Smaller landlords might gain from state marijuana laws

It’s possible that small landlords will receive an unexpected benefit in states with laws that legalize recreational marijuana.

That’s because properties with loans or mortgages from federally chartered banks are prohibited from renting to marijuana dispensaries due to the ban on marijuana production, sale and use under federal law.

However, small landlords who own their properties outright or work exclusively with local, state-chartered banks will be able to rent to these businesses.

Overall, small landlords have fewer internal and external regulations to manage. They also stand to make good money off these deals because dispensaries tend to pay market or even above-market rent. Still there are technical matters associated with the relevant regulations. If you’re considering renting to a cannabis dispensary, check with a real estate attorney about the rules and regulations in your state.

One of the latest state laws to pass was in New York. The new law there leaves it up in the air how many licenses to sell marijuana will be allowed.

It’s not expected that any marijuana stores will open there until at least 2022. But when they do, it is likely to infuse dollars into the economy, including small landlords who rent out space for retail shops.