Window to the Law: Legal Marijuana and the Real Estate Professional

Window to the Law: Legal Marijuana and the Real Estate Professional

Jan 31, 2017
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Learn about the legal issues that a real estate professional may encounter as marijuana becomes legal for both medical and recreational use in many U.S. jurisdictions. 

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Window to the Law: Legal Marijuana and the Real Estate Professional: Transcript

Marijuana is an illegal drug under federal law, however, over the last 20 years, usage of medical marijuana has become legal in most U.S. jurisdictions.

In this edition of Window to the Law, we will discuss how legalization of marijuana impacts real estate professionals and brokerages.  I am Finley Maxson, NAR Senior Counsel.

While marijuana remains illegal under federal law, 30 states and the District of Columbia have passed laws providing for the legal use of medical marijuana. Eight of these states also allow for the recreational use of marijuana. Additional states are considering legislation legalizing marijuana for recreation use or allowing for medical usage. 

Legal marijuana poses a challenge for real estate professionals and brokerages in two instances: property management and employment law. 

When a real estate professional serves as a property manager, tenants may request an accommodation under the federal fair housing act or state law to allow the tenant to smoke or grow marijuana on the premises.

Property managers can prepare for requests to smoke on premise by using a lease that bans all forms of smoking on the property. Instead of permitting the tenant to smoke marijuana, the landlord could permit use of other forms of marijuana, such as lotions or food products. 

A landlord could choose to prohibit tenants from growing marijuana on premise by citing concerns about resident safety or potential damage to the property. The presence of marijuana plants could encourage criminal activity on the premises because of the plants’ value. Growing can also damage the property because of the high humidity levels required by large growing operations. Also, the excessive levels of electricity required to grow marijuana could pose a potential fire risk to the property.

Since requests for accommodation are factual determinations, every accommodation request should be considered separately. Therefore, different solutions may be needed for different accommodation requests.

Real estate professionals should work closely with the property owner and the owner’s attorneys to determine the proper course of action when addressing accommodation requests to use or grow marijuana. Note that federally-owned housing and property covered by federal housing programs will not require an accommodation for new tenants, but state laws may require the landlord or property manager to accommodate theses requests on other properties. Because it is unclear how the conflict between state and federal law should be resolved, real estate professionals should be careful to work under the direction of the property owner and to receive all instructions in writing.

The legalization of marijuana also raises employment law issues such as use during work hours and use at the workplace.  Because marijuana remains illegal under federal law, federal law does not require an employer to make an accommodation for marijuana usage by an employee.  Most state laws carve out an exception that allows employers to discipline employees for otherwise legal marijuana use on the premises or intoxication [SLIDE #10]. However, some states do not allow employers to discriminate against employees who may have a medical marijuana registration card. So, real estate brokerages should be familiar with how their state laws address legal marijuana usage by their employees. 

Brokerages may also want to address legal marijuana usage by independent contractor salespeople.  While independent contractors are allowed the freedom to conduct their business activities as they choose, a brokerage could include guidelines in its independent contractor agreement on the salesperson’s usage of legal marijuana. Just like the brokerage encourages salespeople to maintain a certain level of professionalism during their association with the brokerage, the guidelines would set forth the firm’s expectations for its independent contractors.  Of course, the brokerage needs to be careful to not exercise too much control over its independent contractors to avoid having them classified as employees.

For more information, check out these resources.

Thank you for joining us for this edition of Window to the Law.

Window to the Law is a monthly video series focusing on a legal topic of interest. Not just for legal professionals, Window to the Law covers topics applicable to legal compliance for real estate professionals, brokerages, and REALTOR® associations.
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