To be sure, the past decade has been a good one for marijuana and its advocates. Not only is medical marijuana now legal in 20 states and the District of Columbia, but Colorado and Washington also allow the use of recreational marijuana.
While this evolution may stoke some people, it has sparked an interesting challenge for the self-storage industry.
Despite the changing tide of marijuana laws and perceptions throughout much of the U.S., self-storage owners have yet to come to terms with a troubling question: Should facilities in states with lax marijuana laws—particularly Colorado and Washington—let tenants store marijuana? Understandably, the industry remains slightly gun-shy about the issue.
I don’t think facility owners will be jumping at the chance to let their tenants store marijuana.
– Marc Goodin, self-storage consultant and owner
For instance, when asked whether self-storage tenants in Colorado should be allowed to keep marijuana in rented units, Colorado Self Storage Association President Jackson White offered this response via email:
“We will be following the implementation of the new marijuana law for a while, and then we will make a presentation to our members. Beyond that, we have no additional comment at this time.”
Medical marijuana now is authorized in 20 states.
The Long Arm of the Law
It’s not an easy quandary to sort out, especially since pot and self-storage already have an uneasy relationship.
For instance, cops recently busted a Connecticut man named William Bradley after he posted a video online that featured him walking through his vast marijuana garden and advocating for medical marijuana. Bradley—who suffers from terminal cancer but isn’t enrolled in Connecticut’s medical marijuana program—posted his name and address on the video. That eventually led cops to 2 pounds of weed and 20 grams of hashish that Bradley had stashed inside a self-storage unit.
In Illinois—another medical marijuana state—a 32-year-old man named Fidel Garcia was sentenced in January to 30 months’ probation and slapped with $7,800 in fines and fees after pleading guilty to marijuana possession. According to a media reports, Garcia was arrested in August 2012 after police found nearly 2 pounds of marijuana inside his storage unit in Elgin.
Finally, authorities in Owensboro, KY, recently arrested a 21-year-old tenant after discovering a 9-pound stash of marijuana inside his storage unit. According to media reports, the marijuana was valued at $9,000 and was part of a larger pot-trafficking operation. Pending legislation in Kentucky would legalize medical marijuana.
Authorities in Florida busted this marijuana-growing operation at a storage unit.
According to self-storage consultant Marc Goodin, who owns two facilities in Connecticut and one in Canada, the primary concern for facility owners isn’t legality, but rather the risks associated with allowing marijuana in self-storage units.
“First of all, my leases—and most leases throughout the country—state that you can’t store food, plants or any other type of organic material that might attract animals and pests,” Goodin said. “So right off the bat, I don’t think facility owners will be jumping at the chance to let their tenants store marijuana. It’s an organic material, and self-storage isn’t an appropriate place to store it, whether it’s legal or not.”
Goodin added that self-storage owners and managers also must consider safety concerns and community sensitivities, regardless of the laws in any given state.
“We all have a perception that drugs have a dark side to them and that people commit crimes to get their drugs,” Goodin said. “Why attract that to your facility? For a $100 a month, I really don’t think it’s worth the negative perception or the safety concerns.”
From a safety standpoint, marijuana self-storage already has proven to be a risky proposition. Consider, for instance, the case of Gary Hite, a California man whose self-storage unit was broken into in 2010. According to media reports, thieves tunneled through two layers of drywall and stole $35,000 worth of medical marijuana that Hite was keeping inside his storage unit.
Marijuana raises liability and insurance concerns for self-storage operators.
For Jeffrey Greenberger, a self-storage legal expert and partner at Cincinnati law firm Katz Greenberger & Norton LLP, cases like Hite’s highlight concerns over liability and insurance.
“It’s important for consumers to understand that right now, there’s just no way to insure [marijuana],” Greenberger said. “And that means marijuana isn’t something we’re prepared to cover or deal with if it’s lost, damaged or stolen. How do you value it? How do you depreciate it? How do we know you actually had it? It’s all very problematic.”
Greenberger also likened marijuana to other items that typically are prohibited by self-storage owners, such as high-value antiques, ammunition, explosives and hazardous waste.
“Rental agreements already contain a lot of restrictions on what can and can’t be stored in a self-storage unit. For instance, we ban things that are flammable, things that deteriorate when exposed to moisture or fluctuating temperatures, and property valued beyond a certain dollar amount,” Greenberger said. “And I think marijuana fits into all of those categories.”
Marijuana use remains illegal under federal law.
Finally, while states like Colorado and Washington may have legalized recreational marijuana, the federal government still classifies pot as a controlled, dangerous substance that carries penalties for possession and distribution. Greenberger said this conflict alone is enough to keep self-storage owners at bay.
“I don’t think there is a bank out there willing to do business with marijuana dispensaries, because banks are governed by federal rules and regulations,” Greenberger said. “Since it’s not federally legal to have marijuana on your possession, banks don’t want the money from these businesses deposited in their accounts because they’re afraid the federal government will eventually crack down on them. And the same goes for self-storage facilities.”
Regardless of the barriers to marijuana self-storage, Greenberger does foresee a day when the landscape may look quite different. It’s just going to take some time.
“I’m sure there are entrepreneurs in Colorado and Washington and Southern California who would love to open a marijuana equivalent to self-storage wine tasting and storage,” Greenberger said. “But until the day comes when owners no longer have to worry about the federal government cracking down on the banks and insurance companies writing lines of coverage for lost or stolen marijuana, I just don’t think owners will knowingly and willingly get into the marijuana self-storage business.”