Cannabis Legalization in Ontario: What Landlords Need to Know

If you’re a Landlord in Ontario, you need to be ready for the upcoming legalization of cannabis. While the new laws will impact all homeowners [Related: Guide to Pot Legalization Homeowners, Buyers and Sellers], there are some important implications for Landlords.

First, a review of the new cannabis laws in Ontario:

• As of October 17th, 2018, it will be legal for adults 19+ years of age to possess up to 30 grams (one ounce) of marijuana – that’s equal to about 40-70 joints, depending on the size of the joint.
• It will also be legal to grow up to 4 pot plants per residence. In other words, four plants in a single-family house, four plants in a condo or 4 plants in each apartment in a triplex. In case you’re wondering, one plant grown indoors can yield ¼ pound of pot, depending on the lighting source and growing conditions. Grown outside, it’s not unreasonable to expect one pound of pot per plant.
• In Ontario, cannabis will initially be sold online, though licensed retail dispensaries will be a reality next year.
• Edible marijuana products (e.g. pot gummies or lollipops) won’t be legal to possess or consume until fall 2019.
• It’s still TBD whether or not Toronto will allow residents to grow marijuana in outdoor gardens.
• Legit, medical cannabis users are not affected by the new legislation.
• Condo boards are currently passing rules to deal with the legalization of cannabis. Many are going completely smoke-free (both tobacco and marijuana) and grandfathering in current smoker residents. Others are planning to rely on existing ‘nuisance’ rules to deal with any issues. If you own a condo, talk to your property manager to understand what they are doing and how that impacts you and your Tenant.

Tips for Ontario Landlords

• Include a no-smoking rule in the lease. Section 10 of Ontario’s standard Residential Tenancy Agreement allows you to specify smoking rules. If the Tenant agrees in writing to not smoke in the unit and proceeds to smoke, you likely have grounds to evict them. Note that evictions in Ontario are not easy, and you’ll be probably be asked to prove that the smoke was either damaging the unit or interfering with the enjoyment of other tenants.  
• Include a ‘no grow’ rule in the lease that specifically states that the Tenant is prohibited from growing marijuana in the unit.
• Condos: If you’re renting out your condo, make sure to give Tenants a copy of the condominium rules and bylaws. If your condo building is smoke-free, the Tenants must abide by the rules. It’s good practice to advertise the rules in advance of securing a new Tenant.
• Home Insurance: While we still don’t know how Ontario home insurers are going to deal with cannabis legalization and pot being grown inside of apartments, homes or condos, make sure your policy covers you if your Tenant smokes or grows the legally-allowed four pot plants inside the home.
• Hydro Usage: Do your tenants pay for their own hydro? If they decide to grow the legally allowed four pot plants, how will that affect your hydro bill? According to the CBC: “From lights and heating to pumps and ventilation fans, it’s estimated that it takes about 2,000 kWh to make a pound of product using traditional growing methods. That’s close to how much electricity an average Canadian household uses in two months.”  The good news is that there are lots of new homegrow kits and hydroponic options out there to help minimize smells and optimize energy. The Gobro One Hydroponic Grow Box, for example, has an LED lighting system, carbon filters for smell reduction and claims that the average user spends less than $5/month in extra hydro. [side note: it looks pretty cool too]
• Pot Smells: Like cigarette smoke, pot smoke tends to permeate everything. If your tenant is smoking weed in your house or condo, be prepared for bigger cleaning bills in between tenants. Depending on how much they smoke, you might also be looking at having to paint and replace carpets and drapery. Section 13 of the Ontario Residential Tenancy Agreement states that “the tenant must repair or pay for any undue damage to the rental unit or property caused by the willful or negligent conduct of the tenant, the tenant’s guests or another person who lives in the rental unit”.
• Protect yourself: there are some clauses that your REALTOR can include in the agreement to help protect you and your property from damage from smoke or marijuana plants…but with Ontario’s new standard lease, you’ll be limited by what you can include.
• Spot checks! It’s smart to schedule regular inspections with your Tenant and your property. In Ontario, you must provide 24 hours written notice (indicating the reason for entry, date, time and length of entry). The Tenant does not have to be home during the inspection.
• Is your property a grow-op? Ontario’s rules allow for the growing of 4 pot plants per residence, so a 4-unit house could have as many as 16 pot plants in it, and apartment buildings could, in theory, become small-scale grow-ops. When it comes time to sell, make sure to discuss with your REALTOR and lawyer about any disclosures that you need to make about the pot-growing activity that has taken place in your home.

Being a Landlord in Ontario isn’t easy, and the new cannabis legalization will raise some serious concerns that you need to be ready to address.