Do Colorado Marijuana Laws Put You at Risk?

If the movement to legalize recreational and medical marijuana has done anything, it’s affected real estate and rental prices.

Forbes Magazine published an article in November of 2016 entitled “Marijuana Legalization is Really a Real Estate Story” and there is no doubt that it is true. The article reports that between 2011 and 2015, warehouse vacancy rates dropped by almost 4%!

This has been good for some real estate investors, but what about those who hold properties other than warehouses? How have marijuana laws affected owners of commercial office buildings and residential homes?

It’s important to keep several things in mind when thinking about marijuana and real estate in Colorado Springs.

Changing Federal Perspective

Don’t forget that the federal government still classifies marijuana as an illegal drug.

The Obama administration chose not to enforce federal marijuana law, which created an environment in which marijuana related businesses could grow without concern about being shut down by federal agents. That has changed with the Trump administration and it is uncertain what will happen next.

As a property owner, this could cause you a lot of trouble. If your tenants are involved in a drug bust, you could find yourself faced with damage to your property and possibly to your reputation.

Local Laws Affect Your Property Too

El Paso County has not been as friendly to marijuana businesses as Denver and some other regions in the state. The county’s laws prohibit commercial marijuana facilities within its borders. []

Property managers make a point of keeping up with the changing state and local laws to make sure your property is in compliance. We also want to make sure your tenants are in compliance.

Potential Problems with Allowing Marijuana on Your Property

Blue Mountain Real Estate includes in its lease that tenants cannot grow or use marijuana on the property. Why? Because the federal laws don’t only affect commercial marijuana businesses and cause high profile drug busts. We also have problems with personal use and growth.

For example, your lender is very interested in following all federal, state and local laws. You may run into a problem if your residential or commercial lease doesn’t explicitly prohibit illegal activities on the property and those illegal activities include violations of federal law. Your lender may be able to call in the note if you allow marijuana on your property.

Another problem shows up in utility bills. Tenants have been known to modify the electrical and water systems in a building to support the indoor growth of marijuana plants with grow lights and watering systems. Insurance companies are aware that these modifications sometimes cause fires and mold damage. They may not want to work with landlords who allow marijuana on their property.

Blue Mountain Realty Protects Your Investment

Our job is to protect you and your investment from expensive problems. We keep an eye on your property and notice if there are any signs of illegal activity. It may be tempting to capitalize on the growth of marijuana-related businesses in Colorado, but we don’t recommend it at this time.

Contact us and we can help you earn money on your real estate investments without the risks.