Marijuana is now legal in Illinois. Is your business ready?

by Mainstreet Organization of Realtors

From Kate Sax, vice president of professionalism and career development at the Mainstreet Organization of Realtors

As of Jan. 1, Illinois has joined the growing group of states that allow recreational marijuana use by adults. Dispensaries in the state sold more than $3 million worth on New Year’s Day alone.

With that type of demand, there’s no question that legal weed will impact real estate professionals. Marijuana is being grown, processed and consumed in the properties Illinoisans buy, sell and rent. And, while it’s legal statewide, it’s still illegal at a federal level and a substance that people have varying levels of comfort with.

If you’re a managing broker, you need to put some policies in place around how you’ll handle the different ways that pot could impact your business, before you find yourself confronted with a situation you don’t know how to address.

And of course, all changes to your policies should be reviewed by a lawyer to ensure that you are protected and in compliance with the law.


Now that marijuana is legal for recreational adult use in Illinois, it’s time to reevaluate your brokerage’s employment policies.

You’ll likely want to add language that addresses marijuana usage to your employment and independent contractor agreements. Depending on your brokerage, you may already have alcohol policies you can use to shape new marijuana rules. For example, your brokerage could codify that employees must not be under the influence of marijuana when showing a home, at the office or when driving for work.


If your brokerage manages rental properties, you’ll need to consider how your leases should address marijuana. But even if your brokerage does not actively manage properties, it’s important to understand how the state law may impact buyers who are interested in purchasing income-producing property and tenants who are looking to rent.

According to Megan Booth, director of federal housing, valuation, commercial real estate policy and programs for the National Association of Realtors, Illinois law specifically allows landlords to ban recreational marijuana from their properties. However, in the case of renters who use marijuana for medical purposes, landlords will need to offer reasonable accommodations.

In Illinois, those approved to use marijuana for medical purposes can also grow up to five plants on their own property. Unfortunately, cultivating the plant indoors can also promote mold growth. As a property manager, you’ll need to consider what you could add to a lease to allow tenants to exercise their rights to grow medical marijuana while also protecting your property. This might include the use of certain types of equipment, like a grow cabinet, that minimize the likelihood of damage.

It’s not yet entirely clear how marijuana should be handled on FHA-approved properties. Given that it is still illegal at the federal level, there could be risks to allowing residents in an Federal Housing Administration-approved property to use pot on the premesis, but it is not yet clear whether the federal government will pursue action in these types of cases. That’s something that property managers will need to watch closely.

Commercial real estate

Marijuana legalization opens up lucrative commercial opportunities but comes with related risks. According to Booth, Colorado now has more dispensaries than it does Starbucks locations — but nearly all dispensaries are cash-based due to federal banking regulations.

The cash-based nature of these businesses raises two concerns. First, since they are widely known to hold significant amounts of cash, they can be targets for thieves. Second, these businesses may need to pay rent in cash. If your brokerage manages commercial property, consider policies addressing who will be responsible for extra security at those buildings that include dispensaries, and how cash rent payments will be handled if allowed.

These challenges are why NAR has begun to advocate for dispensaries to have access to Federal Deposit Insurance Corp.-insured banks in states where marijuana is legal. The Secure and Fair Enforcement Banking Act, which would allow banks to work with marijuana businesses, was passed by the House of Representatives last year but has yet to be taken up in the Senate.

Whether your brokerage will enthusiastically rent to dispensaries or would prefer to avoid marijuana altogether, this new law is sure to touch your clients, agents and employees. Put policies in place now to shape how you deal with it, and keep an open line of communication with your legal counsel so you can adapt policies appropriately as the Illinois marijuana market grows.

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