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What You Need to Know About Marijuana and Real Estate

It’s all over the news and impossible to ignore: the legalization of marijuana. According to the National Conference of State Legislatures, 23

states and the District of Columbia permit the prescribed medical use of marijuana, 11 states permit limited possession and use, and 3 states permit recreational use. As a real estate professional, be prepared to answer client questions about relocating to these states or how these new laws will affect them.

Read on for a list of the important issues surrounding the new marijuana laws and their impact on the real estate market. Plus, download a guide to home inspection for marijuana grow homes.

Grow Houses

With the law now allowing in-home cultivation of cannabis plants, your buyers may be concerned about an increase of indoor grow houses and how this affects the inspection process. Though indoor growing may sound nonthreatening, it can be a nightmare for a potential buyer. The irrigation systems used on marijuana plants tend to generate humidity and cause water to pool on flat surfaces, which can result in water damage and mold. Effective growing operations often use ultraviolet lighting that draws tremendous amounts of electricity, which can result in hazardous and illegal wiring issues.

Federal Housing

Though states like Colorado may have legalized the recreational use of marijuana, the drug is still illegal on the federal level, and the government has the authority to make arrests if an individual violates federal law. Like most real estate professionals, it’s likely that you will deal with the occasional HUD transaction. Make sure your clients are informed that the consumption of marijuana, on any property built or operated with federal funds or insured by HUD, remains illegal.  According to ColoradoRealtors.com, these policies may be modified depending on the policy changes made by the Obama Administration. Advise your clients to research all applicable laws, permits, and licensing requirements before making an offer to purchase or lease space for marijuana cultivation.

pot grow house checklist


Renting and Marijuana Usage

Clients will want to know if landlords can prevent or restrict tenant marijuana use on a rental property. And in fact, they can. Much like smoking cigarettes, landlords can prohibit legal activities if they so desire. Some may try and make a case for marijuana usage for medical purposes. However, tenants are not protected under the Americans with Disabilities Act in this case because marijuana growing and possession are still considered a crime under federal law. Be sure your clients are aware of their landlord’s rules and regulations concerning marijuana usage.

Growing Marijuana as a Homeowner

While it is unknown how much marijuana is cultivated in private residences in the United States, legal or not, people are actively growing marijuana in every state and territory in the U.S. Clients who express interest in purchasing homes suited for home growing should be directed to their state and local authorities to determine what is legal in their location. The same is true for clients who wish to sell or lease a property where growing has occurred, or leasing property to individuals who wish to grow in the future. The regulations change frequently and vary dramatically from place to place, so keeping your clients up to date on the applicable laws is important.

Download a checklist for home inspections at a marijuana grow house.

Plus, check out our new course, How is the Legalization of Marijuana Affecting the Real Estate Market.