How will legalized pot affect property owners?

The Illinois legislators recently passed a bill legalizing the use of recreational marijuana. It is expected to be signed into law by Governor Pritzker later this month, making recreational use of the drug legal in Illinois as of January 1, 2020. Smart, successful property owners need to be aware of the effect this law could have on their businesses and properties.

Changes to the Illinois Condominium Property Act

Important to owners, condominium associations, property managers and tenants, the law includes an amendment to the Illinois Condominium Property Act which allows condominium associations to place certain restrictions on the smoking of marijuana, both in common elements and in private units.

That said, the restrictions are limited to the traditional smoking of marijuana and cannot extend to other forms of consumption or use (unless they amount to nuisances). Regardless, restrictions on the use in private units must be approved by the ownership by way of a change to the Declaration and Bylaws of the association, and not merely by Board approved rules and regulations.

Residential Lease Modifications

For owners of multi-family residential properties, most leases will need to be modified to avoid running afoul of the new law. Landlords will no longer be permitted to consider the mere presence or use of marijuana as a violation of the law and a basis for terminating a lease. But landlords should be aware of the restrictions that are included in the bill, including parameters around the growing of marijuana in one’s home and the limits on legal possession.

Commercial Lease Concerns

For owners of commercial properties, leases will need to be scrutinized closely. Landlords will need to take the new law into consideration when evaluating their insurance policies. Additionally, since the law includes a stipulation that allows any workplace to enforce a reasonable zero-tolerance policy regarding marijuana use, Landlords may want to include lease provisions making this a requirement of their tenant’s business.

The legalization of recreational marijuana also opens new opportunities for commercial and industrial property owners as the number of growers and sellers will greatly increase, but landlords will need to adjust their leases to account for the particular challenges that can come with these tenants and businesses.

These are just a few of the changes – and challenges – ahead. Property Owners should consult with experienced real estate counsel to ensure they are well prepared for any and all of the potential issues that could arise from the implementation of this new law.

Since 1992, Erwin Law has been advising property owners, homeowner associations and landlords, helping them stay abreast of important changes in the law. We know how to protect your business and maximize results. When you are looking for a trusted partner you can rely on, call us at (773) 525-0153, or visit erwinlawfirm.com.