Marijuana and the Practice of Real Estate Course SlideDeck

Marijuana and

The Practice of Real

Estate

Marijuana and

The Practice of Real Estate

C-9508

CE Forward, Inc.

S-1655

Jillayne Schlicke

I-0651

THANK YOU:

Mike Lowe

Caliber Home Loans

Victoria Hinson

Old Republic Title

Welcome! Please complete your sign-in sheet

Cell phones and laptops off while class is in session.

I-pads okay

Breaks

Bathrooms

Coffee

Water

Weed

Agenda

IntroductionsBoundariesMedical v. RecreationalWA I-502NMLS Form 17Grow HousesHOAs, Prop Mgmt, TenantsFair HousingBanking, Lending IssuesCase StudiesConsentQuizEvaluationsCertificatesClose

We will cover this in

mostly a linear way but

we may decide to jump

around.

Objectives

Understand the issues related

to WA State medical and legal

marijuana laws when

practicing real estate.

Boundaries

Marijuana and R.E.

Policy

Time

Law

No Marijuana use,distribution, etc.

Section 1: Small Group

Assignment

Introduce yourself to the people in your small

group.

Are you for or against legalized weed and why?

What do you want to learn today?

Section 1: Small Group

Assignment

What do you want to learn today?

Section 2: Federal and State Law

Medical Marijuana:

23 states and D.C.

Limited possession and use:

11 states

Recreational use:

4 states

Colorado, Washington State, D.C., and

Alaska


Marijuana remains a Schedule I

substance under the Controlled

Substances Act.

Q: What are the other Schedule I drugs?


Q: What are the other Schedule I drugs?

Heroin

LSD

Marijuana (cannabis, THC)

Mescaline (peyote)

MDMA (ecstasy)

GHB (date rape drug)

Ecstasy

Psilocybin (mushrooms)

Quaalude

Khat

Bath Salts


Marijuana remains a Schedule I

substance under the Controlled

Substances Act.

Distribution remains a federal offense.

DOJ notice of intent not to prosecute

activities that are legal under state law.

State licensed marijuana businesses,

dispensaries, growers are not (yet)

immune from federal prosecution.


Federal enforcement limited to cases

involving:

Interstate distribution

Large-scale growing or selling

Civil asset forfeiture laws allow Federal

government to seize property allowing

illegal activity….


To date, we have not seen multi-family

property seized if a tenant was using

marijuana.

For real property permitting cultivation:

in 2012 a landlord pled “not guilty” to

“maintaining drug-involved premises.”


Medical Marijuana

Chapter 69.51A

Medical Cannabis.

Written recommendation from a doctor

Register with the state

Obtain a registry ID card

Designated primary caregiver to help

patient cultivate/use cannabis.


Medical Marijuana

Chapter 69.51A

Medical Cannabis.

Each patient:

Possess and use 24 oz of marijuana

Cultivate up to 15 plants

May obtain permission to use/cultivate

more, if medical need is proven.

Primary caregiver doesn’t get to use the

weed


Recreational MarijuanaInitiative 502

Non-medical, recreational use, 21 years +

ONLY Licensed growerscultivate MJ plants and create edible products

ONLY Licensed retailerssell plants and edibles

WA State Liquor Control Board


Recreational MarijuanaInitiative 502

21 years +Possess up to one ounce of marijuana for private use

Public use and possession is still illegal

Non-medical cultivation is still illegal

Under 21? Still illegal

Section 3: Listing and Selling

NWMLS Seller Disclosure Form 17

See number 7 (J)

“Has the property been used as an illegal

drug manufacturing site?”


Seller Disclosure

Small Group Discussion:

How ought a home seller that grows more

than 15 cannabis plants for personal use

answer this question?

What are the possible consequences if a

home seller answers this question

dishonestly…and the real estate broker is

aware of the dishonest answer?


Grow Houses

See Slide Deck


Grow Houses

Purchasing a home that was used to grow

pot can be a nightmare for a home buyer.

Small-scale grow houses could wind up

having widespread mold due to the use of

irrigation and moisture needed for plants.


Grow Houses

Small Group Discussion

Come up with a list of 10 signs of a possible

former marijuana grow house


Grow Houses

10 signs of a possible former marijuana grow

house


Grow Houses10 signs of a possible former marijuana grow house

Unsafe wiringOversized fusingsDamaged fixturesHoles for ventilation and electrical accessWood rotRusted hollow columnsRusted gas burning appliances and damaged ventsMoldDeteriorated chimney mortar from venting to fireplace


Grow Houses

RCW 18.86.030

Duties of a Broker:

“(d) To disclose all existing material facts known

by the broker and not apparent or readily

ascertainable to a party; provided that this

subsection shall not be construed to imply any

duty to investigate matters that the broker has

not agreed to investigate;”


Grow Houses

We are not experts in identifying former illegal

grow houses. However, under what

circumstances would you point out possible

signs of a former illegal grow house to a home

buyer or home seller?

Discuss^ with your small group. Elect a group

leader and share your answer with the rest of

the class.


Home Owner Associations

Rules against smoking.

Residents may want to change those^ rules to

allow smoking recreational marijuana.

Do rules allow cultivation for medical use?


Multi-Family Residential Property

Rules against smoking.

Residents may ask for accommodation to allow

for smoking medical marijuana.

Multi-family property owners/managers may

want to address (in the lease) the issue of

cultivating medical pot due to the significant

electricity, water, and heat required.

Section 4: Property Management

Property Management

May want to consider a disclosure for renters

when the multi-fam, condo, or apartment allows

for marijuana use.

Smoke, odor

High humidity, mold

Explosions from idiots trying to extract the THC

from marijuana plants


Property Management, Multi-Fam, HOAs

Alternatives to smoking

Marijuana can be added to baked foods

THC = delta-9-tetrahydrocannabinol

THC in Edibles

THC in spray form can be vaporized or inhaled

THC in lotions applied topically

Consider policies that would accommodate

these alternatives to smoking


Section 8 Housing

The use of marijuana (even for medical purposes)

is prohibited in federally assisted properties. HUD

states that Public Housing Authorities (PHAs) and

owners of such housing must deny admission to

those with a household member who is illegally

using a federally controlled substance; and may not

provide a reasonable accommodation new

tenants....


Section 8 Housing

…For existing tenants, owners/managers must

establish procedures and lease provisions that

allow the termination of assistance and tenancy for

those engaging in federally illegal behavior. HUD

did state that owners are not compelled to evict

existing tenants, and PHAs may, on a case-by-case

basis, make exceptions for users of medical

marijuana that are existing tenants.


Fair Housing

HUD and the Washington State Human Rights

Commission agree that regarding the use of

medical marijuana, a state law cannot require

what a federal law prohibits. The Federal Fair

Housing Act prohibits the use of illegal drugs

Q: What are our protected classes?

Section 4: WA State Protected

Classes

Fair Housing

Protected Classes

Race

Color

Religion (Creed)

National Origin

Sex

Familial Status

Disability

Fair HousingAdditional Protected

Classes in WA State

Sexual Orientation

Honorably

Discharged Military

Veterans

The Use of a

Service Animal

Section 4: Handount

Fair Housing

WA State Human Rights Commission

Guide to Disability and WA State

Nondiscrimination Laws

Section 5: Banking, Finance,

SARS

Public Safety

Legal marijuana growers and retail business

owners must be able to deposit their legitimate

income into a state or federally chartered bank.


SARS

DOJ

Federal banking regulators defer to DOJ and

FinCEN (Financial Crimes Enforcement Network)

SARS/AML

WA State banks must have…..


SARS

WA State Banks

Policies to accept deposits from legal MJ sales

Customer ID program

File regular SARS reports if suspicious activity.

File SARS routinely as a precautionary measure

but then must file the SARS every single time.


SARSWA State Banks

Is MJ-related tenant in a commercial building where MJ-revenue is paying the commercial loan?Then bank must document this as a due diligence requirement.

Banks are expected to do comprehensive risk assessments of loans where real property is being used to house MJ businesses or secured by MJ-related collateral


SARS

Residential Lending

Source of funds for the purchase of a 1-4 fam

residential home is coming from a licensed, legal

MJ retail or manufacturing business, those funds

must be sourced from bank statements, like any

other source of funds. .


SARS

Residential Lending

IF the home buyer owns a legal marijuana retail

or manufacturing business, income is

documented the same way other self-employed

borrowers document income: 2 years personal

tax returns, 2 years business tax returns plus a

current profit and loss and a balance sheet on the

business.


SARS

Residential Lending

IF the home buyer owns a legal marijuana retail

or manufacturing business, income is

documented the same way other self-employed

borrowers document income: 2 years personal

tax returns, 2 years business tax returns plus a

current profit and loss and a balance sheet on the

business.


SARS

Residential Lending

Red Flag SARS/AML

See pages 5-7 in the Feb 14th FinCEN memo

Banks

Lenders

Mortgage Brokers

Are all required to file SARS

Due to the banking rules, non-traditional sources

of mortgage lending are an option.

Section 6: Case Studies

Mickie Jones

Medical MJ Business Owner

Jo Strummer

Rec MJ Business Owner

Paula Simmonon

Stoner Home Seller

Nicky Topper

Stoner Home Buyer

Section 7: Consent

Small Group Discussion

Have you ever worked with a real estate client who

was intoxicated on alcohol when you arrived to obtain

signatures on documents? How did you handle it?

How do you know your client is or is not high while

signing documents?

Is there a WA State law or rule that speaks to this

issue?

How have you handled client drug or alcohol issues in

the past?

Section 7: Consent

Consent:

RCW 19.86

Before acting as a dual agent and before

accepting compensation from more than one

person.

Disclosure

Must disclose conflicts of interest…etc.

General Obligations of Professional

Competence and Negligence….

Section 7: Consent

General Obligations of Professional Competence and Negligence

A real estate broker has a duty to exercise reasonable skill and care.

If a broker knowing the client was drunk/high and likely not in a position to make the best decision possible, asked the client to sign anyway, the broker MAY be liable, based on a claim of negligence.

-one attorney’s opinion. -each firm should consider extending policies/procedures surrounding alcohol to marijuana.

Section 8: Quiz

Rules:

1) Jillayne’s quizzes are always only for fun

2) True/False = 50% chance of being right!

3) Small group quiz = Legal cheating! Patriots

Quiz!

4) Open book = Answers might be in the

handouts

5) But they also might not be in the handouts so

guessing is cool!

Recap, Certificates, Evals, Close

Rules:

Any remaining questions?

Will upload questions, answers and links to the

website CEForward.com

Please do not lose your certificates

THANK YOU Victoria/ORTC and Mike/Caliber

Evals: Please write a narrative description

about your experience in class

Date post:	16-Jul-2015
Category:	Real Estate
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