President Trump announced the revocation of the California clean air waiver act.  Regardless of where you sit on this particular issue, the impacts will be profound on States rights, on real estate and one industry in particular.  Why are 33 states impacted?  Which industry could be hit hardest that has nothing to do with automobiles?

Before talking about the implications of the waiver revocation, it is important to understand the background of the clean air waiver.


The California Clean air Waiver

The Federal government in 1977 granted California a waiver to regulate auto emissions as long as they were at least as strong as the federal standards and that the state needs the standards for “compelling and extraordinary conditions”.  Since California adopted their auto standards 14 states have followed suit adopting the California standards


States rights

At the end of the day, the California waiver is about states rights.  The supreme court will ultimately have to decide if the federal government or the state of California has the ability to regulate emissions.  This decision will be precedent setting as many other items could fall into the category of state vs federal law.  One in particular is Cannabis.

The Cannabis risk

Cannabis is illegal under federal law, yet twelve states have legalized recreational marijuana and thirty three have legalized some form of medical marijuana.  The Federal government has the authority to regulate controlled substances, yet states have clearly gone against the federal government in fully legalizing its usage in their states.  The states have also stepped in to regulate this new industry as opposed to the federal government.  Think of alcohol.  Alcohol is regulated by the federal government via the ATF (Alcohol, Tobacco, and Firearms).

Based on the decision in the California suit, why couldn’t the federal government through executive action preempt states on Cannabis?  The California suit will be precedent setting not only for the auto industry but also for industries like Cannabis where states have taken the lead in regulation and legalization.

Impact on real estate

If there were an executive action on Cannabis like the California auto emissions waiver, the impact on real estate would be profound.  According to a Denver Post article, in Colorado Cannabis cultivation occupies 4.2 million square feet of space; this number doesn’t include all the retail space also occupied by Cannabis.  If all of this space suddenly became empty due to an executive order there would be a large impact on pricing of both retail and warehouse space with rents and prices plummeting


How the California waivers are ultimately decided will have a profound impact on autos and industries like Cannabis.  Our current political climate has become very polarized and executive action is being utilized more frequently by both parties creating considerable uncertainty for industries. Although I don’t see any executive action in the future on Cannabis, nothing is out of the question.

Resources/Additional reading




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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.


Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, Illinois, and Florida. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide.  To get started on a loan all they need is their simple one page application (no upfront fees or other games).