Realtors need to keep abreast with new real estate-related laws in order to better serve their clients. At a recent district meeting of the Silicon Valley Association of Realtors, members learned about the new state law regarding the use of cannabis and how it will impact real estate transactions from Jeff Lerman, a partner with Lerman Law Partners, and Sean Kali Rai, founder of the Silicon Valley Cannabis Alliance.
The speakers noted cannabis is a legally complicated area, with no synchronization between city, county and state, thus resulting in an uncertain outcome that has become frustrating for all parties since the federal government prohibits the use of cannabis, and the state says it's now okay. Currently counties and cities are making their own rules regarding use, retail, cultivation and manufacture of the plant.
Lerman walked Realtors through the timeline of federal and state laws regarding cannabis. Cannabis is illegal under the federal Controlled Substances Act. In January, Attorney General Jeff Sessions rescinded the Cole Memo, which adopted a policy of non-interference with marijuana-friendly state laws. In February, Congress voted to renew the Rohrabacher-Blumenauer Amendment, which protects medical marijuana states from federal prosecution.
Adequate disclosure is essential when someone intends to use a property they purchase or lease for the sale, cultivation or manufacture of cannabis, said Lerman. Title/escrow companies currently refuse to insure such properties. Landlords face significant risk when a tenant is engaged in cannabis activity, since the Feds can include property owners in an enforcement action against a cannabis operation.
"Anyone wishing to engage in a cannabis operation should consult an attorney," advised Lerman.
Proposition 64 passed with 57 percent of the public's support, approved by 40 out of 57 counties. Analyzing California voter approval of marijuana, Rai said it is interesting that the yes majority decreased in less urban areas, particularly in counties known for greater law enforcement. San Francisco County, for instance, had the highest approval, at 74.3 percent; Santa Clara County, 58.3 percent; Contra Costa County, 60.7 percent. The more educated, white, wealthy appeared to have less fear of cannabis compared to cities with a greater minority population, even if they were educated and wealthy.
California law allows licensed shops to sell marijuana to anyone age 21 years or older. Doctor recommendations for medical marijuana are no longer needed to make a purchase in these shops; yet, California cities appear ambivalent about cannabis.
The situation is fluid, according Rai. San Mateo and Santa Clara counties are looking at retail licensing. In Mountain View, which had a 68 percent passage, conversations with the community are taking place regarding retail sales.
Los Altos appears to be exploring a marijuana tax, and potentially using that as an impetus to permit limited retail operations. Fifty-eight percent of Los Altos voters approved recreational cannabis.
Rai said with regard to licensing, the best way to proceed is to call the planning department of that particular city and find out about that city's regulations regarding cannabis and necessary disclosures.
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