Gavel to Gavel: Law Against Foreign Land Ownership Poses Problems

A bill passed by the Oklahoma Legislature this year could pose problems for commercial real estate.

After Oklahoma legalized medical marijuana, law enforcement has struggled with non-U.S. citizens setting up illegal marijuana growing facilities. In response, the Legislature passed Senate Bill 212. Gov. Kevin Stitt signed the legislation on June 6. It is effective Nov. 1.

In the Legislature, supporters referred to the “Red Chinese Communist Party, drug cartels (and) the mafia” and said that the goal was to prevent foreigners from buying land in Oklahoma through “straw owners” and using it for illegal marijuana.

But the law says nothing about the Chinese, or drug cartels, or the mafia. It doesn’t even mention marijuana. It flatly prohibits any non-U.S. citizen from owning land – either directly or indirectly – through a business entity or trust.

The problem is that there are all kinds of legitimate foreign companies that do business in Oklahoma and need to own real estate to do that business. Most major international companies that operate plants in the United States do so through U.S. subsidiaries. Car companies like Toyota are just one example.

But it’s not just car companies. An Italian company, Sofidel, has made a major investment in a paper manufacturing facility in Inola. Like other major multinationals, Sofidel has a U.S. subsidiary that owns its Inola plant. The state of Oklahoma provided millions in incentives to lure Sofidel to Oklahoma. Sofidel employs hundreds of Oklahomans. Likewise, another Italian company, Enel S.p.A., just announced that it is building a $1 billion plant that will employ 1,000 Oklahomans. On its face, the new legislation would have prevented those companies from building their facilities in Oklahoma and would prevent similar companies from doing so in the future.

The legislation does contain an exception if a company is “engaged in regulated interstate commerce in accordance with federal law.” But that’s a vague standard. The company must meet all of the requirements – it must be engaged in interstate commerce, that commerce has to be regulated, and it has to be regulated in accordance with federal law. Car manufacturers probably qualify for the exception – they are regulated under federal law, because their products have to meet U.S. federal safety and environmental standards. But is a company that makes toilet paper engaged in regulated interstate commerce under federal law?

This article first appeared in The Journal Record on July 5, 2023, and is reproduced with permission from the publisher.


Associated People:

Malcolm E. Rosser IV

Practice Area:

Real Estate