Legal marijuana: How will it impact Michigan condominium associations?

Michigan became the 10th state to legalize the recreational use of marijuana when voters approved Proposal 1 and enacted the Michigan Regulation and Taxation of Marihuana Act (the “Act”) on November 6, 2018. The highlights of the Act are as follows:

A person that is at least 21 years or older may possess or consume marijuana.

A person may possess up to 2.5 ounces of marijuana in public and have up to 10 ounces of marijuana at home.

Marijuana cannot not be consumed in public places. However, the Act does not define the term “public place”, which likely will be defined in the future by the legislature or the courts.

A person may currently grow up to 12 plants in their home so long as the plants are not visible from outside of the home.

While Proposal 1 will become effective on December 6, 2018, it will still be illegal to sell marijuana under Michigan law for the time being.  The State of Michigan has until December 6, 2019 to adopt regulations and create application forms to issue licenses to sell recreational marijuana.  While the implementation of the Michigan Regulation and Taxation of Marihuana Act will take several years, and the law is still in a state of flux, the use of recreational marijuana is something that Michigan condominium associations must be prepared to address.  Accordingly, this article will discuss the application of the Act as to Michigan condominium associations and tips for dealing with issues related to the recreational use of marijuana in community associations.

Does the Michigan Regulation and Taxation of Marihuana Act apply to condominium associations?

Section 4, Subsection 4 of the Michigan Regulation and Taxation of Marihuana Act provides as follows:

This act allows a person to prohibit or otherwise regulate the consumption, cultivation, distribution, processing, sale, or display of marihuana and marihuana accessories on property the person owns, occupies, or manages, except that a lease agreement may not prohibit a tenant from lawfully possessing and consuming marihuana by means other than smoking.

Section 4, Subsection 1(e) of Michigan Regulation and Taxation of Marihuana Act states that:

 This act does not authorize:…

(e) consuming marihuana in a public place or smoking marihuana where prohibited by the person who owns, occupies, or manages the property, except for purposes of this subdivision a public place does not include an area designated for consumption within a municipality that has authorized consumption in designated areas that are not accessible to persons under 21 years of age;

In the context of condominiums, the Michigan Condominium Act, specifically MCL 559.103(4) states that an “‘association of co-owners’ means the person designated in the condominium documents to administer the condominium project.”  Similarly, Mich. Admin R. 559.202(1) states that the condominium bylaws “shall designate the association of co-owners as responsible for the management and administration of the common elements, property, easements, and the affairs of the condominium project.”  Accordingly, a condominium association is responsible for managing the condominium and it would still have the authority to prohibit or regulate the use of marijuana in the condominium bylaws or duly adopted rules and regulations under the Act.

What issues will Michigan condominium associations encounter after recreational marijuana has been legalized?

            As an initial matter, condominium associations should be aware that the consumption, sale and use of marijuana remains illegal under federal law as it is a Schedule I drug under the Controlled Substances Act of 1970. See e.g.  Forest City Residential Mgt, Inc ex rel Plymouth Square Ltd Dividend Hous Ass’n v Beasley, 71 F Supp 3d 715, 727–28 (ED Mich 2014) (holding that the owner of an apartment complex did not have to permit a tenant to smoke medical marijuana under federal law).  If the condominium bylaws prohibit illegal activity, which is quite common, a condominium association would not be required to permit the consumption, use or sale of marijuana on condominium property simply because recreational marijuana has been legalized under Michigan law.  Similarly, while the federal government has not prioritized the prosecution of marijuana crimes, condominium associations should be cautious about permitting an activity on condominium property that is illegal under federal law simply because it is now legal under state law.  Accordingly, while it this author’s opinion that condominium associations should play it safe and prohibit recreational marijuana use until it is decriminalized under federal law, some condominium associations may want to amend their condominium bylaws or adopt rules and regulations to reflect the recent change in state law.

In the event that a condominium association decides to permit recreational use based on state law, or federal law is changed in the near future, common issues that a condominium association should consider with respect to potential amendments to the governing documents are as follows:

Where can marijuana be used within the condominium?

If a condominium association decides to permit recreational marijuana use on condominium property, it is recommended that possession of marijuana be limited to a co-owner’s unit.  Section 4, Subsection 1(e) of Michigan Regulation and Taxation of Marihuana Act prohibits the use of marijuana in a “public place”, a term which has not yet been defined by the legislature.  Accordingly, arguments could be made that certain common elements, such as clubhouses, courtyards, pools, sidewalks, parking areas, etc. are “public places” within the meaning of the Act.  Accordingly, if a condominium association does not want to wait to permit the recreational use of marijuana, it should amend its condominium bylaws or adopt rules that limit the use of marijuana to an individual co-owner’s unit.

If marijuana use is permitted, is smoking marijuana permitted or must it be ingested by other means such as edibles?

As recognized by Section 4, Subsection 4 of the Michigan Regulation and Taxation of Marihuana Act, as discussed above, landlords can prohibit a tenant from smoking marijuana, but not ingesting it on other forms that are less likely to cause a nuisance to other co-owners.  While this provision of the Act has limited, if any, applicability to community associations, it does provide guidance in formulating policies for community associations.  Specifically, condominium associations that do permit the use of recreational marijuana should consider banning the co-owners from smoking marijuana.

Can a co-owner grow marijuana in the condominium?

Section 4, Subsection 1(f) of Michigan Regulation and Taxation of Marihuana Act provides in pertinent part:

 This act does not authorize:…

(f) cultivating marihuana plants if the plants are visible from a public place without the use of binoculars, aircraft, or other optical aids or outside of an enclosed area equipped with locks or other functioning security devices that restrict access to the area;

Accordingly, the Act would not permit a co-owner to grow marijuana on the common elements or in their yard in a site condominium.  However, this provision of the Act may be subject to change if SB 1243, which was introduced on November 29, 2018, is passed by a ¾ supermajority of the Michigan legislature.  SB 1243 would make it illegal to grow marijuana at home, so condominium associations should be hesitant about adopting a bylaw or rule that would permit a co-owner to grow marijuana within the condominium.

Can a co-owner sell marijuana?

Section 11(a) & (b) of Michigan Regulation and Taxation of Marihuana Act provides as follows:

Sec. 11. (a) A marihuana establishment may not allow cultivation, processing, sale, or display of marihuana or marihuana accessories to be visible from a public place outside of the marihuana establishment without the use of binoculars, aircraft, or other optical aids.

(b) A marihuana establishment may not cultivate, process, test, or store marihuana at any location other than a physical address approved by the department and within an enclosed area that is secured in a manner that prevents access by persons not permitted by the marihuana establishment to access the area.

Based on the above criteria, it is unlikely that a person could legally obtain a license to sell marijuana under the Act in the context of a residential condominium when formal rules and regulations regarding licenses are adopted in the next year.  However, it would be within the realm of possibility that a company that is engaged in the cultivation or sale of marijuana is located in a business condominium unit.  Accordingly, condominium associations that contain business condominium units should consider whether they should adopt bylaws or rules that would restrict marijuana operations within the condominium.

Conclusion

The approval of Proposal 1 and adoption of the Michigan Regulation and Taxation of Marihuana Act (the “Act”) will certainly create many new legal issues for condominium associations.  However, until recreational marijuana use is decriminalized under federal law, condominium associations are best served by amending their bylaws or implementing rules that ban marijuana use on condominium property in order to minimize their liability.  If a condominium association is having difficulty amending its bylaws, it may be able to use provisions in their existing documents to prohibit marijuana use.  Examples of bylaw provisions that could be enforced to prevent the cultivation, sale or use of marijuana would include bylaws that generally prohibit illegal conduct, bylaws that prohibit commercial use of a unit or bylaws that prohibit nuisances.  For condominium associations that desire to take a more progressive approach, they are best served by amending their condominium bylaws to indicate that the board of directors has specific authority to adopt rules and regulations related to recreational marijuana use.  Given that the law on recreational marijuana is still in the state of flux, boards will likely need flexibility to adopt rules as the law in this area continues to evolve on a state and federal level.

Kevin Hirzel is the Managing Member of Hirzel Law, PLC and concentrates his practice on commercial litigation, community association law, condominium law, Fair Housing Act compliance, homeowners association and real estate law. Mr. Hirzel is a fellow in the College of Community Association Lawyers, a prestigious designation given to less than 175 attorneys in the country. He has been a Michigan Super Lawyer’s Rising Star in Real Estate Law from 2013-2018, an award given to only 2.5% of the attorneys in Michigan each year. Mr. Hirzel was named an Up & Coming Lawyer by Michigan Lawyer’s Weekly in 2015, an award given to only 30 attorneys in Michigan each year. He represents community associations, condominium associations, cooperatives, homeowners associations, property owners and property managers throughout Michigan. He may be reached at (248) 478-1800 or kevin@hirzellaw.com.