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Though recreational marijuana is now legal in California, this does not mean tenants are free to use it within a rental property. Today we are speaking with Dan Hines, Regional Director with Mynd Property Management for the Sacramento area. Dan is here to discuss what these new laws mean for property owners and tenants, alike.
Steve Rozenberg: Ladies and gentlemen, I am Steve Rozenberg with Mynd Property Management and I am with Mr. Dan Hines, the Regional Director of Sacramento. Dan, thanks for joining me today. Appreciate it.

Dan Hines: Thanks for having me Steve.

Steve Rozenberg: So what I’d like to talk about today is, there’s some new laws that have come into effect within the last year or so and I want to get an idea of the best way for an investor to handle a situation. So recently the state allowed the use of recreational marijuana. So it is now legal to smoke in a property. Now you have basically multiple factors; you have either smokers, regular cigarettes, and now maybe marijuana, vaping and everything else. But how do you handle stopping someone from doing this and what’s the, I know that you can just ban the leasing and stuff, but I’m just curious, how do you handle that? And if I’m an investor, how do I stop someone or how do I handle this situation? Cause it’s kind of an unknown for a lot of people. And I’m guessing this smell and residue is kind of hard to get out if it’s in the property. So I’m curious your opinion on this.

Dan Hines: Yeah, so it’s a great question. You said something interesting that since the law passed it’s now legal smoke on the property and that’s not exactly true. So recreational marijuana is now legal. You can be in possession of it. You’re not breaking the law. But that doesn’t necessarily mean that you can still smoke it within a rental unit. Under some circumstances it doesn’t even mean that you can have it on the property. So what I mean by that is traditionally a lot of leases, even standard public leases will say no smoking and tobacco inside the unit. Well, now you have the recreational marijuana element. So a lot of the language in leases is being updated to say no smoking of any substance is allowed inside the unit.

And that’s the sort of broad overarching of any substance whatsoever. And then from there if the resident is still going to do it, even if they say that it’s for medicinal reasons or things like that, when they move out, the property has to be in the same condition it was when their lease started or they’re subject to security deposit charges.

So if they break a rule or if they say, well I have to do this, it helps me feel better. But when they move out, if that smell is still there as a landlord, you’re still able to go after the security deposit and that’s another video and a whole nother, but you do still have some recourse there.

Another point, just make sure you’re very, very clear on what your rental agreement does say, if you’re using a really old addendum around smoking, make sure that’s updated. And then on a property-wide level, even though recreational marijuana is legal in the state, as a property owner, you do still have some control to where you can prohibit certain things or certain activities on your property. Just a blanket “it’s not allowed”. And I have seen some properties go to a “no cannabis is allowed on the property”, which means cultivation, possession, smoking, just flat out. You can’t have it. If you do have it, it’s a violation of your lease term. And that is afforded legally.

Steve Rozenberg: Yeah, because they could, it could be a grow house. Technically They’re not using it. They’re not smoking it. They’re just growing it. Right. So you have to, that’s interesting. I never thought that you actually have to specify, no, I’m not sure what the term is, creation or horticulture or whatever you do, but you can’t actually manufacture it. Now are you seeing this, is it something that’s popping up on your radar in Sacramento in rental properties and how do you deal with it and what’s the best advice you would give investors when they come across this? How do you handle it?

Dan Hines: Yeah, we have seen it in multifamily properties. We have seen people shortly after it became legal recreationally, there was a little bit of a maybe an overcorrection where residents thought that they can walk around and-

Steve Rozenberg: it’s like the Wild West, right? Anyone can do whatever they want.

Dan Hines: Exactly. And we explained we’re treating this in the same way as we treated in alcohol. Right. You can’t walk through the common area and sit down and drink a beer at two o’clock in the afternoon by the pool. You can’t do that, right? So same set of rules there. We have seen a little bit of an uptick. But again, it goes back to just being super, super clear with what your rent terms, what your lease terms state.

Steve Rozenberg: Let me ask you this. I remember this before, and I don’t remember if this was just a meth lab house or if it was marijuana as well, but didn’t it have to be classified at some point as a hazardous material that had to be extracted from the property? Or is that only when you’re dealing with serious drugs, not just marijuana? Or as marijuana in that if it becomes a grow house, is there something that has to all of the sudden insurance gets involved and other things or is it just when it’s more serious drugs?

Dan Hines: So to the best of my knowledge, and thankfully we’ve never had to deal with a marijuana grow house on that scale. Dealing with controlled substances things like meth houses where you know things are being cooked, that’s a completely different set of protocols, right? I don’t believe that the marijuana situation would do that. But the same, again, disclaimer thankfully we haven’t dealt with something on that scale. I’ll plug another video “How Do You Make Sure You’re Selecting A Good Resident?” Make sure that-

Steve Rozenberg: Absolutely, absolutely. Without a doubt.

Dan Hines: And then the other thing is, when you’re dealing with new sets of laws, things evolve. People try to figure out how to push the envelope. It’s important to know how you deal with situations when you find yourself doing something new. We have in-house legal counsel, we’re always staying up on the latest biggest laws and issues there. I want to touch on one thing from a previous question.

Something that we have seen the uptake in has been people dabbling in small-scale cultivation now that it’s more legal in wide scale. Even then there are certain laws that say how it has to be kept size restrictions. There’s a short list of things that you have to abide by and I would say that’s probably the biggest thing that we’ve seen has been people trying to explore that. But again it goes back to setting a really early expectation with the resident. Here are the lanes, this is what is allowed, this is what’s not allowed. And then just making sure that you’re staying diligent.

Steve Rozenberg: So if I’m hearing you right, it’s really a matter of setting the proper expectations, well-picking the right tenant, which we’ll talk in another video about. You pick the right tenant, you have it in your lease that you don’t just say tobacco, you have to say all substances essentially. And then making sure that you follow the lease.

And, I think from what I heard from you was basically if it goes down that path, basically you need to seek legal counsel to make sure that you are handling it correctly and you’re making sure that you dispose of whatever, depending on how bad it could be, right? If it’s a major grow house or something, you’ve got to make sure that it’s disposed of correctly in the correct manner and any disclosures. But it’s definitely a slippery slope.

And I think because it’s so new, a lot of people are probably, there’s a lot of unknowns I guess. And it’s a matter of people trying to still figure out how to handle it and you know, hopefully it’ll, like you said, “some, you can’t even have it in the property”. I would never have thought that depending on the area and the lease agreement and all that stuff. So it’s not just a very, Hey, now it’s like smoking a cigarette. I can smoke some marijuana. It’s not that simple apparently from what you’re saying. And I think that’s the takeaway is that you have got to think of these things all the way through from A to Z, not just A to G?

Dan Hines: Yeah, planning for it. But then when you deal with it, or when you get hit with a situation, life time, understanding what your recourse is, what are your remedies? Right? So there’s a lot of people that once it became legal. Again going back to that wild West comment they tried to push the envelope some and so most leases will still have house rules and there’s an entire section around resident responsibilities and there’s language in there that refers to things like “quiet enjoyment” and “nuisance”. And just because there’s something that’s illegal doesn’t necessarily mean that you can do it whenever you want on any scale that you want. If it starts creating a problem for another resident if you’re dealing with a multi-communal property. I’ve had situations where someone is taking up a new instrument clarinet or a tuba or something. Who were like “hey, it’s two o’clock in the afternoon, I just want to practice. I’m not breaking any laws”. Yeah, except your neighbor happens to work nights and he can’t sleep and he’s complaining, so now we have a nuisance issue and now we have to try to figure out a way that everyone in the property can co-exist.

Even if you’re dealing with a situation where if recreational marijuana is legal on the property, but there’s, I mean you can’t smoke in the unit. There’s still the nuances of making sure that it’s not creating other problems for the rest of the property.

Steve Rozenberg: Sure. Absolutely. All right, well I appreciate it, Dan. Thank you for your time everyone. I am Steve Rozenberg and this is Dan Hines, Regional Director of Sacramento. Dan, if they want to get ahold of you and maybe talk to you about management services or get a little bit more of your marijuana expertise, how do they do that?

Dan Hines: Go to our website, Mynd.co. M-Y-N-D dot C-O. It’s probably linked down there somewhere.

Steve Rozenberg: Yep.

Dan Hines: There’s a couple of Contact Us pigeons and also through our internal communication system there. It’s easy to get in touch with us.

Steve Rozenberg: All right, great. Well everyone, thanks for watching. This is Steve and Dan and we’ll talk to you guys later. Bye. Bye.
Dan Hines: Thanks.

As the use of recreational marijuana has become legal in California, some tenants may believe they are now free to use or cultivate within a rental property; however, this is not necessarily true. Of course, residents are required to follow these new use and cultivation laws, overall, and it is imperative that property owners and managers do the same.

Smoking cannabis within a rental property—particularly within a multifamily property—can be considered a nuisance. And for properties in which smoking is barred, generally, residents are likely barred from smoking cannabis, as well. It is imperative that tenants follow the stated rules in their lease agreement, particularly if it prohibits the use of cannabis as property owners and managers have the right to ban the smoking of such substances just as they can ban the use of tobacco.