On May 4, 2019, Governor Pritzker and key legislators unveiled a long-anticipated proposal to legalize the use of cannabis for adults over the age of 21 under Illinois law (Amendment No. 1 to SB 7). The proposed law would allow residents over the age of 21 to possess up to 30 grams of cannabis and grow up to five plants per household. The Act prohibits the use of cannabis in public places including government buildings.
While the draft legislation might be amended and still has to be approved by the General Assembly, it is not too early for local governments to prepare for the proposed law’s sweeping changes affecting cannabis business establishments, including land use/zoning, tax revenues, employee policies, expungement obligations, among others. We can’t possibly go into everything that is in the 533 page bill, but we have provided a brief summary of some of the provisions that affect units of local government below.
One Year to Prohibit Cannabis Business Establishments
The draft legislation contains a provision that will allow local governments to “opt-out” or entirely prohibit cannabis business establishments in their jurisdiction, including dispensaries, cultivation centers, craft growers, processing organizations, and transportation organizations. However, any “measure prohibiting or significantly limiting” the location of cannabis businesses has to be adopted within one year of the effective date of the Act. After this one-year period has expired, local governments will have to seek approval by referendum to adopt any prohibition or significant limitation on cannabis businesses.
Regulate Cannabis Businesses
The current bill allows local governments to regulate cannabis businesses but only to a certain extent. The bill allows local governments to adopt (1) reasonable zoning ordinances that do not conflict with the Act or unreasonably prohibit home cultivation and use of cannabis; (2) ordinances and rules governing the time, place, manner, and number of cannabis businesses; and (3) regulations on the consumption of cannabis in a manner consistent with the Act.
This language would permit local governments to impose distance restrictions between cannabis businesses and other sensitive uses and locations, limit the hours of operation of cannabis businesses, or set a cap on the number of cannabis businesses allowed within the jurisdiction. The current bill also expressly allows local governments to regulate cannabis businesses through the use of conditional (special) use permits. While the bill allows local governments some regulatory authority, the bill prohibits local governments from regulating cannabis businesses in a more restrictive manner than allowed under the Act. Importantly, this prohibition includes an express home rule preemption.
Employment Policies and Workplace Drug Policies
Under the current bill, employers will have the authority to adopt reasonable and nondiscriminatory employment policies concerning drug testing, smoking, consumption, storage or use of cannabis in the workplace. In addition, employers will have the power to discipline or terminate employment of an employee for violating an employer’s employment policies or workplace drug policy. The Act also establishes when an employer may consider an employee to be under the influence of cannabis.
Municipal Cannabis Sales Tax
Under the current bill, both home rule and non-home rule municipalities can adopt ordinances to impose a local tax on the operation of a cannabis dispensary. The rate of tax cannot exceed 3% of the dispensary’s gross receipts from the sale of non-medical cannabis. If imposed, the tax may only be imposed in 0.25% increments.
Expungement of Local Records and Offenses
The initial procedure for expunging criminal records will be handled by the Illinois State Police (ISP) as well as the State’s Attorneys Office. However, local law enforcement will have to automatically expunge records pertaining to arrests for minor violations identified by the Department of State Police within 60 days of notice from ISP.
SB 7 is only a proposal at this time and still needs to pass both the Illinois House and Senate and be signed by the Governor before it becomes law. However, it is important to note that the current draft state budget includes cannabis revenue, so, it is expected that the General Assembly will move fairly quickly to consider passing legislation.