The California Legislature has passed Assembly Bill 1482 – Tenant Protection Act of 2019 (“AB 1482”), providing for comprehensive statewide residential rent control and eviction protections.  Signed by Governor Newsom in October 2019, and commencing January 1, 2020, AB 1482, among other things, requires a landlord to evict a tenant only for “just cause” if the tenant has occupied the property for more than 12 months.  (See original post here.)  AB 1482 will remain in effect until January 1, 2030.

In the cannabis space, AB 1482 has been giving landlords and tenants pause.  Specifically, the question many are grappling with is whether engagement in certain cannabis activities rise to the level of “just cause” justifying eviction of a tenant under the terms of AB 1482.

As described in AB 1482, “just cause” means: (a) failure to pay rent; (b) material breaches of lease; (c) committing waste; (d) commission of a nuisance; (e) criminal activity on the property, or criminal threats against the landlord or landlord’s agent; (f) improper assignment/subletting of space; (f) refusal to allow landlord to enter the property as authorized by law; (g) refusal to execute a written extension or renewal of the lease that terminates on or after January 1, 2020 for an additional term of similar duration with similar provisions, provided that those terms do not violate this section or any other provision of law; and/or (g) failure to vacate.  If the eviction is for just case but is a curable lease violation, a landlord must first give notice of the violation to the tenant with an opportunity to cure the violation.  If the violation is not cured within the time period set forth in the notice, a 3-day notice to quit without an opportunity to cure may be served to terminate the tenancy.

Evictions where there is “no fault” of the tenant are permissible when: (a) it is a result of the landlord’s compliance with a government order or a local ordinance that requires vacating the residence; (b) the unit is being removed from the rental market; (c) the landlord intends to demolish or substantially remodel the residential unit; or (d) the landlord or specified family members of the landlord intend to occupy the residential real property.  In the event the owner evicts a tenant based on “no fault” of the tenant, the owner must, at the owner’s option, either assist the tenant to relocate or waive in writing the payment of rent for the final month of tenancy.  Further, any notice of termination on this basis must include notice of the tenant’s right to relocation assistance or rent waiver.

In drafting AB 1482, a bill with the express purpose to provide heightened protections for tenants, the Legislature most certainly did not take into consideration the dichotomy between federal and state cannabis laws.  As an initial matter, most leases require compliance with local, state and federal law, and cannabis-related activities may constitute a material breach of the lease, a qualifying action for “just cause” eviction.

California’s Health & Safety Code section 11362.1(a) provides that: “[I]t shall be lawful under state and local law, and shall not be a violation of state or local law, for persons 21 years of age or older to:

  1. Possess, process, transport, purchase, obtain, or give away to persons 21 years of age or older without any compensation whatsoever, not more than 28.5 grams of cannabis not in the form of concentrated cannabis;
  2. Possess, process, transport, purchase, obtain, or give away to persons 21 years of age or older without any compensation whatsoever, not more than eight grams of cannabis in the form of concentrated cannabis, including as contained in cannabis products;
  3. Possess, plant, cultivate, harvest, dry, or process not more than six living cannabis plants and possess the cannabis produced by the plants;
  4. Smoke or ingest cannabis or cannabis products; and
  5. Possess, transport, purchase, obtain, use, manufacture, or give away cannabis accessories to persons 21 years of age or older without any compensation whatsoever.

Despite attempts to the rectify the inherent inconsistency with state law, the federal government still classifies cannabis as a Schedule I drug under the Controlled Substances Act.  Therefore, possession, personal cultivation or use of cannabis on the residential premises would constitute a violation of federal law.  Therefore, if the lease includes the above-referenced compliance provision, a landlord, arguably, has “just cause” to evict a tenant if the tenant fails to cure this breach in lease terms.  Moreover, the landlord may claim the cannabis-related activities are a nuisance under Civil Code section 1946.2, also justifying “just cause” eviction.

Additionally, California law gives landlords the green light to include specific terms in a residential lease the prohibit a tenant’s possession, personal cultivation or use of cannabis within the residential unit and/or common areas.  Health and Safety section 11362.1(a) specifically conditions this code provision on Section 11362.45, expressly states: “Section 11362.1 does not amend, repeal, affect, restrict, or preempt the ability of an individual or private entity to prohibit or restrict any of the actions or conduct otherwise permitted under Section 11362.1 on the individual’s or entity’s privately owned property.” (Heath & Saf. Code § 11362.45(h).)

Therefore, while California law holds cannabis-related activities identified in Health and Safety Code section 11362.1 are not “criminal activity,” property owners and landlords are not precluded from prohibiting cannabis-related activities on the premises per the terms of the lease.  Under AB 1482, landlords are, then, well within their rights to evict any violating tenant for “just cause” following the required notice and cure period.  Tenants engaging in cannabis activities and landlords could all benefit from taking a hard look at their current residential leases in advance of January 1, 2020 and from working towards remediation of any violations.

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