The possible legalization of marijuana for medical use in the state might be good news for seriously ill users, but owners of properties where the wacky weed would be sold could face a high-noon showdown with federal prosecutors.

Marijuana advocates are collecting signatures to place an initiative on November’s ballot that would eliminate state criminal and civil penalties for patients that use marijuana as medicine to alleviate suffering from illnesses including cancer, glaucoma, HIV and multiple sclerosis.

If the medical marijuana question gets on the ballot and wins voter approval, marijuana for medical use as approved by a doctor would be legal in the state without the governor or legislature signing off on it. Three years ago, the drug was decriminalized in the commonwealth through the same process, relegating possession of small amounts to no more than a fine.

The Massachusetts medical marijuana law is designed to provide for up to 35 dispensaries statewide, with at least one in each county but no more than five per county, said Michael Cutler, a Northampton-based lawyer that lobbies for marijuana law reform around the country.

But while those dispensaries would be legal under Massachusetts law, it would still be illegal to use or sell the drug under federal law. Take the case of the Motel Caswell in Tewksbury. The U.S. government is currently suing Russell Caswell, owner of the motel. The federal government says the motel at 434 Main St. is subject to forfeiture based on sporadic drug activity the Tewksbury Police Department reported at the hotel between 2001 and 2008.

If it wins the suit, the government plans to seize the Motel Caswell, sell it for approximately $1.5 million and give more than half the cash to the Tewksbury Police Department – even though Caswell himself has never been charged with a crime.

Such is the predicament facing many property owners where drug-related activity occurs.

Medicine Or Intoxicant?

Even in states where marijuana is legal and dispensaries are common, commercial property owners are being indicted for wrongdoing. In Whitefish, Mont., a landlord that rented property to a medical marijuana business was recently sentenced to serve a year in prison for maintaining a property involved in drug distribution. The investigation was conducted by the Department of Homeland Security and the Northwest Montana Drug Task Force.

But these cases are – for now – uncommon. More often when the feds have wanted to flex their muscles, it’s the Drug Enforcement Administration that goes in, seizes a business’ assets and shuts the dispensary down, with little or no legal repercussions for the property owner beyond losing a tenant.

Even so, if a commercial landlord loses a tenant, he or she doesn’t get paid. So if an owner were planning to sign a marijuana dispensary onto a commercial lease, the legal language would need to include clauses with respect to operating strictly within the laws of the state, said Bloomfield, Conn.-based attorney Aaron Romano.

“It would not be in compliance with federal law and both parties have to understand that in the contract,” he said. “Everyone is taking a risk. That said, I firmly believe it’s around the corner that the feds will change the laws to be in line with the state laws. And Connecticut’s is the most Puritan model you can get in how government-controlled it will be.”

Connecticut’s state legislature recently voted to approve the use of marijuana as medicine by seriously ill patients. Gov. Dannel Malloy has said he would approve the legislation. The medical marijuana law there would provide for between three and 10 growing operations but would not limit the number of dispensaries in the state. The drug would then be distributed through licensed pharmacists.

But, like in Massachusetts, the locations of those drug-selling operations are still undetermined. There will likely be very strict zoning regulations requiring the locations to be in specific areas, but that has not yet been determined, said Romano, a lifetime member of the National Organization for the Reform of Marijuana Laws (NORML). He said the same will likely be true in the commonwealth.

On one hand, in Connecticut, marijuana is being treated as a pharmaceutical product. But on the other hand, it may be viewed as an intoxicant, so the state will likely need to make a ruling on whether a medical marijuana dispensary should be zoned into areas where there are liquor stores or other pharmacies, Romano told Banker & Tradesman.

‘A Vexing Issue’

The square footage of the dispensaries and growing locations could also be dictated by the state, according to Romano, an active member of NORML’s legal committee. Owners of the operations will need to ensure there is ample space for secure storage. There will also be a strong emphasis on security at the dispensary sites. That would make a former bank building, with its built-in secure vault and other security measures, an ideal location for the pot operations, Romano said.

“You have to protect a highly valued product from thieves,” Romano offered. “The regulations from the state will need to be very specific … in terms of what they can and can’t do in terms of limiting or restricting areas. The whole purpose of it is to provide access to this medicine to suffering patients.”

Attorney Cutler said there is ample commercial real estate vacated as a result of the recession that could be ideal locations for growing or dispensing marijuana. He has spoken to both property owners and individuals interested in providing space for or in operating dispensaries.

However Massachusetts votes – if it gets the chance – the model seems to be already working for Colorado, which is home to roughly 720 marijuana dispensaries. The State of Colorado collected $5 million in sales tax from medical marijuana businesses last year, more than twice what it collected the year before. Denver alone collected more than $3.4 million last year from sales tax and application and license fees for dispensaries.

“Real estate and cannabis has long been a vexing issue,” said Allen St. Pierre, executive director of NORML. “Because the federal law hasn’t yielded a quarter on this issue, it has set up this situation of great uncertainty. We’re not unsympathetic in the slightest to small owners of commercial property or real estate investment trusts. From the get-go, real estate has been a bit of a problem. At the state level, they’re engaged in a lawful operation, but not at the federal level. This confusion is profound across the entire country in states that have medical marijuana laws.”