A tokin’ tenant issue

Filed under: Contributed Columns | Tags:, , ,

I am going to discuss a topic that I haven’t been that close to since my undergraduate days in Boulder: marijuana.

Not recreational use, but instead, implications arising from the recent increase in the number of clinics set up to dispense medical marijuana.

We have been asked several times recently on behalf of landlords to review proposed leases for dispensaries. Our findings are that this is an area of law that is, well, “hazy,” perhaps enough to make the landlords a bit paranoid.

First, some background:

Colorado passed Amendment 20 in November 2000. The initiative directed the Colorado Department of Public Health and Environment to implement and administer what was to become the Medical Marijuana Registry program.

In March of 2001, the State of Colorado Board of Health adopted rules and regulations for the issuance of identification cards and the creation of a registry of card holders.

While Amendment 20 allows for the qualified individual cultivation and use of marijuana, it does not propose how non-cardholder cultivation and distribution would occur, and this is the source of confusion as well as risk.

An inquiry on Rollitup.org about how to start a dispensary links to a page on state health department’s Web site that states as follows:

“The Colorado Medical Marijuana amendment, statutes and regulations are silent on the issue of dispensaries. While the Registry is aware that a number of such businesses have been established across the state, we do not have a formal relationship with them. Please be aware:

The Registry does not license dispensaries.

The Registry does not have a list of dispensaries.

There are no regulations regarding dispensaries.

The Registry is unable to assist with complaints regarding dispensaries.

The Registry has no information on how to establish/operate a dispensary.

There may be local ordinances that might impact the operation of a dispensary.

Please contact local authorities for specific information.”

If it can be argued that there is a right under the Constitution for the individual on the registry to possess medical marijuana, then persons set up to accommodate that need would be protected, too.

However, that is not specifically spelled out.

Further, what if the dispensary operator sells to individuals not on the registry? None of this activity is protected or exempted under federal law. Although the current Colorado administration has indicated it does not intend to pursue medical marijuana users, federal law provides otherwise, and the feds have closed down some dispensaries.

But how does all this affect landlords?

The U.S. Supreme Court has issued a couple of decisions that pertain to the interplay between state laws that permit the use of medical marijuana and the federal Controlled Substances Act (21 U.S.C. 801).

In U.S. v. Oakland Cannabis Buyers’ Cooperative, 532 U.S. 483 (2001), the Court considered whether a facility that distributed medical marijuana, as permitted under California law, was violating federal law.

The buyer’s cooperative argued that there should be an exception from the Controlled Substances Act for medical necessity. The court held that there is no medical necessity exception to the Controlled Substances Act’s prohibitions on manufacturing and distributing marijuana and that the actions of the buyer’s cooperative in distributing medical marijuana violated federal law.

In Gonzales v. Raich, 545 U.S. 1 (2005), the respondents claimed that the enforcement of the Controlled Substances Act violated the Commerce Clause of the U.S. Constitution to the extent it prevented them from possessing, obtaining or manufacturing marijuana for personal medical use. The Court held that Congress’s Commerce Clause authority includes the power to prohibit local cultivation and use of marijuana.

Finally, pursuant to 21 USC 881, “All real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and appurtenances or improvements, which is used or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of the [Controlled Substances Act] punishable by more than one year in prison” is subject to forfeiture to the United States.

Based on the assumption that growing and distributing medical marijuana violates the Controlled Substances Act, it could be argued (and has been) that any real property on which medical marijuana was grown or distributed would be subject to forfeiture to the U.S. government.

To use a non-legal term, that would be a real buzz-kill.

Kent Karber is a partner with Holland & Hart LLP

One Response to A tokin’ tenant issue

  1. A medical marijuana collective is a group of qualified patients or caregivers who share or are motivated in a common interest. Often the common interest is the production and transfer of medical marijuana amongst the group.

    January 18, 2010 at 5:48 am