legalization of cannabis in Canada
17 Oct

What You Need to Know About Cannabis Legalization & Real Estate

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As of October 17, 2018, recreational use of marijuana is now legal in Canada. If you’ve got a stake in real estate, what does this mean for you? Can a landlord ban a tenant from smoking marijuana? Do home owners have to disclose marijuana plant growth on the property if it’s legal? How does the new cannabis legalization impact Canadians’ real estate buying decisions?

As real estate investors, landlords, home owners, and potential home owners, you’ve got questions. We’ve got answers.

 

What landlords & tenants need to know

In Ontario, the government has not changed rental laws to address cannabis but a renter’s right to smoke cannabis in their unit or building will depend on their building’s rules and a tenant’s lease agreement.

  • Canadians are now are entitled to grow up to four plants per residence (not per person).
  • It is legal to smoke and vape cannabis in private residences if the lease permits smoking (not including residences that are also workplaces e.g. long-term care and/or retirement homes) Also, many outdoor public spaces including sidewalks.
  • There may be additional restrictions on smoking and vaping in municipal bylaws, employer policies, and lease agreements.
  • Currently, landlords can spell out a ban on smoking tobacco and they will be able to include a ban on smoking marijuana as well when the lease ends. (Current tenancy laws in Ontario prevent changes to a lease prior to its end.)

For more information, check out the Ontario.ca cannabis legalization information page.

What home buyers & sellers need to know

A recent Zoocasa study reveals attitudes of both Canadian home owners and renters on the impact of cannabis use on property values:

attitudes of home owners and renters cannabis use

Here are some more statistics on Canadian home owners and buyers on cannabis according to Zoocasa:

  • 57% of home owners felt that growing a legal mount of cannabis would negatively impact property values
  • 64% of home owners felt that smoking marijuana inside a home would lower the value
  • Percentages of home buyers who say they’d be less interested in buying a home if they knew cannabis was grown legally on the property:
    • 52% of buyers overall
    • 38% of Millennials
    • 58% of GenXers
    • 59% of Baby Boomers

Cost of smoking marijuana in your home

According to Dan Henderson, president of DelSuites and Del Condominium Rental property management companies, it can cost $5,000-6,000 to get the smell of marijuana smoke out of walls and floors.  Says Henderson, “It’s not the stigma (of marijuana use), it’s just the number of expenses to maintain the unit and the complaints landlords receive from the neighbours.”

Do home sellers have to disclose illegal grow-ops or legal cannabis growth?

According to Joe Richer, Registrar of the Real Estate Council of Ontario (RECO), in most cases probably not. Sellers are required to disclose any latent physical defects the owner is aware of. The types of issues that would be disclosed arise from the fact that most grow-ops result in damage due to excessive moisture leading to mold and many have unsafe electrical modifications. This principle would also apply to legal cannabis growth as well.


How to avoid making a mistake in your real estate investment given the new cannabis law

The bottom line is to work with a knowledgeable, respected, and trustworthy REALTOR®. Hiring a REALTOR® is always advisable, but given the legalization of cannabis, it’s more important than ever to ensure you’re making the right decisions every step of the way.


Want to know what this would mean for you or have more questions?

We can help.

Call us today at 1-888-444-9533 or send us an email.

There’s absolutely NO OBLIGATION. A consultation with our team of experts is FREE.


Visit this Canada.ca Cannabis Act information page to find out more information how the new law impacts various provinces and territories.

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