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Marijuana's Impact on Real Estate in Massachusetts
Michael McDonagh, MAR General Counsel | Dec 28, 2016
On November 8th, 2016, Ballot Question #4, which will allow for the recreational use of marijuana, was passed by Massachusetts voters by a fairly wide margin of 54% to 46%. Under the new law, the use of marijuana for recreational purposes will be legal, starting on December 15, 2016. However, the sale of the drug from regulated retail stores will not be permitted until the beginning of 2018. So how will this new law impact real estate? Here are a few considerations to keep in mind, but watch for more information from MAR on this issue in the coming weeks and months.
The first thing to consider is that although legal under state law, marijuana remains a Schedule 1 illegal substance under federal law. Up until this point, the federal government has taken the position that it will not enforce federal law in those states that permit recreational marijuana usage. However, there is no guarantee that they will keep this position in the future as more and more states change their laws to allow for the use of marijuana. How will the legalization of recreational marijuana affect landlord-tenant relationships and the rights of each party?
As written, the law will allow for landlords to prohibit the smoking of marijuana on their property, but owners should be sure to check the language of their lease agreements to make sure the issue is covered. Just as a landlord may prohibit smoking of cigarettes in an apartment, they may also prohibit smoking of marijuana.
How will the new law affect residential transactions? Similar to the laws in Colorado and other states, the law will permit residents to cultivate a certain amount of the drug in their homes for personal use. This could potentially impact the homeowners insurance policy if there is a loss due to issues related to water damage, electrical fires, and mold issues.
When listing a home where cultivation is occurring, it is prudent to have a conversation with the seller prior to any showings or open house. A seller should consider removing or relocating equipment during the listing period.
Finally, the new law provides cities and towns with some ability to regulate or prohibit the sale of marijuana at retail locations within their community. It is likely that additional regulations will be enacted and changes to the law itself may be made by the legislature before 2018. This will hopefully provide some additional time to clarify some of the issues that relate directly to the real estate industry.