Marijuana Tenants Update – March 2018

In October, 2015, Incline Law Group published a blog about how the state laws regarding medical marijuana, along with the issuance of the Cole Memo, impacted landlord tenant law.  The article compared the dynamics between the California and Nevada State Laws with that of the Federal Government along with the Federal Government’s ability to prosecute those who violate the federal marijuana laws.

Since that time, both California and Nevada have legalized recreational marijuana.  However, the federal government still considers marijuana to be a Schedule 1 drug, making it illegal for both medical and recreational users.  Former Deputy Attorney General James Cole released the “Cole Memo” in August 2013, which provided guidance to federal prosecutors with regard to marijuana prosecution.  The Cole Memo essentially directed federal prosecutors not to prosecute certain uses of marijuana if the use did not violate the local state law, which has allowed the industry to blossom.  The Cole Memo also provided landlords who rented to tenants that were involved in the marijuana business a sense of security so long as the landlord and tenant complied with local laws.

In January, 2018, current Attorney General Jeff Sessions, announced the withdrawal of the Cole Memo.  As previously mentioned, the federal government has the right to seize property used in the cultivation, manufacturing or selling of cannabis.  This can include real property where the owner is merely a landlord who does not participate in the cannabis business.  Under the guidance of the Cole Memo, this risk had been significantly reduced.  Now, due to the withdrawal of the Cole Memo, it is expected that prosecution of all marijuana related crimes, whether or not legal under state law, will increase.  This means that any landlord who has a tenant in the marijuana industry, or even a recreational user who is growing their own plants for private use, again risks prosecution under federal law, including, but not limited to the government seizing the landlord’s property.

While the Cole Memo was not legally binding, it provided many landlords with enough confidence that they would not be prosecuted for renting to those in the marijuana industry.  However, all leases must now be revisited based on the withdrawal of the Cole Memo or landlords could be subject to criminal penalties.

If you have questions about your lease and what your legal risks may be, please contact our office.

(Published March 2018)