As you may already know, Massachusetts voted to legalize recreational marijuana usage. We provided some helpful information on what residential landlords should know about legalized marijuana in a recent blog post. From a commercial landlord’s perspective, the situation is a bit more complicated. Why? Although some states have legalized marijuana, it is still  illegal at the Federal level. This created a complicated situation for commercial landlords. Here’s what you should know about federal vs. MA laws on marijuana and landlord risks.

Federal Laws on Marijuana

Marijuana is illegal under federal law. Although individual states, like Massachusetts, have voted to legalize medicinal or recreational use of marijuana, where federal and state laws conflict, federal laws take precedence. Federal law states that, “It shall be unlawful for any person knowingly or intentionally (1) to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute, or dispense, a controlled substance; or (2) to create, distribute, or dispense, or possess with intent to distribute or dispense, a counterfeit substance.”

Massachusetts Laws on Marijuana

Under Massachusetts law, adults over age 21 now have the legal right to possess a certain amount of marijuana, to smoke it in private, and to grow up to 6 plants per adult (or 12 per household). Additionally, MA law St.2017, c.55 (H3818) gives cities and towns the ability to control marijuana businesses and allows them to implement a special excise tax of up to 3% on top of the 10.75% excise tax levied by the commonwealth. The regular sales tax of 6.25% also applies to marijuana sales.

Federal vs. MA Laws on Marijuana and Landlord Risks

Here’s where things get complicated. Although marijuana use and sales may be legal in Massachusetts, it is still illegal at the federal level. Since federal law supercedes state law, one could get prosecuted for violating federal law. As a landlord, you may think that all of this doesn’t relate to you, but there could be severe consequences for renting your property to a business or person that intends to sell marijuana. Federal dictates that it is “unlawful to (1) knowingly open, lease, rent, use, or maintain any place, whether permanently or temporarily, for the purpose of manufacturing, distributing, or using any controlled substance; (2) manage or control any place, whether permanently or temporarily, either as an owner, lessee, agent, employee, occupant, or mortgagee, and knowingly and intentionally rent, lease, profit from, or make available for use, with or without compensation, the place for the purpose of unlawfully manufacturing, storing, distributing, or using a controlled substance.”

The penalty for violating this law is a fine of up to $500,000 and/or up to 20 years in prison. Additionally, the property in question could be subject to forfeiture. Yes, that’s right, the government can actually seize your property! This should be enough to scare any landlord!

U.S. vs. Janetski

Your first thought may be, what’s the likelihood that the federal government would go after a landlord? Although rare, there was a case where this did occur. In U.S. vs. Janetski, a commercial landlord leased a property to a medical marijuana business. He was found guilty of violating federal law, even though it was legal in his state. He was sentenced to one year in prison, fined $100, and given an additional three years’ of supervised release.

What Commercial Landlords in Massachusetts Should Know

As a commercial landlord in Massachusetts, it is extremely important that you seek legal advice when considering a lease with a business involved in the marijuana industry. In fact, you should have an attorney review all commercial leases since you may inadvertently lease to a marijuana-related business. You may want to have specific language in all leases to protect yourself from liability. Until federal laws change, the conflict between federal vs. MA laws on marijuana should be something that you are aware of and protect yourself against.