There’s no clear resolution in sight when it comes to the opposing stances between the federal government and an increasing number of states on the issue of marijuana legalization. And that leaves many in the multifamily industry to try and navigate a maze of conflicting laws regarding pot-related property matters.
Apartment owners and managers must all tread carefully when it comes to marijuana use on their properties, as rules and regulations continue to evolve. The District of Columbia and 22 states have legalized marijuana for medicinal purposes, with the most recent being Minnesota this past May. In addition, six other states passed legislation from March through May of this year, paving the way for certain medical patients to legally use cannabis extracts.
Colorado and Washington have gone a step further and legalized marijuana for recreational use as well. Other states are looking to do the same, with many citing the potential to generate millions of dollars in tax revenue annually.
Despite the increasing acceptance by states, the U.S. Drug Enforcement Administration (DEA) continues to list marijuana as a Schedule 1 substance. This classification, which includes heroin, cocaine, methamphetamines and LSD, carries the toughest criminal drug penalties and recognizes no medical use. And the federal government does not seem likely to de-list pot anytime soon, with the DEA chief of operations James L. Capra recently calling the decriminalization of marijuana at the state level “reckless and irresponsible.”
A Protected Class?
Given the current incongruity when it comes to marijuana legislation, those in the multifamily industry are faced with the dilemma of how to comply with contradictory obligations regarding tenant rights and other housing-related matters in an increasing number of states where marijuana has been legalized.
This difficult position is typified by the differing protections that medical marijuana tenants are offered under federal and state laws.
Present drug use is not a protected class for purposes of the federal Fair Housing Act, as set forth in United States v. Southern Management Corp. (1992). This case discussed a 1988 amendment to the Fair Housing Act that defines handicap as “a physical or mental impairment which substantially limits one or more of such person's major life activities, a record of having such an impairment, or being regarded as having such an impairment, but such term does not include current, illegal use of or addiction to a controlled substance.”
Though landlords who refuse to rent to medical marijuana patients may be in the right according to the federal Fair Housing Act, they may find themselves in violation of anti-discriminatory laws on the state level.
In California, for example, the Unruh Civil Rights Act “provides protection from discrimination by all business establishments in California, including housing and public accommodations,” according to the California Department of Fair Housing & Employment. The Unruh Civil Rights Act states that, “all persons within the jurisdiction of this state are free and equal, and no matter what their sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, or sexual orientation are entitled to the full and equal accommodations, advantages, facilities, privileges, or services in all business establishments of every kind whatsoever.”
Thus, it is crucial that apartment owners and managers thoroughly investigate fair housing and civil rights laws in the states where their properties are located.
HUD and State Housing Authorities
For landlords who receive federal housing subsidies, the medical marijuana maze is arguably even more difficult to navigate.
In Colorado, a tenant recently challenged a local housing authority's zero tolerance policy regarding both medical and recreational marijuana–and won. The agency had decided to terminate the tenant's housing assistance after realizing she is a medical marijuana patient. Her lawyer met with representation for the U.S. Department of Housing and Urban Development (HUD), who reiterated an earlier stance that HUD would leave the decision to take away a medical marijuana user's housing benefits up to local housing authorities (despite its position that it can not allow disabled clients to use medical marijuana). The tenant's lawyer then met with the local housing authority, which amended its policy so that marijuana-related tenant issues will now be reviewed on a case-by-case basis.
The deep divide between how federal and state governments are handling the issue of marijuana has caused significant challenges for many in the multifamily industry, as they have been put in a particularly vulnerable position. Thus, apartment managers, owners-operators and developers all need to be as informed as possible about fair housing implications, tenant disputes and other matters related to current marijuana legislation in their areas. Doing so may help prevent any potential legal ramifications down the road.
Marijuana Law Do's and Don'ts
- Carefully research the specifics of marijuana-related laws and prior cases in your state to ensure you are following proper protocol.
- Investigate how renting to users of legalized marijuana may affect your loan compliance obligations.
- Review both federal and state laws to ensure your leases are in compliance.
- Consider asking tenants who are medical marijuana smokers if it would be possible for them to take it in a different form, such as edibles or tinctures.
- Recognize that you have potential fair housing obligations to tenants who may be affected by smoke.
- Review any smoke-free policies to see what effect they have on medical marijuana users.Don't:
- Ask a potential tenant if he or she is a medical marijuana smoker, as doing so may violate privacy rights and HIPPA laws.
- Assume that medical marijuana users are a protected class for purposes of the Fair Housing laws. Controlled substance users (i.e. marijuana smokers) are actually excluded from protection (see United States v. Southern Management Corp.).
- Refuse to make reasonable accommodations for any disabled tenants being affected by smoke.
Morgan Stewart is a partner with Manly, Stewart & Finaldi, an Irvine, Calif.-based law firm that specializes in real estate. He devotes his practice to advising national multifamily and commercial real estate clients on legal issues including construction litigation, insurance bad faith, general corporate formation issues, contract negotiation and development, and personal injury.