., the Court stated:In deciding whether a rental property is used in a trade or business or is a capital asset, the Court of Appeals for the Second Circuit has examined the taxpayer's rental-related activities for continuity, regularity, and substance.

Denver and the entire state of Colorado have legalized marijuana, which is ultimately a federally controlled substance.

Substance over form.

John, We also have very little insight into the substance or source of the I current tenants claims to possession or their lien.   

I listen all the time to stuff and mostly it’s just a lot of talk and little substance.

I maintain that substance is more important than form.

(1): There is a clause in our lease that says that if the tenant is in possession of a "controlled substance", they can be given a 1 day notice to quit.

If it is illegal in your state, I would start by giving the tenant written notice reminding them that it is illegal and that smoking of any substance is not allowed in the rental.If they do it again, call the cops immediately.

Your standard business practice, the substance of communications with your professionals, and certainly any financial documentation you can bring to bear on what made you change your mind - these all go to demonstrate your intent.So it sounds like this is a fortunate accident for you. 

You cannot tell anyone they aren't allowed to have a legal substance like alcohol or prescription drugs in your house.