Legal Marijuana and Real Estate

Oregon's new marijuana laws have created a bit of a legal quagmire, including the real estate industry.  Pre-existing medical marijuana laws and regulations, marijuana legalization for personal use and federal marijuana laws ( as in marijuana is considering a schedule I substance along with heroin) make navigating legal liabilities and disclosure responsibilities a mine field.

Meanwhile, on the ground, we in the Portland real estate market are approached daily by folks wanting to purchase or lease space to open a dispensary or develop a grow operation.  And, in selling, we often come across properties that have pretty obviously been used as grow operations.

First, and important to know: the federal government's RICO laws and classification of marijuana as a schedule I substance, make properties involved in manufacture or distribution, vulnerable to forfeiture. And forfeiture is one of these situations where one must prove innocence, rather the usual standard of innocent until proven guilty. AND, transfer of title, (selling the property) does not remove the risk of forfeiture. Ack!

Properties that have been used as grow operations can have certain types of damage and contamination of which one should be careful.  Excessive watering and humidity can lead to mold, fertilizers and pesticides can have lasting contamination effects and often electrical wiring has been added to and illegally altered.  Whether we are representing buyers or sellers, disclosure and discovery of these issues are important.  Of course when disclosed, does the property become vulnerable to federal forfeiture as mentioned above?

Now, in general, if folks are making efforts to comply with state marijuana regulations, the risk of federal repercussions is low.  But it is important as real estate professionals that we inform our clients of the risks, as a part of their decision making process.

Currently 23 states have some sort of legal marijuana laws and regulations.  Is that close to a tipping point where legislation in the remaining states will happen quickly?  Or will the upcoming presidential election bring a conservative backlash as recently threatened by Donald Trump?

Though I can answer some questions on this topic, Marjorie Elken, with Zupancic Rathbone Law Group, P.C. (who gave a great presentations at our office recently) has focused an amount of her practice on these some of these marijuana issues.