The topic that landlords are talking about this new year is a new law in Nevada that has recently passed this past November, and takes effect
January 1, 2017
the end of the marijuana prohibition.
The new year will bring the regulation of production and sale of cannabis, as well as the taxation on cannabis, just like the sales of any other tangible product. This is raising many eyebrows in the world of property management and also questions about how we should treat the future of marijuana and our tenants.
Over half of the United States, 28 states plus the District of Columbia to be exact, have passed laws in favor of the legal use of marijuana dating all the way back to 1996. A recent poll has stated that
60 percent of Americans favor general legalization.
Some states also allow the cultivation of marijuana plants for “individual consumption.” The trouble here in Nevada is that marijuana remains a Schedule 1 substance under federal law and is still barred from being prescribed.
When Colorado was the first state to allow legalized marijuana, it increased their tourism numbers by 1million people per year. How will this affect the rental market and economy in our valley? We are very soon to find out. The Department of Taxation is quickly creating the licensing requirements for recreational marijuana. Once recreational sales hit Colorado, leads to apartments increased by 19.20%, compared to the national increase of 9.41%, according to apartmentguide.com. We are looking forward to see what this brings for the Las Vegas valley market.
There are a few things to consider when moving forward in this new year regarding this smoking hot topic:
Cultivation of plants
In Nevada, the current statue NRS 453A allows 12 mature plants to be grown IF there is no dispensary within 25 miles of where the user lives at the time. The growing of these plants requires specific living conditions, including temperature control, water and humidity, which could ultimately affect the utilities bills. This may be an area to address in the lease.
Many standard leases come with a no-smoking clause because the strong odor and film is tough to remove. Most leases also contain strict “no illegal drug activity” at the dwelling. But does your lease specify which type of smoking is or is not allowed? Covering all bases by including specifics of no-smoking tobacco or marijuana inside the dwelling could be advised.
In light of recent events, some banks have opened their doors to catering to marijuana-based businesses. However, with cannabis remaining a Federal Schedule 1 drug, they are not federally regulated, i.e. FDIC Insurance. Because it is a high risk to banks, this can be an extremely unaffordable luxury, which leaves many dispensaries as cash-only businesses. This should be addressed in two areas: How rental payments will be accepted and ensuring the leases clearly state the landlord and tenant responsibilities regarding the security of the building.
From single-family, multi-family to commercial, many property owners are firm on their opinions of smoking on or in the premises. So where does that leave us for the cardholders of medical marijuana? In California, it is considered a fair housing violation under state law to refuse someone for the medical use of marijuana. In December of 2014 HUD stated, “The use of marijuana (even for medical purposes) is prohibited in federally assisted properties.” For Section 8 tenants, it is clear that there is zero federal tolerance, but will your homeowners be compliant with maintaining a completely smoke-free dwelling with no exceptions? The fact that it is still prohibited under federal law means that you are now required to permit marijuana. It’s the owner’s choice! “Because it is still against federal law the owners reserve the right to evict on federal terms if need be” – Robert Schumacher, Managing Partner of Gordon & Reese Scully Mansukhani law firm.