Renting to Mary Jane

by Guest bloggers Jesi Wolnik, Esq. and Richard Mack, Esq.

The Arizona REALTORS® Legal Hotline receives many calls regarding property management and landlord/tenant issues. One question seems to continue circulating among landlords and property managers because there is no consensus in the courts yet. The question?

Can a landlord prohibit tenants from using medical marijuana in the rental property if the tenant holds a medical marijuana card?

Of course, we all know by now that while the Arizona Medical Marijuana Act (AMMA) has legalized marijuana for medicinal purposes in Arizona, the Federal Controlled Substances Act (CSA) still lists marijuana as a schedule 1 drug and therefore, it remains illegal under federal law.

Currently, there is not an easy answer to this conflict because this area of the law is not fully determined. In this article, we will review two decisions that outline the struggles the courts wrestle with in reconciling the conflict between the AMMA and the Federal CSA.

First, in 2013, when a Scottsdale maintenance man discovered marijuana in a tenants’ apartment, the apartment complex (“Plaintiff”) provided proper notice to the tenants that they were being evicted. The
lease, they argued, contained a provision prohibiting certain conduct on the part of the tenants including: “manufacturing, delivering, possessing with intent to deliver, or otherwise possessing a controlled substance or drug paraphernalia.”

The tenants did not vacate the apartment, so the Plaintiff sued to have them removed from the property. The tenants claimed they could not be evicted and the Plaintiff was in violation of A.R.S. § 36–2813 (A), which states:

    “No school or landlord may refuse to enroll or lease to and may not otherwise penalize a person solely for his status as a cardholder, unless failing to do so would cause the school or landlord to lose a monetary or licensing related benefit under federal law or regulations.”

The Maricopa County Superior Court determined the Plaintiff properly used the “innocent owner” defense, explaining:

    “Upon learning of the marijuana use at the property, the landlord did what was needed to terminate the use of the property for what is still considered to be a federal crime.” WRPV, XI, DH, SCOTTSDALE LLC v. MILTON, Lower Court Case No. CC2013100080.

The landlord prevailed in this case and the eviction was declared proper.

Subsequent to the Maricopa County Superior Court case, a 2017 decision was issued from the Court of Appeals addressing a dispute centering around the legality of a commercial lease between a tenant/dispensary and a landlord. There, the Court of Appeals stated:

    “The AMMA provides protection against arrest and prosecution for qualifying patients…and dispensaries so long as they are in compliance with the AMMA. See A.R.S. § 36-2811. An interpretation that allows a dispensary to lease premises for use compliant with the AMMA, but authorizes the State to prosecute a landlord leasing property to a dispensary compliant with the AMMA…would render the statute futile and violate A.R.S. § 36-2811(E).” – Green Cross Med., Inc. v. Gally (Ariz. App., 2017).

Accordingly, the Court said interpretation of the AMMA as “not providing immunity for landlords would lead to an absurd result and is untenable.” The tenant/dispensary prevailed in this case, and the landlord’s attempt to cancel a contract based on possession of marijuana was not allowed.

So, where do these two court decisions leave landlords and property managers? Unfortunately, there is no clear answer because the lower court decision by the Maricopa County Superior Court does not set precedent, and the Court of Appeals decision centered on commercial property, which involves more sophisticated parties who could have bargained for their rights in their contract.

Additionally, in the Green appellate decision, the landlord signed a lease with a dispensary, clearly knowing the tenant’s intended use for the property.

What we do know is that the AMMA states a landlord cannot reject a tenant simply because they hold a medical marijuana card if in compliance with state law. Further, a landlord likely can prohibit smoking within the residence, if this is a lease term applied to all of the landlord’s properties, and not arbitrarily applied.

Landlords and property managers should recognize that this issue is far from decided as more cases work their way through the courts. Therefore, landlords and property managers should consult with an attorney before attempting to terminate a lease based on marijuana use or growth as there is certainly more to come from the courts on this subject.

We leave you with thoughts from the Ninth Circuit:

    “For now, federal law is blind to the wisdom of a future day when the right to use medical marijuana to alleviate excruciating pain may be deemed fundamental. Although that day has not yet dawned, considering that during the last ten years eleven states have legalized the use of medical marijuana, that day may be upon us sooner than expected. Until that day arrives, federal law does not recognize a fundamental right to use medical marijuana prescribed by a licensed physician to alleviate excruciating pain and human suffering.” – Raich v. Gonzales, 500 F.3d 850, 866 (9th Cir. 2007).

Jesi L. Wolnik, Esq. is an associate and Richard V. Mack, Esq. a partner at Manning & Kass, Ellrod, Ramirez, Trester LLP. This article is of a general nature and reflects only the opinion of the author(s) at the time it was drafted. It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.

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