This document summarizes emerging property management issues related to medical marijuana and criminal background screening. For medical marijuana, it outlines the new Ohio law and limitations on use. It discusses challenges around allowing medical marijuana use by tenants as a reasonable accommodation. For criminal backgrounds, it discusses HUD guidance against blanket bans on felons and recommends an individualized approach considering factors like crime seriousness and rehabilitation. Landlords are advised to have consistent policies and consult legal counsel on difficult cases.

1. Emerging Property
Management Issues
Theresa Morelli, Esq.
Theresa Morelli Law
LLC, Akron, OH
Nov. 8, 2016

2. Part I Medical Marijuana
• The Ohio medical marijuana law (OMML)
effective Sept. 8, 2016
• Summary of federal Controlled Substances
Act of 1970 (CSA)
• Best practices for leases and management
and operations policies and procedures
• Is use of medical marijuana a reasonable
accommodation for tenants with disabilities?

3. OMML Summary
Qualified patients may use medical marijuana in
these forms only:
• cannabis oils for eating or topical application;
• tinctures containing alcohol for eating;
• patches for topical application;
• other edibles and plant materials (such as plant
material infused oil); &
• vaporization when cannabis is heated without setting it
on fire.
• All of the above must be sold by state-licensed
dispensaries.

4. Examples of Qualified Patients
Persons with:
• Cancer
• Crohn’s Disease
• Epilepsy
• Fibromyalgia
• Multiple Sclerosis
• AIDS
• PTSD
• ALS
Catch-all category:
• Persons with pain that is
chronic & severe OR
intractable to qualify as a
medical condition

5. OMML Summary
• Still prohibited: SMOKING AND GROWING
MARIJUANA
• Website of OH Medical Marijuana Control
Program: www.medicalmarijuana.ohio.gov
• OMMP must be fully operational by Sept. 2018
• Many questions remain as OMMP will enact
rules for physicians, dispensaries, etc.

6. CSA Summary
• CSA prohibits all marijuana, including prescribed
marijuana, and classifies it as a Schedule 1 drug with no
medical use like heroin and crystal meth.
• U.S. government’s position on law enforcement est.
2009: Dept. of Justice will not focus federal resources on
prosecuting crimes that were legal in medical marijuana
states.
• On Aug. 11, 2016, the Drug Enforcement Administration
announced that it will keep marijuana as a Schedule 1
drug that doctors are not allowed to prescribe.

7. CSA says: • May face civil forfeiture of its
real property under federal
law
• May be federally prosecuted
for aiding and abetting
21 United States
Code Sections 846
& 881(a)(7) says a
landlord who,
particularly with
knowledge, leases
rental housing to a
user, possessor, or
cultivator of medical
or recreational
marijuana

8. Is medical marijuana use an accommodation that
Ohio’s landlords must grant?
• Ohio is only state to limit medical marijuana use to
“cannabis extracts” whereas the other 24 states
currently allowing medical marijuana permit
marijuana that is smoked or grown.
• In the 6th Circuit federal Court of Appeals, a 2014
decision ruled that landlords do not have to allow
medical marijuana use by a tenant with alleged
disabilities who smokes marijuana based on (1)
the request’s unreasonableness and (2) federal
law trumps Michigan’s medical marijuana law.

9. Forest City Residential Management v. Beasley
• FCRMI initially filed an eviction lawsuit for lease
violation based on illegal drug use.
• This was my case. My strategy was to file a federal
declaratory judgment action in U.S.D.C. in Detroit
against the HUD-assisted tenant.
• Tenant represented by Legal Aid & asked for
reasonable accommodation for her alleged MS to
use medical marijuana after sued.
• Tenant presented expired MI medical marijuana
card.

10. FCRMI v. Beasley
• It was not reasonable for landlord to permit
tenant to use marijuana, because the federal
CSA prohibited it. Judge Cox also cited the
federal Fair Housing Act and Section 504
which both state that current use of illegal
drugs is not protected.
• Michigan’s medical marijuana laws were not
controlling. The federal CSA preempted
them.

11. Landlord’s Solutions
Applications
• Landlords may ask if
applicants currently use
illegal drugs. Name
marijuana specifically or all
Schedule 1 drugs (i.e., they
have no medical use).
• Applicants may argue Ohio
makes use legal and they
did not know their use was
illegal under federal law.
Admission Standards &
Leases
• Tenant selection plans
need to spell out that
illegal drug use is
prohibited and cause for
housing denial & tenancy
termination.
• Follow HUD and OHFA
for lease requirements.

12. What about employees living on-site?
• What happens if an employee (e.g. custodian) lives
on-site in employer’s housing and wants to use
medical marijuana in his apartment off-duty?
• In the workplace, employer can deny use of medical
marijuana—seek an experienced labor & employment
lawyer for your factual scenario.
• More troubling: what if an employee’s spouse or child
wants to use medical marijuana in the employer-
owned housing and files a failure to reasonably
accommodate charge with HUD or Ohio Civil Rights
Commission?

13. Remains to be seen in OH
• Still unclear for OH and other states that
allow cannabis extracts: will courts treat
edibles and tinctures differently than
smokeable marijuana when it comes to
reasonable accommodations? (No case law I
am aware of at this writing)
• Ohio has not made medical marijuana users
a protected class. Yet, many underlying
medical conditions likely are disabilities.

14. Key Takeaways
• Don’t tell a requester
verbally that the
landlord will not allow
medical marijuana use.
The person must be
allowed to submit a
request.
• Have one centralized
decision maker.
• Issue a denial letter in
writing and cite the
applicable laws, cases,
etc.
• Be consistent with all
tenants—both with
admissions and with
evictions.
• If you let a 70-year-old
faithful rent payer with a
clean apartment use
medical marijuana, you
must allow all the other
tenants to do so. It is a
fair housing violation if
you do not.

15. Key Takeaways
• Be proactive: plan,
prepare, and proceed
effectively.
• OMML allows a limited
form of medical marijuana
only.
• Will Ohio allow the use of
cannabis extracts by
tenants as a reasonable
accommodation?
• If you opt to allow
medical marijuana
for 1 tenant, you
must do so for all
and realize that the
CSA is still being
violated.
• If you opt not to,
don’t take shortcuts.
Send the required
compliant notices.

16. Part II Compliant Criminal Background Screening
HUD’s General Counsel issued on April 4,
2016 a notice relating to the use of
criminal and arrest records and how to
avoid disparate impact claims for
background screening methods that may
affect people of color disproportionately
so as to violate the federal Fair Housing
Act.

17. Fair Housing Risks To Avoid
• More and more
applicants challenge
housing denials, which
are a commonplace
housing discrimination
charge or lawsuit.
• Do not leave denials
solely up to your
screening software.
• Tenant screening
companies depend upon
courts & law enforcement
agencies to enter
information accurately
and timely. This does not
always happen, and
discrepancies result.
Landlord gets sued. Will
your screening company
indemnify you?

18. No More “No Felonies” As A Restriction
• HUD’s April Notice states a “no felonies” restriction
without mitigating factors will likely violate the FHA.
• The DOJ has entered a federal court case in New York
where a landlord categorically denied housing to
convicted felons and applicants with misdemeanor
convictions other than traffic offenses.
• Housing providers cannot rule out an entire category of
convicted applicants without factual evidence showing
the ban is necessary.

19. Best Practice #1
• First, HUD’s notice does not refer to HUD’s
regulations found at 24 CFR Sections 5.850 et seq.
on arrest, conviction, and other criminal record use
by HUD-assisted landlords.
• The notice does not indicate HUD will amend them.
• Thus, those regulations already provide factors for
HUD-assisted landlords to consider and for other
landlords to consider, too.

20. 24 CFR Section 5.852 Discretionary Factors
• Crime’s seriousness
• If admitted, effect on
community
• Extent of applicant’s
participation in the crime
• Effect of denial on other
household member not
involved in the crime
• Effect on housing
program integrity
• Housing demand by
compliant tenants
• Require exclusion of
culpable applicant from
household
• Does culpable applicant
show personal
responsibility and take
reasonable steps to
prevent or mitigate
crime?

21. Is crime intertwined with disability?
• If applicant claims a
disability lead to crime,
determine if a reasonable
accommodation may be
called for. Consult your
lawyer.
• E.g., applicant claims
alcohol abuse was a
crime factor and claims
successful completion of
a supervised alcoholism
rehabilitation program
• If applicant claims
rehabilitation for illegal
drug use after crime took
place, follow the same.
• E.g., a chronic illness
lead to prescription
addiction and claims
successful completion of
a supervised drug
rehabilitation program

22. Crimes for which HUD requires denials committed a
reasonable time before admission
 Drug-related OR violent criminal activity
 Other criminal activity that would threaten the
health, safety, or right to peaceful enjoyment of
their neighbors
 Other criminal activity threatening the health or
safety of landlord’s employees or contractors
 Applicant subject to lifetime registration under a
state sex offender registration program

23. Factors to consider under 24 CFR Section 5.855
• Applicant’s certification
that s/he did not engage
in criminal activity for a
specified time period
• Landlord needs to re-
verify criminal screening if
applicant disputes
accuracy of it in whole or
in part
• Information in support of
admission by probation
officer, landlord,
neighbors, social service
agency personnel, etc.

24. No HUD Safe Harbors
• HUD’s April 2016 notice is devoid of “safe harbors”
for time frames chosen such as 15 years for
certain crimes, 10 years for other crimes, or 5
years for some other crimes.
• I will give two online examples of time frames. I did
not list entire policies-just certain portions.
• Proviso: this is not an endorsement or
sponsorship or guarantee for either FHI’s or
the Seattle Housing Authority’s policies and
procedures.

25. FHI (Owned by 2 attorneys)
No time limit for
conviction:
• 1st degree murder
• Sex offenses such as
forcible rape, child
molestation, or
aggravated sexual battery
• Arson
• Crimes involving
explosives
10-year conviction limit:
• Homicide other than 1st
degree
• Manslaughter
• Felony involving bodily
harm
• Armed robbery
• Burglary or theft
• Sale/manufacture of
controlled substance

26. FHI (Owned by 2 attorneys)
5-year conviction limit:
o Illegal use of controlled
substance
o Prostitution
o Stalking
o Forgery
o Weapon offenses
o Commercialized vice
3-year conviction limit:
• For any other felony

27. Seattle Housing Authority
Note:
• Count as a conviction for
SHA:
 Not guilty for reasons of
insanity
 Not guilty for diminished
capacity
• 20-year time limits for
conviction of:
 Murder/homicide
10-year conviction limit:
 4 or more assaults of any
kind
 Armed robbery
 Sexual assault/rape
 Arson

28. Seattle Housing Authority
5-year conviction limit
• Felony assault
• Delivery of controlled
substances
• Intent to sell drugs
• Robbery
• Domestic abuse
2-year conviction limit:
• Use or possession of
controlled substance
• Misdemeanor assault
• Burglary
• Prostitution

29. Summary of Best Practice #1
• Consider HUD’s factors
for housing denials,
because they are
objective and neutral.
There is no need to
reinvent the wheel.
• Consider time limits for
crime categories,
protection of residents &
employees, and specific
denial categories based
on reasonableness and
history of risks:
 SHA denies housing to
anyone incarcerated for
any reason within prior 6
months of application
interview date
 SHA denies housing with
clear & convincing
evidence applicant is
currently engaged in
violent criminal activity
although applicant not
arrested or convicted

30. More factors to consider for affordable housing
• Make sure your criteria don’t violate any
federal, state, or local regulations that
apply to the housing program itself, e.g., to
project-based Section 8 housing
• Crimes of theft & deception should be
scrutinized more, e.g. fraud or falsification
convictions

31. Best Practice #2
• Second, look at each applicant denial case
by case and review the totality of the
circumstances.
• Use the same system you would with a
reasonable accommodation or modification
request. Have centralized decision making for
consistent decisions.
• Consult your lawyer for anything questionable
and to minimize risk.

32. Summary of Best Practice #2
• Engage in-house or outside counsel to
conduct re-verifications of records when
applicant challenges housing denial
(FCRA compliant, too)
• Perform an individualized assessment of
the applicant’s criminal background and
offer due process (re-verification and
reconsideration)

33. Summary of Best Practice #2
• Don’t forget to comply with denial notice
requirements for all applicants under the
federal Fair Credit Reporting Act (FCRA)
and with applicants for HUD-assisted
housing under HUD Handbook 4350.3.
Apply any other denial requirements for
your housing type such as PHAs.

34. Contact
Theresa E. Morelli, Esq.
(330) 592-4636
tmorelli@theresamorellilaw.com
http://theresamorellilaw.com
www.linkedin.com/in/morellitheresa (see my 25+ articles on fair
housing and other legal issues impacting residential property
management law)
Nothing in this presentation should be construed as
legal advice. No attorney-client privileged relationship
has been formed, and everything in this presentation is
for informational purposes only.