Housing is a fundamental right and a vital determinant of health. Health equity is not possible without widespread access to safe, affordable, high-quality housing. Local housing policy is a central conduit for advancing such ends. However, preemption of local law is a powerful institutional mechanism that state legislatures sometimes deploy to inhibit or nullify municipal efforts to address housing-based inequities. Local housing policies often have high stakes, are ideologically laden, and are politically salient. This makes them a clear target for preemptive action. Political science research to date has focused on broadly explaining the causes of preemption, with scant emphasis on its consequences and minimal attention to the implications for racial and economic equity. This article highlights the political repercussions of state preemption. Drawing on in-depth qualitative interviews, the article examines how local tenant organizations that work to build power within racially and economically marginalized communities perceive and respond to state preemption. The findings demonstrate how both the reality and the threat of state preemption prompt tenant organizations to adjust (and often minimize) their policy goals and to adapt their political strategies in ways that strain their capacity. By burdening local organizations that are crucial power resources in marginalized communities, state preemption of local housing policy risks entrenching inequity and eroding democracy.