Real Estate Considerations in Preparation for Recreational Cannabis in Illinois

Real Estate Considerations in Preparation for Recreational Cannabis in Illinois
Landlords * Tenants * Cannabis Operators

With the passage of the Cannabis Regulation and Tax Act, recreational cannabis will be legal in Illinois beginning January 1, 2020 for anyone 21 years or older. The law provides certain zoning and other limitations on cannabis business establishments and cannabis use on certain property.

Types of Businesses and Limitations

  • Dispensaries: A cannabis dispensary acquires cannabis from cultivation centers, craft growers, processing organizations, and other dispensaries for the purpose of selling cannabis, cannabis-infused products, cannabis seeds, and cannabis paraphernalia. Licenses will be awarded geographically and based on each region’s population. There are a limited number of licenses available per region.
    • Regions where licenses are available: Bloomington (1); Cape Girardeau (1); Carbondale-Marion (1); Champaign-Urbana (1); Chicago-Naperville-Elgin (47); Danville (1); Davenport-Moline-Rock Island (1); Decatur (1); Kankakee (1); Peoria (3); Rockford (2); St. Louis (4); Springfield (1); Northwest Illinois nonmetropolitan (3); West Central Illinois nonmetropolitan (3); East Central Illinois nonmetropolitan (2); South Illinois nonmetropolitan (2).
    • If a license is issued, then an applicant has 180 days from the approval date to identify a physical location for the retail storefront.
    • The Illinois Department of Financial and Professional Regulation will verify the physical site of a dispensary is: suitable for the public, safe, sufficient in size, handicap accessible, and not within 1,500 feet of another dispensary among other things.
    • If the property is not owned by the applicant, then a certification of consent that the property may be used to operate a dispensary is required.
  • Craft Growers: A craft grower is a facility operated to cultivate, dry, cure, and package cannabis to provide cannabis to dispensing organizations to be sold or provide cannabis to processing organizations to make other products. A craft grower may not be located within 1,500 feet of another craft grower or a cultivation center. Also, a craft grower may not be located in an area zoned for residential use.
  • Infuser, Transportation and Cultivation Organizations: An infuser is a facility operated by an organization that directly incorporates cannabis concentrate into a formulation to produce a cannabis-infused product. A transportation organization is an organization or business that transports cannabis on behalf of business establishments. A cultivation center is a facility operated to cultivate, process, and transport cannabis and cannabis-infused products to other cannabis establishments. There are no property limitations specifically for infuser, transportation or cultivation organizations, although use of property may be limited by the landlord or local governing body.

Other Limitations and Protections

  • Local Government:
    • May enact reasonable zoning ordinances or resolutions to regulate cannabis business establishments or prohibit the establishment completely.
    • May regulate the time, place, manner, and number of cannabis business establishments.
    • May authorize an entity to allow on-site consumption, such entity will not be considered a public place within the meaning of the Smoke-free Illinois Act.
    • May regulate those areas specially deemed sensitive, such as colleges and universities.
  • Tenants:
    • Landlords may not be penalized or denied any benefit under State law for leasing to a person who uses cannabis.
    • In residential property, an owner or lessor may prohibit the cultivation of cannabis by a lessee.
    • In condominiums, an association may prohibit or limit the “smoking” of cannabis, defined as “the inhalation of smoke caused by the combustion of cannabis.”

If you have additional questions regarding recent cannabis legislation and related real estate considerations, contact Adam Fayne (Adam.Fayne@saul.com) or Robin Dusek (Robin.Dusek@saul.com) at Saul Ewing Arnstein & Lehr LLP.

 

 

 

 

 

 

*The authors of this article would like to thank Diana Arroyo for her contributions.

DISCLAIMER: Per federal law, marijuana is a Schedule I controlled substance. This means that it is a federal crime to sell, distribute, possess, and/or use marijuana or marijuana-derived products, regardless of any state law that may authorize certain marijuana activity. Although federal policy may, at times, recommend enforcement discretion when a business or individual is in compliance with state marijuana law that is deemed to comply with federal enforcement priorities, it is important to understand that compliance with state law does not equal compliance with federal law, and that federal marijuana policy may change at any time. No legal advice we give regarding marijuana law or policy is ever intended to guide or assist clients in violating federal law.

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