Cannabis and Rental Properties: How to Create a Marijuana-Friendly Rental Property
The move to legalize the possession or use of cannabis is gaining more ground worldwide especially in the United States. Eleven states in the US, Washington D.C., and two other territories have approved cannabis for recreational use.
At the federal level, it is still frowned upon and that is why if you own a property, you have to understand the laws governing cannabis at all levels of government: Federal, State and Municipal. It is possible that your rental property is situated in a states in the US that violating cannabis laws of the state. You can consult local legal experts where necessary as you won’t be able to hide under the canopy of ignorance if the law comes calling.
Knowing about the laws on cannabis possession or use
To accommodate a tenants desire to grow cannabis in your rental property will first dependent on whether it is allowed in the region your house is situated but also what the quantity limits are. For example, in the state of Colorado where it is legalized to an extent, legislation passed restricted medical marijuana caregivers who grow plants on behalf of their patients to only 99 plants. During that same period, Denver and some other cities allowed residents not more than 12 plants.
Some other states have their own laws and a thorough understanding of these regulations is necessary for you as a rental property owner. The varying limits can create confusion. According to Marijuana Industry Group executive director, Michael Elliot, “Under the law, you have home growers that look like businesses, with no license, no testing, while there are definitely legitimate ways of growing in your home. Eitherway, it is important to remember it is illegal to sell it to anybody.”
Over the years, there have been many stories of battles between tenants and landlords. Landlords keeping deposits of tenants to pay for damages caused by excessive growing or changing their locks to keep tenants out and keeping the plants for themselves. If the growth of the plant was against the terms of their leases they have a leg to stand on but it can become a difficult battle to win in the courts. Most landlords are generally hesitant to lease their properties to “farmers of the plants” in the first place even when the tenants were willing to pay an extra fee as it just ads risk and complexity to being a renting out their home.
States and territories where cannabis is legal
- Recreational and medical purposes: Whether marijuana is for recreational or medical purposes, there are places where recreational use is legal. In these places, it is generally accepted to keep an amount that is enough for personal use in your residence (which could include consuming edibles). You only qualify if you are 21 years of age or older. The states are:
- District of Columbia
- Northern Mariana Islands
- Medical purposes only: Other states where only medical marijuana is allowed have some form of patient registration. This provides cover for them against arrest for possession of a certain amount of cannabis for medical use personally. The states include:
- New Hampshire
- New Mexico
- New Jersey
- North Dakota
- Puerto Rico
- Rhode Island
- Virgin Islands
- West Virginia
New York is also in this category. However, the state has put an extra measure in place by decriminalizing the possession of marijuana. You cannot use it recreationally. There is even a monetary fine for possession. These states often change their stance on cannabis and therefore it is important to constantly check these laws.
Understanding the laws of the state and acting accordingly while creating marijuana-friendly leases to the farmers has its advantages. First of all, you can increase your rental fee to offset the extra risk, damage and headache overall. Tenants wanting to grow marijuana in their place are aware that getting leasing to do so is not easy and unusual. Typically these tenants are are quiet and do not cause issues since they often want to stay off the radar of law enforcement. Some landlords have attested to the fact that marijuana growers are usually the best clients they have had. This doesn’t mean there are no exceptions though. To make sure you are leasing to those that will not make you regret your decisions, you can hire a property management company that can help you find the right tenants or maintain the property in general.
Marijuana-friendly property management companies
Housing Guru is an example that gives assurances about the tenants they suggest. They make sure their client who will be your tenant has a verifiable source of income, good references, and great rental property history. Housing Guru also does court checks to search for legal documents against the prospective client, and can also help with immediate replacements of tenants who move out of your apartment. Apart from helping you get the right tenants, this property management company can also help you maintain your property.
Making your property comfortable for the farmer
As a landlord, if you approved your tenants to grow in your rental property, you have to consider things like electricity and water for the indoor growing plants. These costs tend to be significantly elevated due to demand of plant so finding the right compromise for the tenant and your pocket is critical. You may also want to consider remodel your unit to help with their operations. For example, grow rooms for marijuana require ventilation so the walls won’t grow molds. Installation of air conditioning units, fans, and ductworks are other additions that can make the property marijuana-friendly to prospective clients.
While it is costly, it is better for you as the landlord to put these items into the home properly than have a tenant try to make changes to your property with meeting proper code, and potential creating safety issues for the home.
Incorporating your decision in your lease
Engage legal advisers to incorporate the terms into the lease to protection yourself and ensure compliance by your tenants is critical. This can help you maintain control of the property while servicing a niche of potential renters that pay a significant premium to rent.
Most of those in the business of growing cannabis understand that there are regional requirements and laws they need to abide by when growing cannabis for recreational and medicinal purposes. However, you as the landlord need to also understand these laws and ensure your tenants are abiding by them to protect yourself and your property.