Marijuana and Rental Property Leases

In states where marijuana and medical marijuana have become legal, landlords and property owners are discovering new challenges in their ability to control the actions of their tenants.

Keeping in mind that marijuana is still illegal on a federal basis, this helps landlords to an extent because the majority of property rental leases already have a “No illegal activity” clause. The tricky part is, what is actually happening at the property. After all, “No Smoking” clauses generally only apply to cigarettes, not marijuana.

According to Seattle, Washington attorney Bret Sachter stated in an interview with Rental Housing Journal states, “You can prohibit smoking, prohibit pets, but with marijuana it’s much easier because it is federally illegal. So you can pretty much prohibit it if you want to no matter what, even medical marijuana.”

So, if you go with the “No Smoking” clause only, be sure to specify “No Smoking and No Smoking Marijuana.” Even in situations in which tenants provide a prescription from their doctor for medical marijuana, you still have the ability to prohibit it due to the fact that is federally prohibited. You simply state, “I understand that the state allows medical marijuana, but it is still a Schedule 1 drug.”

You can also specify in your lease that not only do you prohibit smoking, but you prohibit the use of illegal drugs. This covers all drugs as well as marijuana, thanks to the fact that it is federally prohibited.

Of course, all of this is fine for long term rental owners and property managers, but what about short-term rentals or corporate housing? It’s much more difficult to enforce in a short-term rental situation. While you can include it in your policies that you don’t allow the smoking of marijuana on your property, if you can’t catch them, there’s not much you can do.

Another issue with marijuana is that in some states, not only are you allowed to smoke or consume pot, but also grow it. This causes additional issues for landlords, as growing marijuana can put a large power load on your property. If the tenant is responsible for their own utilities, that’s one thing. If the property owner is, that’s another. To grow marijuana, it’s vital that grow lights or hydroponics be used. The result is that these methods require enormous amounts of energy from the electrical system. Most apartment buildings are not equipped for such a power load.

Finally, what if you say, “to heck with it” and decide that you will rent to this market of marijuana users. That decision could make things even more difficult for you. For one, no insurance company would cover you and secondly, you would not be able to deposit the funds into a federally-accredited bank. Your corporate property would have to be self-insured as well as ran entirely on cash due to current federal drug laws.