office.

(Published March 2018)

Leases and Medical Marijuana Tenants

  • March 15, 2018

The State of Nevada legalized the use and cultivation of medical marijuana in 2014 and began allowing cannabis businesses to operate in 2015.  While California voters approved the use of medical marijuana some two decades ago, California law makers only put into place a regulatory scheme in 2015 thereby allowing dispensaries to operate legally.

Medical Marijuana and Leases

Cannabis law is currently a very fluid and rapidly changing area of law.  The legalization of medical marijuana at the state level presents significant conflicts with federal law in numerous areas including drug policy, banking laws, criminal law and so much more.  Under federal law, the use, cultivation and sale of marijuana – medical or not – is illegal.  As a result of the past war on drugs, federal law provides some very severe penalties for violations of federal drug law, including forfeiture.

The federal government does have the right to seize property used in the cultivation, manufacturing or selling of cannabis.  This can include real property where the owner of the real property is merely a landlord who does not participate in the cannabis business.  While the federal forfeiture laws do have an “innocent owner defense” many state cannabis laws require the lease to specifically state that the lease is for purposes of cultivation, manufacturing or selling.

As noted above, this is a rapidly changing area of law.  Just two days ago (October, 2015) the Federal District Court for the Northern District of California issued a ruling (a somewhat scathing decision, in fact), based on the 2015 Appropriations Act, halting the Department of Justice from expending funds to enforce federal laws that interfere with state laws that authorize the use, distribution, possession or cultivation of medical marijuana.

Until the conflict between the state and federal laws governing the use and sale of marijuana are entirely resolved, providers of services, goods and property, including landlords (both commercial and in some cases residential) are advised to seek legal counsel and to address new contract and lease provisions such as “escape clauses” and stated compliance with state cannabis law.

(this post was originally published in 2015)