By Rebecca Rothmann, Justin S. Dobek and Daniel J. McMahon Jr.
Illinois is poised to legalize adult-use cannabis. As of May 31, 2019, the Illinois House and Senate have passed the Cannabis Regulation and Tax Act (the Act) and the bill is on Governor Pritzker’s desk for approval. With more than 12 million residents, Illinois has a population twice the size of Colorado. Although the official approval is still pending, Illinois would become the eleventh state to approve the adult use of marijuana, and it would be the first to legalize it through the state legislature. This bill was passed concurrently with a near $85 billion budget.
The Act is designed to help address several social issues that include “allowing law enforcement to focus on violent and property crimes, generating revenue for education, substance abuse prevention and treatment, freeing public resources … and individual freedom.” Its main function is to legalize the recreational use of cannabis and cannabis-related products for those who are 21 years of age and older.
The cultivation, distribution and sale of cannabis will remain highly regulated. Residents of the state of Illinois will be permitted to possess up to 30 grams of flower, 500 milligrams of cannabis-infused products or 5 grams of cannabis concentrate. Those who have a valid medicinal card are permitted to grow up to 5 cannabis plants exceeding 5 inches tall. Nonresidents of Illinois will be limited to 15 grams of flower, 250 milligrams of cannabis-infused products or 2.5 grams of cannabis concentrate.
Employers will retain the right to produce their own drug policy as they see fit, which includes drug tests, and they are allowed to discipline an employee or terminate employment if their policy is broken. However, cannabis now is listed as a “lawful product” under the Illinois Right to Privacy at Work Act, and therefore an employer’s drug-policies do not extend past the workplace. This is significant due to the length of time cannabis can stay in one’s system. Depending on factors that include frequency of use or body type, such as height and weight, one may test positive for cannabis weeks after ingestion. Pre-employment testing for marijuana is therefore questionable and possibly discriminatory.
The Act outlines a broad procedure for detecting whether an employee is under the influence of cannabis while at work, and gives the employer quite a bit of discretion. An employer must have a “good faith belief” that the employee is using marijuana by citing specific symptoms that are attributed to the effects of cannabis. The Act provides the following catch-all language regarding good faith belief, “an employer may consider an employee to be impaired … [if[ an employee manifests specific, articulable symptoms while working that decrease or lessen the employee’s performance of the duties or tasks of the employee’s job position ….” Symptoms attributed to the effects of cannabis that are listed in the Act are: inhibited speech, physical dexterity, changes in agility and coordination, general demeanor, irrational or unusual behavior, negligence, disregard for safety, and damage done to property or another employee.
The Act further requires that each employee who is accused of violating a workplace drug policy pertaining to cannabis must be given a reasonable opportunity to oppose the misconduct charge. The broadness of this procedure creates possible opportunities for accusations of discrimination, so employers must be aware of the proper steps to take when identifying cannabis use in the workplace and disciplining workers.
The creation of an equitable cannabis market is another goal of the Act. Licenses will be required for all operations that grow, distribute and sell marijuana. These licenses will be given out by various government agencies, including the Department of Agriculture, Department of Financial and Professional Regulation, Department of Public Health and the Illinois State Police. Other parts of this effort include the creation of a low-interest loan program to assist with the fees involved with opening various operations, along with the opportunity to waive those fees or reduce costs.
The production and sale of cannabis will be taxed similarly to alcohol products, and all of the tax revenue will go into the “Cannabis Regulation Fund.” This excess revenue will be distributed to the General Revenue Fund, Restoring Our Communities Fund, mental and substance abuse services, Budget Stabilization Fund, Illinois Law Enforcement and Standards Board, and Drug Treatment Fund.
Cannabis will be taxed at 7% for the revenue earned by the grower, distributor and/or dispensary. Retail cannabis products will be taxed at 10% for cannabis with less than 35%THC concentration, 25% for cannabis that exceeds 35%THC concentration and 20% for all cannabis-infused products. Additional sales taxes may be added by municipalities (up to 3%), counties (up to 0.5%) and unincorporated parts of the state (up to 3.5%).
Counties and local governments are given authority to regulate all cannabis operations in compliance with the Act. This includes but is not limited to hours of operation, number of dispensaries within its jurisdiction, space between cannabis-related businesses and the size of various operations. Municipalities have the ability to bar dispensaries from their jurisdiction by “opting out” within a year of the Act going into effect. Civil violations are allowed to be given to those who violate these local ordinances.
Social Equity and Criminal Expungement
The Act emphasizes certain social equity principles and attempts to address the impact of the war on drugs on various communities. It outlines the Restoring Our Communities (ROC) program that will invest in the areas that have been most affected by state drug laws. This program will allow for those in the affected areas to apply for grants to provide assistance with starting new cannabis-related businesses.
The ROC program also provides for an expedited expungement process for those who have been “arrested, convicted, on supervision, or on probation” for cannabis-related charges if the crime was any level of misdemeanor or a class-4 felony. This expedited expungement process may occur after the Act goes into effect on January 1, 2020.
According to the Illinois Constitution, only the governor has the power to pardon crimes through recommendation of the Prisoner Review Board, which oversees the interview process for pardon applicants. However, the Criminal Identification Act, issued in 2009, has allowed for blanket expungement of certain low-intensity misdemeanor crimes for possession or use of cannabis.
Rebecca M. Rothmann is an Equity Partner at Wilson Elser in the Chicago office. Rebecca is co-chair of the Firm’s Specialty Professional Risks Practice Team. She primarily represents accountants, attorneys and insurance brokers in defending malpractice claims involving a wide range of issues. She also defends insurers and their agents and brokers in litigation and arbitrations in a variety of claims including ERISA, life and health insurance coverage disputes and those arising out of the sale of investment products. She has a growing practice representing property management companies, officers and directors and other specialty professions. Contact her at: [email protected].
Justin Dobek is an associate at Wilson Elser in Chicago office. He is a member of Wilson Elser’s Professional Liability & Services and Complex Tort & General Casualty practice groups.
Daniel McMahon Jr. is a summer intern at Wilson Elser in the Chicago office. He is currently enrolled as a senior at Tufts University and plans to attend law school.
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