Concerns over Oklahoma pot law continue to emerge

The Oklahoman Editorial Board on August 26, 2018

ALMOST daily, it seems, another layer of the medical marijuana onion is peeled away and exposes a concern related to the law approved by a wide margin in June by Oklahoma voters.

Initially, complaints stemmed from the emergency implementation rules approved by the state Board of Health. Grousing about that process has continued, and a legislative working group is meeting weekly to try to come up with a final plan for implementation.

Meantime, real estate experts comprise the latest group trying to figure out how the law will impact them. Their concerns stem from the fact marijuana remains an illegal drug at the federal level — and federal regulations play a significant role in commercial real estate.

The Oklahoman's real estate editor, Richard Mize, wrote about the 2018 Affordable Housing Conference last week in Oklahoma City, where attorney Chris Cotner said the one absolute is that “the possession, consumption, use or sale of cannabis is illegal at the federal level, OK? That's it.”

Cotner, with The Bethany Law Center LLP, said he might be able to provide someone advice on how to follow Oklahoma's law, but the drug remains illegal in the eyes of the feds “and there are certain consequences.”

David Chapman, a professor of real estate at the University of Central Oklahoma, noted that title insurance is unavailable for buildings that house marijuana-related businesses. Commercial real estate attorney Chris Griswold said title companies don't want to underwrite property that could be put in jeopardy by federal law enforcement.

Chapman, who is a property investor and manager, said federal law and concerns about safety have property and casualty carriers reluctant to insure marijuana-based businesses. The latter, he said, are related to an increase in fires and contamination from accidents during processing in states where marijuana is legal.

Other concerns expressed at the conference: Demand for dispensaries is driving up lease rates and property values; marijuana businesses are buying old warehouses at two and three times market rates, even though the buildings aren't configured for most industrial needs; and complaints about smoke will increase in apartments, and those who break their leases by growing pot indoors could be done in by higher water and electric bills.

Banking officials in Oklahoma raised concerns of their own recently regarding the medical marijuana law. At the top of the pile: Because marijuana transactions are illegal under federal law, banks can't take part in them without risking serious penalties.

Due to the existing uncertainty, Oklahoma Banking Commissioner Mick Thompson suggested it's likely that most banks will avoid deposits and loans connected to medical marijuana. That means there will be plenty of cash in play — used by consumers to buy the product, and by businesses to pay their employees and transact with growers and processors. All that cash in circulation could lead to more robberies.

Thompson said Congress needs to fix the problem by changing the law, although that hardly seems likely. Thus, we can expect more confusion and questions to emerge from having medical marijuana on the books in Oklahoma.