No matter what side of the argument you are on, it may pay to know that there are still huge risks involved in anything to do with marijuana. Even though a majority of voters in Washington State passed an initiative that legalized marijuana, it is still a federal crime to grow, manufacture, distribute or possess marijuana. Recent statements by the US Attorney General make it clear that they intend to enforce federal laws concerning marijuana. So what does this topic have to do with real estate? A real estate broker who knowingly assists a buyer to purchase, or a landlord to lease property for the growing, manufacturing, distributing or selling marijuana is potentially subject to federal prosecution.
Even though locating a marijuana business in Washington State is permitted by state law, that activity will necessarily violate federal law. The federal government has authority to seize real estate used in the commission of a crime that violates the Controlled Substance Act and the current administration seems to be living up to their word.
What if a landlord rented their property to a grower or distributor only to have their rental property seized by the feds who have now decided to prosecute violators? Another scary scenario might be in the case of someone who has sold property to such a buyer on owner finance terms. The risk may be too great if you sell property to someone who is now growing or distributing marijuana. Whether you knew of their intended use of the property or not, the government would have the legal right to seize the property. Total loss of your real estate asset may be the outcome of this scenario.
So how could you protect your asset from someone who may put the collateral at risk in such a manner? Consulting with an attorney who may be able to draft some legal protection prior to any owner-financed-sale would be the logical first step if you are willing to take the risk of owner financing. This may include a restriction that prohibits the sale or growing of marijuana as long as a balance is owed on the contract. The buyer’s agent who represents a grower or distributor should also consult with an attorney before proceeding with their help in a purchase. Lawyers are still nervous about engaging in such tasks because of the Rules of Professional Conduct that prohibit them from assisting a client in the commission of a crime.