What you need to know about medical marijuana tenants

Thinking about leasing your commercial property to a Medical Marijuana business in Illinois? There are many issues to consider. Although the prospect of leasing commercial space to a new segment of tenants may seem appealing, there are several pitfalls and unknowns that landlords must protect themselves against. While it is difficult to determine how the implementation of Illinois’ Compassionate Use of Medical Cannabis Pilot Program Act (410 ILCS 130) will play out, it is best to analyze what legal actions have happened in other states and the federal government’s stance on medical marijuana. California in 1996 became the first state to allow medical marijuana, and set the framework. Since then, California has taken further steps to essentially “decriminalize” marijuana use. However, the federal Controlled Substances Act still lists marijuana as a controlled substance. In 2009, the Justice Department issued a memorandum to U.S. attorneys regarding the federal government’s stance on prosecuting users and distributors of medical marijuana. The crux of the memo states federal resources shouldn’t be focused “on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.” However, U.S. attorneys in California in 2012 began prosecuting landlords for violations under the federal Controlled Substances Act. In these instances, the federal government has targeted landlords and sought forfeiture of the landlords’ property. Thus, the U.S. government avoided appearing to criminalize the ill, and made landlords the scapegoats. Now, the pendulum appears to be swinging back toward owners/operators/landlords to legally run medical marijuana enterprises. On May 30, 2014, the U.S. House voted to prevent the use of government funds to be used to prosecute medical marijuana enterprises in states where it is legal. The U.S. Senate has moved the issue forward by proposing that funds allocated to the Justice Department may not be used to prevent states, such as Illinois, from implementing their own laws that “authorize the use, distribution, possession, or cultivation of medical marijuana.” Still, there are unclear issues associated with the Americans with Disabilities Act, fair housing laws and other federal laws which may be in direct conflict with a state’s medical marijuana laws. Would the landlord be liable for knowingly allowing marijuana use on the premises? Is it the landlord’s responsibility to know if a tenant is legally/illegally consuming/dispensing/cultivating marijuana? Until these conflicting laws become clear, it is best for the landlords to protect themselves by not using “canned” leases. Make sure any clauses state evictions may be initiated for violation of ANY law. Commercial landlords should demand full disclosure of marijuana use/enterprise and indemnify themselves against any legal actions taken by any form of government. As this is an evolving area of the law, it is imperative to consult with an attorney to draft a specific lease for this tenant. “Molly” Mary Anne Phelan Real Estate & Property Tax Attorney Kearney & Phelan, Ltd.