Missouri votes to legalize medical marijuana, passing Amendment 2

So last night, Missouri voters officially approved the use of medical marijuana with a landslide passage of amendment 2. This puts a 4% tax on medical marijuana and is estimated to generate nearly 24 Million dollars for the state of Missouri. The revenue would first support the regulation of the program and any leftover would go to help Missouri Veterans. Missouri is the 32nd state to legalize medical marijuana.

All of that sounds good, right?

Well as I was watching the coverage last night, and then watching the online response f83dc70de823e825902c8876cc77aac4_XLonline I noticed a lot of Real Estate professionals expressing excitement for the passage of amendment 2. It got me thinking about a course I recently took about marijuana and Real Estate.

At the federal level, marijuana remains classified as a Schedule I substance under the Controlled Substances Act, where Schedule I substances are considered to have a high potential for dependency and no accepted medical use, making distribution of marijuana a federal offense. Now the intent of this blog is not to spawn off an argument or discussion about the potential of dependency. The intent here is to identify a massive issue for real estate agents, developers, and people who either work or intent to work with dispensaries.

Before I go any further, I’m not an attorney. None of what you read here should be used as me advising you on the legality of working in or around the marijuana industry.

Civil asset forfeiture
This is one of the biggest issues that business owners need to watch out for. Especially if you own a shopping center or a building where a dispensary wants to set up shop. If you Civil-asset-forfeitureown an industrial property where marijuana could be grown or you’re a landlord who is renting a home or a building where someone who uses or grows marijuana, you likely and should have a legitimate fear of civil asset forfeiture. If you’re unfamiliar with CAF, that’s where the federal government seizes your property if it’s used to conduct illegal activity (that was known or should have been known to the owner), or was purchased with the proceeds of an illegal activity.

Since marijuana is illegal under federal law, property owners may forbid the growing or use of marijuana, just to steer clear of the possibility they’d lose their property because of it.

Harder for marijuana-related businesses to get mortgages
Banks are backed by the federal government, and because marijuana is illegal on a federal level, many lenders have no interest in approving a mortgage for someone interested in starting up some sort of marijuana-related business. I should say that it’s not that they may not want to, they can literally have their doors closed by making loans for businesses that sell marijuana.

Taxes
There are two things in life that are certain. Death and taxes, right? A business that sells marijuana is not exempt from paying taxes….federal taxes. So imagine how that goes over when a business owner lets the federal government know that they’ve made their money by selling a schedule 1 substance. If you’re not sure what happens, scroll back up to the civil asset forfeiture section of this blog.

Real Estate Agents aren’t exempt from this either. When you as an agent help someone who buys a property or manages a property that has these types of places in them are at risk of losing their real estate license, because you guessed it……You can be found guilty at the federal level because you knowingly leased a place to a tenant who was running an illegal (at the federal level) operation. To make matters worse, you would also face discipline according to your state’s statutes and administrative rules regulating your real estate license, which require you to abide by state and federal law.

So whatever your situation is around medical marijuana, this is very new territory for the United States and the state of Missouri. If you’re looking for getting into the dispensary business, or if you’re an agent who is interested in helping business owners find a place to open their dispensary business. You need to be very careful, and you should most definitely consult an attorney.

Questions, Thoughts, Comments or Concerns?
Let me know in the comment section below!

 

3 Comments

    1. Couple parts of this answer. First, the federal government is nothing but red tape and any change at the federal level takes an absolute eternity unless they need to change something as a result of a natural or man made disaster. That said, because public support for marijuana legalization is increasing, the DEA’s classification of marijuana as a Schedule 1 substance is changing at the federal level. I think that we will see the following happen. Sooner than later….
      1. More consumers will replace alcohol with marijuana (binge drinking in states with recreational
      marijuana laws is on the decline).
      2. The study of marijuana will enter the educational system, including its therapeutic uses.
      3. Traditional industries (brewers, pharmacies, agriculture) will embrace cannabis.
      4. The use of microdosing (low-doses that allow consumers to stay elevated but functional) will
      increase.
      5. Cannabis agriculture will become more technological.
      6. Congress will have to further consider nationwide legalization due to state pressure and monetary
      benefits.

      I also think that because we live in a Capitalist society, that’s going to further influence federal turn over of Marijuana laws. Capitalism is all about profiting from unmet needs. When marijuana became legal in many states, and it was obvious that there was money to be made, savvy investors saw the void: These businesses would need money, and the banks weren’t interested. So other sources of funding may come from places like. Private investors, venture capitalists, cannabis-specific funds and hedge funds, or other investment funds (these often provide equity financing, taking an ownership interest) hard-money lenders, who base their loans on collateral and are less concerned with the
      borrower’s ability to pay (these tend to be short-term [one to five years] with much higher interest rates and fees than would be found with a traditional lender). The other thing that is really starting to emerge in Marijuana despencery financing is Blockchain using things like Bitcoin currency.

      Thanks for the question!

      Like

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