Who Will Rent Out Their Storefront to a Pot Business?
Landlords May Have to Incriminate Themselves
Any entrepreneur who wants to open a pot business in Washington State will start with a fairly straightforward application process: submit fingerprints, disclose criminal history, share an operating plan that names financial backers, and promise that taxes are paid up. But then the draft rules issued by the Washington State Liquor Control Board last month list this unusual requirement: "a signed affidavit from the landlord acknowledging the leased premises will be used as a marijuana business."
This last demand could be a problem if implemented by the liquor board. Critics say it amounts to landlords incriminating themselves, the sort of obstacle that could hamper many retail-pot business plans.
Seattle attorney Kurt Boehl, who specializes in defending marijuana cases, says that federal drug-forfeiture laws provide what is called an "innocent owner defense." Any property used to facilitate a drug crime can be seized, but federal law allows a landlord to plead ignorance as an "affirmative defense" to such charges. "Unless they are partners, they are an innocent owner," Boehl says.
But sign an affidavit saying you are fully aware of the federal law violations occurring on your leased property, and the story is different. "Requiring this would eliminate that defense completely," Boehl says.
I spoke to a Seattle landlord, Pat—he asked that we use a fake name to protect his anonymity—who is interested in renting to legal pot businesses. Proposed zoning rules from the City of Seattle and regulations in Initiative 502 will make his property among the relatively few locations where pot shops can legally open, so he considers the possible profit worth the risk. But Pat has never heard of a landlord signing such an affidavit, and he hopes the liquor board will modify that requirement. "With the city shrinking the number of places that people can run these businesses, I'm expecting the property value of these types of places to go up."
Boehl says federal prosecutors haven't pursued landlords who were not "directly involved in the illegal activity." Still, he suggests risk-averse landlords avoid attesting to federal law violations. "Arguably, it could make them complicit or a coconspirator in a federal Uniform Controlled Substances Act violation."
Anonymous landlord Pat agrees: "This is not for the faint of heart."