pot plant eggrole's photostream flickr.jpgGovernor Ritter signed H.B. 1284 into law on June 7, 2010, which enacted the Colorado Medical Marijuana Code.  Among a host of other impacts, the Code will likely have the effect of concentrating medical marijuana production, and increasing medical marijuana businesses’ demand for commercial and industrial space to house grow operations and retail dispensaries.  Accordingly, landlords throughout the state are beginning to feel the effects of the law’s new requirements, as a market of new potential tenants emerges. 

This is coming at a time when the retail and industrial market is seeing high vacancy rates, thus making medical marijuana tenants a potentially appealing way for landlords to turn empty space into a rent-producing revenue stream. 

However, much confusion and ambiguity remains surrounding Colorado’s medical marijuana laws.  This is true both with respect to the ever-looming issue that marijuana remains illegal for any purpose under federal law, but also with respect to Colorado’s requirements themselves. 

As described in the Daily Camera, the City of Boulder’s efforts to get medical marijuana businesses within its borders to comply with its regulations is a telling example of the latter problem.    

Landlords dealing with medical marijuana tenants should always keep the federal prohibition on marijuana in mind in deciding whether to enter into leases with such tenants, and in structuring their relationships with such tenants if they do.  Under current Department of Justice policy, federal authorities should not focus their prosecution resources on “individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.”  Unfortunately, given the confusion at the state and local level, it may be some time before anyone knows what “clear and unambiguous compliance” with Colorado’s medical marijuana laws even means.

The ambiguities and confusion suggest that it would be prudent for landlord to be vigilant to ensure that they obtain timely information from their medical marijuana tenants.  Particularly in this field, it is important for landlords to have early notice if problems arise with respect to the licensing or legal status of their tenants.

Photo by eggrole (flickr).

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Photo of Bill Kyriagis Bill Kyriagis

Bill Kyriagis represents real estate and business clients in litigation, land use and bankruptcy matters. Bill’s litigation practice covers a broad spectrum of commercial litigation, though his clients are primarily concentrated in the real estate, development and finance industries. He frequently represents landlords…

Bill Kyriagis represents real estate and business clients in litigation, land use and bankruptcy matters. Bill’s litigation practice covers a broad spectrum of commercial litigation, though his clients are primarily concentrated in the real estate, development and finance industries. He frequently represents landlords in breach of lease and commercial eviction cases, and represents lenders in collection actions, including in U.S. Bankruptcy Court in Colorado. Bill represents real estate developers in land use and development disputes, both public and private, and has handled multiple pieces of litigation centering around the Colorado Common Interest Ownership Act (CCIOA). In the land use context, Bill counsels clients on a variety of local government issues, including posturing land use matters for potential litigation and pursuing claims when necessary.