Landlords Prepare for Recreational Marijuana Legalization

by | Jul 16, 2018 | Rental Property Management Tips

It’s official: recreational marijuana is coming to Canada October 17th.

What that means for landlords remains unclear.

The federal government has given the provincial governments the task of deciding how recreational marijuana will be regulated within the federal framework.

Landlords face many concerns with that framework, especially the provision that allows for home cultivation of up to four large marijuana plants. Smoking and growing marijuana in rental properties could increase landlord liabilities and costs, including:

A spike in utility costs;
Higher costs for restoring units that smell or have water damage;
An increased risk of fire from grow lights or electrical modifications;
Property damage due to humidity, mold, and water;
Potentially higher insurance premiums;
More tenant complaints and disputes over secondhand smoke or smells;
The potential for more police visits;
Illnesses associated with secondhand smoke;
Higher likelihood of crime including burglaries; and
Liability if young people are exposed to marijuana at the property.

In short, landlords are concerned that the new law will negatively impact the profitability of their rental investments. The move comes as most major cities are experiencing drastically low vacancy rates and renters are struggling to find affordable housing options.

Proponents of legalization suggest that condoning marijuana is an amenity that will attract like-minded renters to a property. These proponents fail to recognize the reality that landlords must offer housing to a broad spectrum of renters — including tenants with respiratory disabilities and those with young children — who don’t want to be exposed to the risks.

Step One: Join Forces

As provincial governments consider regulations on the use and cultivation of marijuana, local landlord associations have been instrumental in voicing landlord concerns and carving out exceptions for rental property owners.

At the same time, these associations have been rallying to educate landlords about the changes and what can be done to minimize risks and income loss. A great example is the Alberta Residential Landlord Association which recently held a seminar and enlisted the assistance of a prominent law firm to discuss and draft a sample Marijuana Lease Addendum for landlords in the province.

Will your province allow landlords to ban marijuana smoking or cultivation in a rental property? If you are in the dark, joining your local landlord association is key to staying ahead of the changes and minimizing income loss.

The Marijuana Lease Addendum

It appears that most landlords, or at least those with multifamily properties, may be allowed to restrict recreational marijuana use and cultivation. Many provinces — Alberta, Saskatchewan, Quebec, Manitoba, Nova Scotia, British Columbia and Ontario — are planning to provide exceptions where landlords may be allowed to limit smoking and cultivation of marijuana in the tenancy agreement.

Some provinces, like Quebec and Nova Scotia, are expressly allowing landlords to modify existing leases, while in other provinces, including British Columbia and Ontario, the rules for existing leases are still in process. This is particularly confusing for BC landlords because the province recently invalidated fixed-term lease clauses. That could mean landlords there would have little leverage over current tenants who refuse to sign a Marijuana Lease Addendum.

While a lease addendum may be the answer to avoiding risks associated with marijuana use in rentals, it is crucial to work with an attorney or local landlord association to develop the specific addendum language and hammer out the logistics of incorporating the addendum into the lease.

Alberta Residential Landlord Association published sample language for a Marijuana Lease Addendum on its website. Note that this language covers both smoking and cultivation of marijuana and ties the tenant’s actions to specific consequences. Alberta landlords are encouraged to join the ARLA and obtain a formal Marijuana Lease Addendum drafted by attorneys. Other landlords need to keep in mind that and addendum must be tailored to the specific rules of each province, so landlords outside Alberta should consult with an attorney or explore the benefits of joining their own local landlord association.

Smoke-Free Properties

Landlords who have implemented a smoking ban already may have the power to restrict recreational marijuana in the rental property. Thanks to provincial restrictions, marijuana smoking may be banned wherever cigarette smoking is prohibited. Speak to a local attorney to discuss the specific provisions in the existing tenancy agreement and whether that lease language should be modified.

Review Existing Leases

Landlords will need to review existing tenancy agreements in light of the new law. Although the language of an existing lease may prohibit the possession of drugs, it may no longer apply to marijuana. Likewise, general provisions regarding crime at the property may not prohibit smoking or cultivation of marijuana. It’s also important to note that medical marijuana may not be covered by the new regulations.

Because these issues will vary from lease to lease and from province to province, there are no universal answers. Landlords will need to consult with their local association or an attorney to determine their individual rights and responsibilities. Time is of the essence, and landlords are well-advised to step up now, before the next long-term tenant takes possession.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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