Landlords and Marijuana: A Guide to Protect Your Rental Properties
All eyes were on Colorado when it became the first U.S. state to legalize marijuana for recreational purposes. In the decade since, signs of the cultural impact have been everywhere. At least one study suggests that marijuana legalization created a Colorado Green Rush of sorts: Between 2014 and 2015, over 100,000 people moved to the state. And with Colorado also having one of the lowest rates of homeownership in the U.S., it’s no wonder landlords want to tighten their belts about marijuana usage on their properties.
Fortunately, federal and state laws in this area are more favorable for landlords than tenants. If you don’t want your tenants using marijuana on your property, it’s within your right to make that a rule. Just be sure to have a Colorado real estate attorney review your rental documents for legality and enforceability.
Bottom Line:
Landlords should review their rental criteria, lease documents, and rental/lease policies for any discrepancies related to marijuana use, possession, and cultivation a tenant could exploit.
In This Guide:
What was the significance of Amendment 64?
What damage can marijuana cause to property?
How do I create a marijuana-free lease policy?
What was the significance of Colorado’s Constitutional Amendment 64?
Marijuana became legal to harvest and cure for recreational usage in 2012. It also became legal to operate state-licensed retail businesses that sell the product in 2014. This is all thanks to Amendment 64, a citizen-led ballot measure the majority of Colorado voters supported.
A Brief History of Marijuana Legislation Being Problematic For Landlords
Colorado’s marijuana laws let residents:
Grow up to six marijuana plants, with no more than three flowering at one time.
Store marijuana on the property where it was grown, as long as it’s locked away.
Keep up to one ounce that’s been purchased by a state-licensed retail business where they live, as long as it’s concealed.
Colo. Const. Art. XVIII, Section 16(3)(b)(d)
More specifically, Amendment 64 says you can grow marijuana plants, so long as:
“[T]he growing takes place in an enclosed, locked space, is not conducted openly or publicly, and is not made available for sale.” Colo. Const. Art. XVIII, Section 16(3)(b)
Note: The laws around recreational use of cannabis do not apply to the state’s medical marijuana laws.
Tenants Falsely Interpret Amendment 64
This is problematic for landlords – commercial or residential. Cases have worked their way through the courts where Colorado tenants have interpreted this provision to mean that growing marijuana indoors is fair game.
Well, as they’ve learned, it’s not. The Marijuana Enforcement Division (MED), overseen by Colorado’s Department of Revenue, has clear rules based on Amendment 64 language that gives property owners the opt-out option.
Per MED Rules: “[R]ental property owners have the right to ban the possession and use of marijuana products on their properties.”
Federal Laws Still Matter
The fact of the matter is that the cultivation or possession of marijuana is still illegal under federal law. 21 USCS § 844 Marijuana is considered a Class 1 Controlled Substance if the plant/any part of the plant has more than .03 percent tetrahydrocannabinol (THC). 21 U.S.C. § 812, 7 USCS § 1639o
Even though there is a general perception that the federal government’s approach to marijuana enforcement has softened – particularly in states where marijuana is legal – federal laws still matter.
Don’t Underestimate the Damage Marijuana Can Cause
People who regularly use marijuana are quick to claim little risk or harm, especially when compared to drugs like methamphetamine. However, tenants who aren’t careful can cause substantial structural damage to your property. Let’s take a look at some of the common structural and cosmetic problems caused by cannabis.
Stubborn Odors and Structural Damage
Worst case scenario, marijuana leaves your rental property up in smoke from a reckless user. But it can also cause costly problems that can be a nightmare to fix.
Growing and using cannabis can cause your rental property to reek of the plant’s pungent odor. And its effects can spread beyond the walls of the home. I’ll discuss a case below where this occurred.
Water Damage, Mold, and Electrical Problems
Colorado law says people can have marijuana plants, so long as “the growing takes place in an enclosed, locked space, is not conducted openly or publicly, and is not made available for sale.” Colo. Const. Art. XVIII, Section 16(3)(b) Some people interested in growing marijuana could interpret this to mean they can carry out their DIY operation in their rented apartment, condo, or house – causing major damage.
Cannabis is a fussy plant that requires specific conditions that tend to consume high levels of electrical power and water. Grow rooms are kept at a temperature that’s a little more than just balmy, and at certain points, high-powered lights are left on for extended periods of time. This creates the perfect conditions for moisture, condensation, and mold to spread throughout a residence and cause:
Rotting floors
Drywall damage
Excessive mold
Jerry-rigged wiring, plumbing, and ventilation can lead to costly repairs.
As a 2016 Drug Enforcement Administration (DEA) Intelligence report notes:
“Growers often cut holes in floors and exterior walls in order to install ventilation tubes. Growers often tamper with electrical systems in order to supply multiple high-power grow lights and industrial air-conditioning units. These alterations are often done by tenant growers with little regard for fire risk or the home’s structural integrity.”
“Altered electrical systems with loose and entangled wires, flammable fertilizers and chemicals, explosive materials such as propane and butane, or holes cut into subfloors for venting all pose clear hazards to firefighters or police officers responding to the residence in an emergency situation.”
Consider how courts outside Colorado have ruled on cases where tenants have turned their rentals into cannabis nurseries.
Case 1: A Not-So-Victimless Crime
In State v. Coe, a Washington trial court ordered tenant Stanley Coe to pay his landlord $38,322 for the damage he caused to the rental property as a result of his cannabis grow operation. Coe, who called his marijuana grow operation a “victimless” crime, appealed. He claimed the trial court did not find a sufficient causal connection between the grow operation and the damage.
The appeals court disagreed with Coe. It held there was a sufficient causal connection:
“Here, there was substantial evidence before the trial court showing that the growing operation caused severe mold, mildew, and dry-rot, and that Coe made several unauthorized alterations to the house’s electrical and ventilation systems to facilitate the manufacture of marijuana.” Judge Elaine M. Houghton, Washington Court of Appeals, Division II
The appeals court held that the trial court’s restitution order was appropriate.
Case 2: Grow Operation Makes Historic Home Uninhabitable
In State v. Hoseman, the Wisconsin landlords of an 1885 Victorian home found the historic property to be unihabitable after tenants used it for a grow operation. Damage included:
“[H]igh humidity, which encouraged mold and mildew damage to the walls, fixtures, wood, and curtains. The huge barrels of chemicals needed for the operation ruined wood floors, carpeting, and an antique rug … THC resin saturated many surfaces … Draining acidic chemicals into the toilets and sinks created stains; the toilets were also stopped up with plant material.”
Similar to State v. Coe, the Wisconsin landlords were awarded restitution. But the tenant, Michael S. Hoseman, appealed. Hoseman argued his landlords were not victims and therefore were not entitled to restitution.
The appeals court disagreed. The court held that the landlords, “were ‘direct victims’ of Hoseman’s participation in a conspiracy for the manufacture of marijuana and ‘there is a causal connection between all of Hoseman’s activities and the damage to the…residence.” Judge Daniel P. Anderson, Wisconsin Court of Appeals, District II
The appeals court affirmed the lower court’s restitution order.
Lower Property Values
While these may seem like extreme cases, your property could see similar issues from recreational users. And it could affect your property’s value and end up costing you more to fix the property than it’s currently worth.
Let’s take a look at such a case in Garfield County, Colorado, where a marijuana growing operation became a nuisance not just for the landlord, but for the neighbors, too.
Case 3: Strong Smell Negatively Impacts Property Value
In 2018, a landlord and a neighbor of the rental property took the tenant to court over what was discovered to be an improperly zoned marijuana enterprise. The tenant was growing marijuana in a residential property for commercial purposes.
In Murr v. Selvage, several people testified about the “overwhelming smell” emanating from the house. One such witness was in the real estate business, and noted that she found the marijuana smell “to be powerful enough to have a negative impact on the value of the property.” In the end, the court granted the plaintiffs’ motion for a preliminary injunction against the renter.
Risk to Federal Subsidies
In the past, the federal government has said it won’t aggressively enforce federal marijuana laws in states that have legalized pot. However, there is still a risk when dealing with tenants and marijuana.
Consider that if you accept federal subsidies while leasing to a tenant who uses marijuana on the premises, you risk losing those subsidies because marijuana remains illegal under federal law.
On the flip side, you may prohibit recreational pot use, citing federal laws, but allow medical marijuana use on a case-by-case basis. You have a lot of flexibility about how you go about structuring your marijuana policy.
Structuring a Lease to Deal With Marijuana
Granted you give the tenant proper notice a Colorado landlord can lawfully pursue eviction actions if the tenant fails to comply with certain lease provisions. Let’s take a look at a recent Colorado case that proves why:
Case 4: District Court in Boulder Rules Against Landlord
In 2020, the Boulder District Court heard arguments in a case involving a landlord-tenant dispute over a cannabis nursery on the property. At issue in Romolt v. Covalent Collective was whether or not it was legal for the tenant to operate the nursery.
The court affirmed that because regulated marijuana activities are lawful in Colorado, there weren’t grounds to continue the case. According to the district court, the tenant’s operation didn’t involve any fraudulent business dealings under the Colorado Organized Crime Act (COCCA) and the landlord didn’t have grounds to break the lease agreement.
This is why, now more than ever, it’s important to structure your lease agreements to include clauses that can protect your property from unwanted marijuana-related activities. Let’s take a look at some crime and drug-free clauses that you might consider including in your lease agreement.
Prohibit Criminal Activity
Due to federal law, a written provision in a lease prohibiting criminal activity in or on the leased premises may suffice to make marijuana possession a lease violation and can form a basis for eviction. However, best practice is to also include a specific prohibition of Marijuana on the Property.
Nonsmoking Provision
A non-smoking provision that specifically bans tobacco and cigarette smoking should curtail the smoking of marijuana on the leased premises and prevent marijuana smoke and odor from emanating from a unit.
Nuisance Clause
More broadly, a clause prohibiting a tenant from disturbing, harassing, annoying, or creating a nuisance for neighbors may be sufficient to evict a marijuana-using tenant.
Prohibit Marijuana Cultivation
You may be able to evict a tenant growing weed if you have a provision prohibiting any kind of cultivation of marijuana plants.
Handling Marijuana Lease Violations
You’ll want to consider how aggressively you will pursue lease violations. You have a couple of options:
1. Standard Violation
You may incorporate a less restrictive addendum and treat marijuana use, possession, or cultivation as a lease violation. Under this type of addendum, a tenant has a right to bring themselves into compliance with the policy and “cure” the violation without being evicted.
However, you only need to give tenants a right to cure one time without being evicted. If the tenant violates the agreement again, they have to return possession of the property.
2. Substantial Violation
It’s your prerogative to set a very strict marijuana policy that grants you a remedy for serving an immediate Notice To Terminate Tenancy for Substantial Violation.
With this agreement, the tenant does not get a second chance. Thus, even a single violation gives you grounds to evict. However, some judges may be hesitant to consider this a Substantial Violation since it is legal under Colorado law.
Colorado Supreme Court Gives Tenants More Legal Protections
In recent years, the Colorado legislature has passed a series of amendments that make evicting bad tenants harder.
The Colorado Supreme Court has put the onus on landlords to prove that a tenant violated a crime and drug-free lease clause in order to evict. In short, you need to be able to prove it.
As of 2024, it’s unlawful under the Colorado Fair Housing Act for a landlord to refuse to rent to someone who is part of a protected class. This means that a drug policy violation related to a tenant’s protected class, such as a disability, could make it harder for you to evict.
Create a Solid Marijuana Policy in Your Rental Agreement
If you have questions about your rights as a landlord regarding marijuana and how to lawfully include a crime and drug-free provision in your lease agreement, give us a call at 303-688-0944 to begin a case assessment.
