STATE MEDICAL MARIJUANA BUSINESS FLYING HIGH

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Oklahoma cannabis market saturated; security is an issue.

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  • Southwest Ledger photo by Debi DeSilver        Red Dirt Green Dispensary, located at 2118 W. Lindsey St., in Norman, is nestled in among other businesses in a packed business district. A marijuana flag flies on a windy Oklahoma day, alerting potential customers of the medical marijuana location.
  • Marijuana in Southwest Oklahoma
  • Southwest Ledger photo by Debi DeSilver       A side industry has grown right along with the medical marijuana dispensary businesses: the marijuana leaf can be found on almost anything in the stores.
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OKLAHOMA CITY – Our state ranks No. 1 in the United States in its percentage of medical marijuana patients per capita, and No. 3 nationally in the number of medical marijuana patients.

The state Health Department approved medical marijuana licenses for 183,795 Oklahomans as of Sept. 9, agency spokesman Tony Sellars said. From June 26, 2018, when Oklahomans voted to allow medical marijuana, the industry had grown to 7,581 licensed dispensaries, growers and processors as of Sept. 11, state records show. Tax receipts from medical marijuana produced $27.6 million for the state treasury in the first 11 months (October 2018 – August 2019) from the 4.5% state sales tax and the 7% medical marijuana tax, ledgers reflect.

The average price in Oklahoma for medical marijuana is $319.80 per ounce, just 30 cents less than the national average of $320.10, Dr. David Chapman reported. Because of the amount of revenue generated by the medical marijuana industry, security has become a major issue, Chapman said. He mentioned one dispensary that has been robbed three times.

MJ ‘HERE TO STAY AND GROWING’

The industry “is here to stay and it’s going to grow,” said Chapman, an associate professor at the University of Central Oklahoma who teaches real estate management and investment and is a member of the Oklahoma Real Estate Commission. State Question 788, authorizing medical marijuana, was endorsed by Oklahoma voters on June 26, 2018, and went into effect on Aug. 30, 2018. Employing a little humor to launch his presentation Wednesday on “Unintended Consequences of Marijuana Laws,” Chapman showed off his socks, which had designs of marijuana leaves sewn into them, and he brought two plates of brownies (neither laced with marijuana, however).

LEGAL STATUS OF MJ UNCERTAIN

The legal status of the industry is uncertain, Chapman related. To date, 33 states have legalized marijuana for medical or recreational use. Also, the U.S. Department of Justice under former President Obama issued a guidance memo indicating it would largely “turn a blind eye” to the marijuana issue, Chapman said, but President Trump’s DOJ has revoked that memorandum. Cannabis is illegal at the federal level.

Anyone who has a mortgage on a piece of property has to comply with federal law, Chapman said; so, does any landlord who receives public subsidies for property, such as historic or low-income housing tax credits or Section 8 housing. If so, he said, “You are most likely required to comply” with state and federal laws alike “as a condition of receiving those subsidies.”

Use of marijuana on such property “could result in an allegation of civil or criminal fraud,” Chapman said. And the risk extends to property managers and other agents acting on the owners’ behalf, he cautioned. Insurance companies generally will not cover property damage that’s caused by illegal activities, Chapman said. And because marijuana is classified as a Schedule I drug, the cannabis industry has been closed off from access to financial services, forcing them to operate mostly in cash. Only a fraction of the banks in the U.S. are willing to work with cannabis companies, and anyone transacting business with large sums of cash is typically suspected of dealing in drugs and can expect to be questioned about the money’s source.

The U.S. House of Representatives on Wednesday passed H.R. 1595, the SAFE (Secure and Fair Enforcement) Banking Act, by a vote of 321-103. The legislation would create a safe harbor from federal sanctions for banks that serve cannabis-related businesses in states, such as Oklahoma, where those businesses are legal. Congresswoman Kendra Horn, D-Oklahoma City, co-sponsored the bipartisan measure.

EMPLOYERS SHOULD TREAD LIGHTLY

Employers in Oklahoma need to tread gingerly when coping with issues arising from medical marijuana. House Bill 2612, which the state Legislature passed earlier this year, created the Oklahoma Medical Marijuana and Patient Protection Act. One of its sections decrees that municipal and county governing bodies “may not enact medical marijuana guidelines which restrict or interfere with the rights of a licensed patient or caregiver to possess, purchase, cultivate or transport medical marijuana within the legal limits set forth in this act” or in Title 63 of the Oklahoma Statutes “or require patients or caregivers to obtain permits or licenses in addition to the state-required licenses...”

That provision is similar to the Legislature’s state preemption of regulation of oil and gas exploration/production, limitations on carrying firearms, and on regulation of mobile telephone use while driving a motor vehicle. Municipalities and counties may not impose restrictions on where a medical marijuana dispensary may choose to locate, Chapman said. HB 2612 also bans employers from penalizing job applicants who are medical marijuana cardholders and test positive for the presence of marijuana.

Prior to legalization of medical marijuana, an employee could be disciplined or fired, and a driver could be arrested solely because of the presence of marijuana in his/her bloodstream. Now, though, the threshold is intoxication. Exceptions are allowed for workers who are employed in “safety-sensitive” jobs such as forklift operators and truck drivers. “This will be a litigious issue,” Chapman predicted. “Just about everybody in real estate is affected by the new law,” said Chapman, founder of a realty company. His presentation was part of a commercial real estate “summit”.

LANDLORDS CAN BAN MJ SMOKING

Property owners must establish clear policies about smoking – marijuana as well as cigarettes, cigars, and pipes – in and around their premises. Landlords previously had to cope with damage to their rental property saturated with the aroma from cigarettes, Chapman noted. Because of public health campaigns and widespread anti-smoking laws, that issue has largely subsided. “Now it’s neighbors complaining about marijuana smoke.” Smoke from marijuana “joints” might be considered a nuisance to other tenants and could expose a landlord or property manager to complaints “or worse: claims that secondhand smoke caused adverse health conditions among the property’s other residents,” Chapman said.

House Bill 2612 addresses that subject. “If you have a smoke-free facility, marijuana users are not exempt,” Chapman said. “Nothing in this act” or in the Oklahoma Statutes “shall prohibit a residential or commercial property or business owner” from banning the consumption of medical marijuana or medical marijuana product “by smoke or vaporization on the premises, within the structures of the premises or within 10 feet of the entryway to the premises,” the new law decrees.

In addition, “All smokable, vaporized, vapable and e-cigarette medical marijuana products inhaled through vaporization or smoked by a medical marijuana licensee are subject to the same restrictions for tobacco” outlined in the statutes as the “Smoking in Public Places and Indoor Workplaces Act”. Most states allow landlords and property managers to ban smoking on the premises “so long as consumption is allowed in other forms,” such as a vaporizer, edibles or oils, Chapman said.

EVICTION CLAUSE ADVISABLE

Property owners/managers “may have legitimate reasons” to forbid cultivation of marijuana on their premises, he said. Cultivation often requires high volumes of electricity and water – one marijuana plant consumes six gallons of water daily, he said – and the plants need a lot of moisture, which can be harmful to a building. State law allows a maximum of six marijuana plants to be cultivated on residential property, Chapman said.

Some owners have found their property “stigmatized” if it has been occupied by a marijuana company, he said. If asked, an owner/manager must disclose to a prospective buyer or tenant whether the property was used for a marijuana operation, “just like they would if it had been a meth lab.” Chapman recommended that property owners/managers incorporate an immediate-eviction clause in their contracts with marijuana dispensaries, growers and processors, as a precaution in the event the federal government starts cracking down on cannabis companies.

WHAT HAPPENS WHEN MARKET CONTRACTS?

The Oklahoma cannabis market is saturated, but nobody has any idea when the exuberance of novelty will be exhausted, and equilibrium will be established. “What will we do with these properties when they begin to fail?” one Realtor wondered aloud.

AT A GLANCE: Medical Marijuana

• State Question 788, authorizing medical marijuana, was endorsed by Oklahoma voters on June 26, 2018, and went into effect on Aug. 30, 2018.

• On March 14, 2019, Oklahoma Gov. Kevin Stitt (R) signed a “unity” medical cannabis bill, HB 2612, into law. HB 2612 revised the state’s voter-enacted medical cannabis program.

• To date, 33 states have legalized marijuana for medical or recreational use.

• Cannabis is illegal at the federal level.

• Anyone who has a mortgage on a piece of property has to comply with federal law.

• Because marijuana is classified as a Schedule I drug, the cannabis industry has been closed off from access to financial services, forcing them to operate mostly in cash.

• Landlords can ban marijuana smoking.

• Oklahoma became the quickest state in the nation to fully implement an effective medical cannabis law, according to the Marijuana Policy Project, and is one of the largest in the nation.