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plugubius t1_irjg0sd wrote

Reply to comment by Mental_Cut8290 in Pot twist: Cannabis firm refuses federal judge's ruling because its business isn't legal under federal law by Doc_Dante

As you note, the issue here isn't whether the tenant's business is lawful. It is whether the agreement to pay rent for the property is lawful. The unlawfulness of a business does not render every contract that business signs unenforceable against the business. Under federal law, state law provides the rules of decision in this case. Unless there is a federal law specific to cannabis that expressly invalidates the lease, federal law says nothing at all the validity of the lease here.

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Sumthin-Sumthin44692 t1_irjlr6q wrote

A commercial lease for the purpose of running a cannabis business is illegal under federal law. A lot of commercial leases have the business use/purpose expressly stated in them. But even if this one didn’t the court is not going to ignore what the lease was for. The court cannot enforce a contract, including rent, if it is for an illegal purpose.

Similar cases involve personal service contracts for “physical assistance” that are actually for sex. The court looks to how a contract actually functions. Not just how it appears to function.

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plugubius t1_irjm9et wrote

>A commercial lease for the purpose of running a cannabis business is illegal under federal law.

I have asked repeatedly for someone to identify this law. I know of none. A prohibition on cannabis sales alone won't alter state contract law (which is what the federal court must apply here).

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PullDaLevaKronk t1_irjnl5o wrote

Federal law also makes it a felony to lease or rent any place for the purpose of manufacturing, distributing, or using any controlled substance, including cannabis.

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plugubius t1_irjrzhz wrote

That law does not expressly preempt state contract law, and it would be very hard to argue that conflict preemption applies. It allows the Attorney General to seek a variety of criminal, civil, and administrative penalties. That power does not clearly conflict with a state's ability to decide contractual rights in the absence of the Attorney General's action, and it does not provide for any private enforcement. The scope of federal preemption in the drug context is very narrow.

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lorgskyegon t1_irk5wl7 wrote

The landlord can't ask a federal court to enforce a contract that is illegal under federal law.

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PullDaLevaKronk t1_irk0xll wrote

Never made the argument. Just provided a reliable link to a mention of the law you were looking for.

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ankelbiter12 t1_irjmdhy wrote

IANAL, but my understanding is that because it’s a business property, the landlord is aware of what the business is. I take it as the court is looking at it as “you’ve filed a contract / lease with the tenants, so that they pay you money, in exchange, they can use the property to sell cannabis”. Federally, last I checked, cannabis isn’t legal. Since the landlord knows the property is being used federally illegally, the federal court won’t discuss the contract because it’s invalid. Plus, they also know the landlord could just take it to the Illinois state court so I imagine they’re using some slight discretion there. Now if the property were a residence type instead of business, the landlord would have no reason to know that they’re using their property for selling cannabis, so then I think the federal court would touch it.

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plugubius t1_irjmqng wrote

IAAL. There is no prohibition on leasing space to Vito Corleone, even if you know who Vito Corleone is. If you know about a murder he commits, you can be charged in connection with that, but the lease is still valid, and he still owes you rent.

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Sumthin-Sumthin44692 t1_irjorhy wrote

There is. A landlord can be held liable for conspiracy if they know crimes are taking place on their property. This comes up with so-called “crystal palaces” where motel owner knowingly rent rooms to meth users and prostitutes

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plugubius t1_irjs909 wrote

>A landlord can be held liable for conspiracy if they know crimes are taking place on their property.

I agree, and I said as much. That potential liability is different from whether the lease contract is enforceable.

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Sumthin-Sumthin44692 t1_irjwei1 wrote

A landlord renting a unit for an illegal purpose can be criminally liable as a co-conspirator. The lease is also void so they won’t be entitled to contractual rent. A court could order some payment to the landlord based on equitable principles but the doctrine of unclean hands and public policy considerations would most likely bar or limit recovery.

Bottom line: landlords, don’t lease out space for criminal activity.

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CaptainTripps82 t1_irjnf5l wrote

I was just thinking, the basis for a lot of mob arrests in the past was that even if the underlying business is illegal, you still owe taxes on the income.

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crwlngkngsnk t1_irjueo4 wrote

But you can't rent out a murder room, with the explicit understanding that this is his murder room, to be used for murdering people.
I think, like another poster said, that it might depend on if the lease spells out the purpose of the business. If the nature of the business is known and illegal then Federal law isn't going to enforce a contract for that. I don't know enough about the law to know if this case is heard under Illinois law, but I do know that Federal courts sometimes evaluate cases under State law, so you might be right about that. I guess it depends on the issues raised in the suit. I haven't actually, you know, read anything about the case.

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