Adult-use cannabis is now legal in 15 states, and experts expect New York, New Mexico and Minnesota to be the next ones to make this switch.
Cannabis in general has become more popular and even socially acceptable – one recent poll showed that more than 90% of Americans agree that cannabis should become legal either for adult use or at least medically.
With such a widespread amount of people wanting to partake in their homes and outdoors, property owners and landlords of rental properties may start to wonder if they should address cannabis usage or at least include restrictions against it in lease agreements.
Even in states where cannabis is legal, property managers and landlords are not automatically obligated to allow it on their private property. They can specify this by adding a few sentences into the lease agreement either prohibiting cannabis or permitting it, like they would other substances like tobacco or alcohol.
Property owners could even include a clause stating which usages of cannabis are permitted and which are deal-breakers: perhaps edibles or vaping are fine, but indoor smoking isn’t allowed, since, like tobacco, smell and smoke residue could linger in furnishings, ceiling and walls, as well as increase fire risk.
According to a report from the National Fire Protection Association, between 2012-2016, $476 million of direct property damage had been done due to smoking materials indoors.
Even in a ‘legal’ state, a property owner who doesn’t want consumption on their property could also add additional legal protection with the phrase “It’s understood our state allows cannabis possession and usage but it is still a federally classified Schedule 1 drug, therefore isn’t allowed on these premises.”
In non-legal states it’s much simpler. The landlord doesn’t even need to specifically address cannabis in the lease agreement because all usage would be an illegal activity.
It would be similar to a lease agreement specifically prohibiting cocaine or heroin, rather than a general “avoid all illegal activity and substances” section. If someone needs to get deep into the details, a lease can also specify pharmaceutical drugs for legitimate medical needs but not for other needs.
However, for landlords that want to look ahead to future legal trends, it might be smart to begin including cannabis-specific language in their boilerplate lease templates. This is due to rapid changes in state and national cannabis laws, including possible cannabis-friendly revisions to federal scheduling and legalization.
Including clauses about cannabis in a lease would be beneficial for owners to allow the opportunity to evict a tenant if they are found to be disobeying the rules.
On paper, a tenant found to be possessing or using cannabis in the privacy of their owned or rented home could be potentially in violation of federal laws, as could the property owner. Although it’s likely that investigators would focus more on larger-scale growing or distribution operations in rented homes rather than a tenant with pipe and small personal-use amounts of cannabis.
There are different rules for public and tribal housing, which are both federally-funded programs and must include specific verbiage. But even this could change soon.
On July 14, U.S. Sens. Cory Booker (D-NJ), Chuck Schumer (D-NY) and Ron Wyden (D-OR) released the Cannabis Administration and Opportunity Act, which would decriminalize cannabis federally and also help to expunge certain past cannabis-related crimes.
Congress still hasn’t approved the whole package but experts say versions may be ready for votes as early as 2022.
Renting or leasing property does carry some financial or legal risks by nature, and landlords try to do everything they can to minimize their liability for anything a tenant may do or not do. If problems do occur, a tenant could also try to say the landlord was negligent in not prohibiting cannabis.
Landlords with questions about this topic are encouraged to discuss with a real estate attorney, local landlord association or established rental company.
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