Smoking policies are just one of the topics landlords will need to consider as a bill legalizing recreational marijuana continues to move through the New Hampshire Legislature.
The New Hampshire House of Representatives voted 209-147 in February in favor of House Bill 481. The bill would allow adults age 21 and older to use marijuana and grow cannabis plants at home. The bill would also legalize retail marijuana shops and other cannabis establishments.
The House Ways and Means Committee approved an amended version of the bill on March 27, and as of this writing, the full House was scheduled to consider the new version on April 4, the final day to move bills to the Senate for the 2019 session.
For the bill’s sponsor, Rep. Renny Cushing, D-Hampton, legalizing marijuana would treat it like other regulated business activities and create a system for licensing, testing and collecting tax revenues.
“In the past year, particularly with the opening of stores in Massachusetts, I think there’s an acceptance in New Hampshire that the days of prohibition of adult-use marijuana are coming to an end,” Cushing said.
Cushing expects support for the bill to grow, but it does not yet have enough votes to override a potential veto. Republican Gov. Chris Sununu has said he opposes legalizing recreational marijuana. Cushing said he was optimistic that Sununu would read and consider the full bill before deciding whether to sign or veto it.
Smoking, Home-Growing Pose Challenges
When Massachusetts legalized recreational marijuana in 2016, tenants thought they could use the drug in their apartments, not realizing a building’s no-smoking policy included marijuana.
“Immediately after passage, we did have an uptick in complaints about the sudden weed smell in units,” said Doug Quattrochi, executive director of trade association MassLandlords.
If recreational marijuana is enacted this year, reinforcing no-smoking policies should be a top priority for landlords, Quattrochi said.
“Communicate with your renters upfront as soon as you know this is going to pass into law and take effect,” he said.
New Hampshire landlords will avoid one issue faced in Massachusetts: what to do about vaping, which does not involve the combustion of marijuana. Massachusetts law did not make clear whether vaping was considered smoking, Quattrochi said. The most recent version of HB 481 allows vaping in rental units even if smoking is not allowed.
The proposed legislation would allow people to grow up to six marijuana plants per adult, with a maximum of 12 plants per household. Landlords would be able to prohibit tenants from growing marijuana in their units.
Quattrochi said MassLandlords does not recommend letting tenants grow plants. Cultivation requires high humidity and substantial electricity, he said, putting landlords at risk for mold and electrical fires.
Because most leases do not reference marijuana plants, MassLandlords provided members with an amendment, similar to one created previously to prohibit orchid and other high humidity growing operations.
A separate bill, HB 364, would allow qualified medical marijuana patients and their caregivers to cultivate plants as well. This bill, which has passed in the House and been assigned to a Senate committee, would also let landlords prohibit growing.
One of the benefits of legalizing recreational marijuana is a larger pool of qualified applicants for rental units, Quattrochi said, because Massachusetts landlords now encounter fewer marijuana convictions during background checks.
“It will help folks – especially perhaps groups that have had a disparate impact, disproportionately arrested, disproportionately stigmatized for possession of weed – it will help those groups apply for and qualify for rental apartments,” he said.
Commercial Landlords Face Bigger Risks
Even if New Hampshire legalizes marijuana, the drug remains illegal on the federal level, something commercial landlords will need to consider when leasing to cannabis businesses.
Kris Krane is the cofounder and president of 4Front Ventures, a consulting firm and multi-state operator of cannabis businesses. He said businesses could be at risk for civil asset forfeitures, though he said this has not happened in recent years to compliant, state-licensed operations.
Most banks have been reluctant to work with cannabis businesses, Krane said, creating issues for landlords who need lenders to approve their tenants. He added that some landlords have refinanced their loans to work with a bank willing to service the cannabis industry.
If New Hampshire does legalize marijuana, some of these concerns could be resolved. The Financial Services Committee in the U.S. House of Representatives on March 28 approved the Secure and Fair Enforcement Banking Act of 2019. The proposed legislation would protect banks that service cannabis businesses.
The current risks associated with these businesses do have a potential benefit, Krane said. Landlords often get premium rates on leases.
“There’s going to be a number of businesses, if it happens, that are looking for properties around the state – for cultivation, for production, for retail,” Krane said. “So, it could be a real nice boon to the real estate industry in New Hampshire should the state go ahead and pass the law.”
But a potential challenge for landlords could come at the municipal level. Zoning laws, which can differ from one community to the next, could restrict which locales are able to lease to cannabis businesses.