The New York Marijuana Regulation and Taxation Act (“MRTA”) will no doubt have direct and indirect impacts on all New Yorkers. Direct impacts include the issuance of licenses for entrepreneurs looking to open adult use cannabis businesses such as cultivation, distribution, processing, and retail businesses, and job creation associated therewith. Indirect impacts include tax revenue to the state and local governments. The purpose of this article is to identify some of the issues that coop and condo boards will need to consider now that adult use of cannabis is legal in New York.
Can a New York Condo/Coop or HOA ban Marijuana entirely from the property?
In 2014 the New York State Legislature enacted, and Governor Cuomo signed into law, the Compassionate Care Act, legalizing medical marijuana. The MRTA expands upon the Compassionate Care Act by allowing all adults over the age of 21 (not just sick people) to possess and use certain quantities of marijuana. Even though nineteen (19) states have legalized “recreational” or “adult use” marijuana, cannabis is still listed as a controlled substance under federal law.
Condominium and Coop Boards may be faced with difficult decisions regarding whether and how much to regulate the possession and use of cannabis on the premises. An outright ban may run afoul of the Compassionate Care Act and other state and local laws. Marijuana use by residents suffering from severe, debilitating or life threatening condition may not involve smoking – the medical marijuana may be consumed in liquid or other smokeless form.
Before considering any outright ban, a Condominium or Coop Board would be wise to consult with an attorney experienced in cannabis law.
Will Unit Owners Be Able to Grow Marijuana in their Unit or in Common Areas or Limited Common Areas?
Under the MRTA personal use and cultivation of limited qualities of marijuana is permitted by adults over the age of 21. This does not mean that a Condominium must allow residents to grow cannabis in a common garden accessible to all residents including minors under the age of 21.
Condominium or Coop Board would be wise to consult with an attorney experienced in cannabis law to determine how the Board may regulate the cultivation and possession of cannabis.
Will Unit Owners Be able to Smoke Marijuana in their Unit or in Common Areas or Limited Common Areas?
Many Condominiums and Coops have rules and regulations governing smoking. Smoking may be limited to certain areas of the property. The rules and regulations may be designed to protect residents from second-hand smoke inhalation.
If a condominium is considering allowing adult use of cannabis in certain areas, the Board should consult with an attorney experienced in cannabis law to determine how the Board may impose restrictions on such activities.
Do the Declaration, By-Laws and/or Rules and Regulations need to be updated due to MRTA?
As a starting point, a Condominium and Coop Board should review its current rules and regulations to determine what if anything needs to change in light of the MRTA. If changes are desirable, the next logical question is what procedure is necessary in order to make those changes? What percentage of Unit owners must approve the change? The Board may wish to call an open meeting and listen to the residents’ concerns before considering whether to make changes and if so, what types of changes to the existing regulatory scheme. Changes to the rules and regulations could impact the value, marketability and ability to finance the units.
Can/Should the Condo or Coop lease commercial units to cannabis businesses?
In urban areas many mixed use buildings have retail units on the ground floor. Boards need to decide whether certain businesses are desirable for the building. Some boards may be amenable to an accounting firm that specializes in the cannabis business but not a cannabis dispensary. Other Boards may be amenable to a cannabis dispensary similar to a liquor store but not cannabis consumption lounge. The criteria and rational by which the Board makes its decision will most likely be protected by the business judgment rule in New York, which gives Boards a fair amount of discretion. However, it is important to keep in mind that many cannabis businesses may be minority owned and a Board should be careful to make decisions based on permissible criteria so as not to run afoul of state and federal laws. Best practices would be for Boards to have written policies regarding the types of uses that are prohibited in the building, and consistently enforce those policies.
Does the Board have any recourse if a Unit owner’s cannabis use is causing a nuisance?
Most Condominium or Coop documents will allow a Board to evict a unit owner if that unit owner is violating the rules and causing a nuisance to other unit owners. Noxious odors may be considered such a nuisance. Before taking such drastic action, a Board should have a clear procedure e.g. sending cease and desist letters and giving the unit owner the opportunity to bring their unit into compliance and put an end to the nuisance. If the Condominium or Coop does not have a clear nuisance policy or the procedures to enforce that policy are not clear, then the Board should consult an experienced attorney about amending the documents.
Based on the foregoing, the MRTA may raise difficult questions in the context of community living. Boards will need to carefully consider whether their current documents are sufficient, or whether they need updating. Boards may also be faced with philosophical/cultural decisions as far as how restrictive the Board wishes to be vis a vis cannabis and those restrictions may impact the value, marketability and ability to finance the units. Just as the debate in the municipal government setting has been divisive over whether to opt out of retail cannabis shops, we expect there to be a debate within homeowner associations. If a Board wishes to be proactive, the Board can poll the unit owners about their questions and concerns. While New York may not have much legal precedent for the regulation of cannabis, New York is the fifteenth state to legalize adult use marijuana, and therefore, we can look for guidance in other states. In addition, while cannabis legalization may be a new concept in New York, associations have been regulating substances like alcohol and tobacco for many years.
We stand ready to assist any condominiums or coop boards who wish to consider whether their documents need updating.
For questions about condominium law or cannabis law in New York or general information about our firm, please contact us at (914) 338-8050 or send an e-mail to email@example.com. We look forward to hearing from you.
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