Hey, Dude! Don’t let your real estate career go up in smoke.

From Cannabis Culture on Flickr
From Cannabis Culture on Flickr

July 8th, 2014

In 2013, Washington State passed Initiative 502 which legalized marijuana the possession of marijuana for adults age 21 and older. The only marijuana that would be legal to sell in this state would be grown by specially-licensed Washington farmers and sold in standalone, marijuana-only stores operated by private Washington businesses licensed and regulated by the state.

Today a number of new marijuana stores opened up in the state of Washington and with them, an unlimited number of questions and concerns.

What does this law mean to real estate professionals and Realtors who wish to help someone buy or lease a growing farm or retail space for selling marijuana? Growing, distributing and selling marijuana is still a federal crime. It is still a state crime, but with a few new exceptions. How can a Realtor protect themselves in assisting those clients who are looking for properties to grow or sell pot?

According to Washington Association of Realtors attorney Attorney Annie Fitzsimmons, if a clients seeks to purchase or lease a property for these 502 activities, even if legal in Washington state, it still violates federal law and the Federal Government has broad authority to seize the real estate used in a commission of a crime that violates the Controlled Substances Act.

A Realtor should always refer a client to an attorney in a situation such as this, but be aware that there are few attorneys who will represent your clients as lawyers are prohibited in assisting clients in the commission of a crime.

In addition, 502 businesses are prohibited from opening bank accounts, so most transactions will have to be done in cash. 502 businesses will be unable to get bank financing, nor open an account with the proceeds of their business. This will make any receipt of earnest money awkward and unsafe, to say the least. Landlords will be unable to legally deposit their rent checks they receive, in their own bank accounts without violating money-laundering laws.

If you know that a client of yours has made money selling marijuana, and you know he is using some of that money to purchase a house, even if it’s a home that will be lived in and not related to drug sales, you and he may be accused of money laundering, may be subject to prosecution and he may lose the home and you could go to jail.

If a landlord rents a storefront to a marijuana dispensary or other type of 502 business, the landlords underlying bank loan could be called, at the mortgage holder’s option, as these properties could possibly be seized by the Federal Government in violation of the Controlled Substances Act. Insurance for this type of business is also difficult, which could also threaten the landlords and the mortgage holders interest.

For more details about this new legislation and what it means to Washington State Realtors, check out Annie Fitzsimmons article in Washington Realtors Magazine.

Marijuana-related Businesses Pose High Risks For Landlords

Family faces prison for pot farm

Legalized marijuana and the real estate finance dilemma

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