Colorado Landlords and Marijuana

On Nov. 6, 2012, Colorado became one of the first states in the U.S. to permit the recreational use of marijuana. While the full ramifications of this amendment’s impact are still being sorted out, the impact on landlord-tenant relationships in Colorado is clear.

Very little has changed for landlords with regard to how Amendment 64 impacts a landlord’s ability to govern activity on his or her property. Landlords should carefully review their rental criteria, lease documents, and rental/lease policies to make sure they are crystal clear on issues relating to marijuana use, possession, and cultivation. It is wise to have your documents reviewed by a knowledgeable Colorado real estate attorney to ensure your policies are legal and enforceable.

About Colorado’s Amendment 64

Amendment 64 specifically authorizes:

• Colorado residents to legally grow up to six marijuana plants as long as three or fewer of these plants are mature at any given time.
• Coloradans who grow marijuana are allowed to possess the marijuana they’ve produced on the premises where it was grown.
• All marijuana must be grown in an enclosed location, and it cannot be grown publically or sold to the public.
• Property owners may prohibit or otherwise regulate the possession, consumption, use, and growth of marijuana on their property.

Amendment 64 doesn’t change the state’s medical marijuana laws.

Despite the passage of Amendment 64 in Colorado, the fact remains that the cultivation or possession of marijuana is still illegal under federal law, and marijuana is considered a Class 1 Controlled Substance. In the past, the federal government has said it will not aggressively enforce federal marijuana laws in states like Colorado that have legalized pot. However, there is still a risk. If a leased property is used as a commercial grow house, the property remains at risk of being seized by the government.

Marijuana Use on Property

If a landlord or property manager wishes to prohibit marijuana use in his or her rental properties, he or she should incorporate a crime and drug-free lease clause into their lease agreement. Under Colorado law, a landlord may evict a tenant for failing to abide by the drug policy contained in the lease agreement.

Judicial Enforcement

It bears mentioning that some judges in Colorado are reluctant to force the removal of a tenant on the basis of marijuana use if he or she has not had an opportunity to cure – or stop – the offending behavior.

Furthermore, if the acceptance of marijuana use continues to grow in the state, (55 percent of voters voted in favor of Amendment 64), it is likely that a landlord’s anti-marijuana policy may eventually become unenforceable unless the marijuana is causing damage to the property.

Law Enforcement Involvement

Another thing to consider is that police are no longer arresting people for using or possessing marijuana. Therefore, landlords have lost some of the leverage they once had by threatening tenants with calling the police if they are found in possession or using marijuana.

In the following video, Robinson & Henry Managing Partner and Real Estate Attorney Don Eby discusses landlord rights regarding marijuana use on their property.

Prohibiting Marijuana Growth on Property

If you decide to allow marijuana use on your rental property, you can still refuse to allow tenants to grow pot on the property. There are many valid reasons for making this distinction. The hydroponics often used to grow marijuana can produce mold, and the growing operation consumes vast amounts of electricity. While this a big issue where the landlord pays the electric bill, there are other equally important concerns:

• Toxic mold. The process to kill the toxic mold is expensive and likely a cost that a tenant will attempt to force onto the landlord.
• Extensive home damage. There have been many cases where tenants have cut holes in the walls of rental homes to facilitate the ventilation of their grow operation and others who have rerouted the HVAC system to provide this ventilation.
• Fire hazards. The electrical system of many older homes simply cannot handle the power required by a grow house. This may cause a fire hazard, or a tenant may attempt to “improve” the electrical system through self-help.

Structuring a Lease to Deal with Marijuana

Depending upon the approach you want to take dealing with the use or growing of marijuana on your property, you could consider the provisions to include in your lease agreements:

• Prohibit criminal activity. A written provision in a lease prohibiting criminal activity in or on the leased premises will suffice to make marijuana possession a lease violation and can form a basis for eviction.
• Nonsmoking provision. A nonsmoking provision will prohibit the smoking of marijuana on the leased premises and marijuana smoke and odor from emanating from a unit.
• Include a nuisance clause. More broadly, a clause in a lease prohibiting a tenant from disturbing, harassing, annoying neighbors, or creating a nuisance may be sufficient to evict a marijuana-using tenant.
• Prohibit hydroponic cultivation and cultivation of marijuana. A provision prohibiting hydroponic cultivation or any cultivation of marijuana plants makes growing marijuana plants a lease violation and thus allows a landlord to evict for such a violation.

Options for Lease Violations

You should also consider how aggressively you want to pursue lease violations for the use or growth of marijuana. There are two options:

1. Treat marijuana as a standard lease violation. A landlord 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, if he or she violates the agreement a second time then the tenant would no longer have a right to cure and must return possession of the property to the landlord.
2. Notice to Quit for Substantial Violation addendum. A landlord may incorporate into his lease an addendum that sets a very strict policy that grants the landlord a remedy of serving an immediate Notice to Quit for Substantial Violation. With this agreement, a tenant has no right to bring themselves into compliance or “cure” the default giving the landlord the right to evict the tenant for even a single violation.

Establish Your Policy

Landlords have a lot of flexibility in structuring a marijuana policy. Based on federal laws, a landlord may prohibit all marijuana use on his or her property. The landlord may prohibit recreational pot use, citing federal laws, but allow medical marijuana use on a case-by-case basis.

The landlord may allow the use of marijuana but not the growth of marijuana on the leased property citing health hazards and physical limitations of the property. Or, he may open the floodgates and permit both the use and the growth of marijuana on the leased property.

Nothing requires a landlord to have the same policy for recreational and medical marijuana use. However, if a property owner accepts federal subsidies and permits the use of marijuana, he or she could be in danger of losing those subsidies because marijuana remains illegal under federal law.

Know Your Rights: Contact a Knowledgeable Colorado Real Estate Attorney

If you have questions about your rights as a landlord regarding marijuana and how its use or cultivation may be restricted by a lease schedule, contact us at 303-688-0944 to begin your free case assessment.