Red-Handed Without a Defense: Limiting the Risk of Real Property Forfeiture When Leasing to Lawful Marijuana Tenants

Abstract

The distribution and sale of marijuana is a federal crime; however, in 2009, the United States Deputy Attorney General issued a guidance memorandum that led many to believe otherwise. The memorandum, discussed in Part IV of this Article, stated that federal enforcement of state-level and other otherwise legal production, distribution, and sale of marijuana would become low priority. Many misread the Memo as a green light to begin large-scale marijuana production, failing to realize that state and local laws permitting marijuana activity would not be a defense to federal prosecution. Indeed, property owners who lease to marijuana-related businesses not only continue to be subject to penalties under the CSA, but also run the risk of subjecting their leased property — be it a retail storefront, industrial space, or arable land — to civil forfeiture.This Article discusses the problem faced by property owners wishing to lease premises to growers, processors, and sellers of marijuana in states that have adopted marijuana provisions and established regulatory frameworks. In these states, marijuana provisions do not alter the respective state’s landlord-tenant statutes, despite the various property-related requirements marijuana businesses must adhere to for licensure to operate. Licensing requirements in states with regulatory frameworks in place have lured marijuana-related businesses from the shadows, leaving property owners unable to meet the requirements of any statutory or common law defense to civil forfeiture. Part II of this Article discusses the history of civil forfeiture, focusing on the origin of the guilty property model and its introduction to America. Part III will introduce modern civil forfeiture statutes, their legislative history, and rationalize the government’s use of civil proceedings over criminal proceedings before explaining the forfeiture process. Part IV briefly narrates marijuana’s long history of legality in the United States before discussing its controlling federal statutes. Part V of this Article reveals the possible consequences of leasing property to marijuana-related businesses; the focus then turns to the unavailability of suitable defenses for real property owners who lease to LMTs. Part VI briefly describes the inadequacies of boilerplate provisions currently in standard lease agreements and suggests respective lease modifications property owners should be prepared to discuss with counsel and negotiate with prospective LMTs. Lastly, this Article concludes by reminding property owners that despite marijuana prohibition’s significant progress over the last few years, it could all be undone when the next president takes office in 2017.