Illinois Municipalities Begin Debate on Recreational Cannabis Businesses

With the State of Illinois’ recent legalization of recreational cannabis, municipalities have started to debate whether to “opt in” to allow such businesses. While municipalities cannot prohibit the use of recreational cannabis, they can decide whether recreational cannabis businesses are allowed to operate within their boundaries.

Local officials are just starting to consider the pros and cons of recreational cannabis businesses in their communities. One major reason to favor such businesses is the potential tax revenue. The new state law allows municipalities to impose a 3 percent tax on cannabis sales on top of the already existing state and local sales taxes. Some officials worry that if they do not opt in, they will lose these new tax revenues to bordering communities. Jobs are another key consideration. The cannabis businesses are expected to bring short-term construction jobs as well as retail, transportation and security jobs. A further positive is that new cannabis businesses may occupy long vacant retail space and could help to activate dormant retail centers.

If a municipality opts in, it will face other important decisions. First and foremost, where can these businesses locate? The state statute already imposes restrictions on proximity to certain uses such as schools and day cares. Some municipalities may want to limit cannabis businesses to manufacturing or industrial districts to avoid possible land use conflicts. Municipalities will also have to decide what other conditions they will want to impose on cannabis businesses. Hours of operation are often an important consideration.

On the other side of the debate are officials and citizens who raise arguments to opt out of allowing cannabis businesses. One argument is the impact that such businesses could have on a community’s reputation, particularly ones that actively promote family and kid friendly communities. A closely related concern is the social impacts such as increased addiction, exposure of minors to easy access to cannabis and other health-related costs. Some municipal officials have expressed a concern that cannabis businesses could drive other businesses to look elsewhere as these more established businesses scout new locations.

At this early stage of the debate, the cons appear to have swayed at least two municipal boards. The City of Naperville has directed staff to prepare legislation to opt out. Monticello and St. Josephs are reported to be considering an opt out until they can study the issue further. The Village of Morton, near Peoria, has already voted to opt out.

Other municipalities are keeping their options open. Bartlett, Bannockburn, Decatur, DuPage County, Fox River Grove, Galeburg, Jacksonville, Marion, Milan, Moline, Riverwoods, Rochelle and Springfield are all reported to be undertaking preliminary investigations and soliciting citizen input on whether to allow recreational cannabis businesses. All are expected to take formal action in the coming months.

For questions about the information in this alert, please contact Andrew Scott (312-627-8325 or apscott@dykema.com) or your Dykema relationship attorney.