With much fanfare, CO legislators met in a special session to focus on…
The recent U.S. supreme court ruling sets one of the biggest precedents in recent history that will impact Colorado considerably beyond the case decided. The supreme court recently ruled 6-3 that states can legalize gambling. Why should Colorado care? How about real estate?
New Jersey had passed a state law that legalized gambling that was blocked by the federal government. The recent ruling affirmed New Jersey’s and other states ability to allow legalized sports betting. Why is this ruling precedent setting? Why is Colorado impacted well beyond gambling? How does this impact Colorado real estate?
About the case:
The court upheld the legality of a 2014 New Jersey law permitting sports betting at casinos and racetracks in the state and voided the federal Professional and Amateur Sports Protection Act. Some states see sports betting, like lotteries, as a potentially important source of tax revenue.
The Supreme Court justices struck down the entire federal law on a 6-3 vote, with Justices Ruth Bader Ginsburg, Sonia Sotomayor and Stephen Breyer dissenting. (source cnbc)
States’ rights affirmed:
The supreme court not only decided a case on gambling but also the powers that states have. This same ruling could easily be applied to other decisions states have made like Cannabis/Marijuana, immigration, gun laws, etc….
“The legislative powers granted to Congress are sizable, but they are not unlimited,” Justice Samuel Alito wrote for the court. “Conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the states.”
Cannabis/Marijuana and other states’ rights:
Several parallels between the supreme court gambling case and Cannabis can be made. This recent ruling affirms states abilities to regulate activities within their borders, on of which is the usage of Cannabis.
The proof is in the reasoning. The justices ruled that under the 10th Amendment, the federal government cannot tell states such as New Jersey what to do with their own laws, which is what the Professional and Amateur Sports Protection Act did.
The same justification can be applied to many current and future battles between the federal and state governments, experts say.
“The reason this case was so closely watched is because of its implications on so many areas of policy that have revealed federal-state tensions of late,” said Ilya Shapiro, a constitutional studies scholar at the Cato Institute, a libertarian think tank.
“From environmental regulation to sanctuary cities, marijuana to guns, states are flexing their sovereign muscles in a way that strengthens our body politic.”
“The legislative powers granted to Congress are sizable, but they are not unlimited,” Justice Samuel Alito wrote for the court. “Conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the states. “It’s going to stop the federal government from being more aggressive on things that they might like to be more aggressive on,” said Lisa Soronen, executive director of the State Local Legal Center, which represents state and local governments before the Supreme Court. (source: USA today)
Colorado Cannabis Real Estate impacts
I wouldn’t go out on a limb saying that this ruling eliminated all uncertainty regarding the federal government trying to shut down the Marijuana industry, but it did give more certainty to the industry. The ruling in New Jersey is an important solidification of state’s rights on issues such as marijuana. Furthermore, as the industry continues to grow with multiple states offering recreational marijuana it will become even harder for the federal government to try to infringe on state’s rights.
This is important for real estate. Real estate is a long-term asset that is not liquid. The more certainty in the market the less “risky” a marijuana asset is. Don’t get me wrong, there is still risk in the marijuana industry, but the biggest risk is not necessarily the federal government, but risk of a changing market (supply and demand). Market risk is much easier to predict than political/federal risk. This ruling helped eliminate considerable federal risk to the marijuana industry.
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in the Colorado Real Estate Journal, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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