Ontario commercial landlord liability for illegal drug activity changes on July 1, 2026. On that date, the Measures Respecting Premises with Illegal Drug Activity Act, 2025 comes into force, and for the first time a commercial landlord can be prosecuted for knowingly permitting leased premises to be used for drug production or trafficking. It is a provincial offence with a "reasonable measures" defence, not an automatic civil liability. Corporate fines can reach $1,000,000.
That framing matters, so it is worth stating plainly at the outset. This new regime does not make landlords automatically responsible for whatever a tenant does behind a locked door. It does not create a private right of action allowing anyone to sue a landlord. It is a quasi-criminal, provincial offences regime built around a knowledge standard, and it gives landlords a defence if they took reasonable steps to prevent the activity. Understanding where that line sits is the whole point of preparing before the in-force date.
The Act was enacted through Schedule 8 of Bill 10, the Protect Ontario Through Safer Streets and Stronger Communities Act, 2025, which received Royal Assent on June 5, 2025. Order in Council 758/2026, signed May 14, 2026, set the in-force date of July 1, 2026 and, importantly, applied it only to commercial landlords for now. Residential landlords and sublessees are not currently captured. At Hadri Law, our corporate and commercial team works with Ontario business owners and property owners on exactly the kind of lease review and risk planning this new law demands.
Who the Law Applies To: Ontario Commercial Landlords
The regime currently applies to commercial landlords only. In practical terms, that means a person or corporation leasing premises to a tenant for commercial use. If you own a retail plaza, an industrial unit, an office suite, or a mixed commercial building and you lease space to business tenants, you are within scope as of July 1, 2026.
Several categories are currently outside the regime. Residential landlords are not captured. Sublessees are not captured. The government has also indicated it consulted on possible exemptions for not-for-profit housing, supportive housing, and institutional accommodation, but no final determination has been announced as of this writing. The Act does, however, allow the regime to be expanded to residential landlords in the future, so today's exclusions should not be treated as permanent.
What the Act Prohibits: "Knowingly Permitting" Drug Activity
The core prohibition is that a commercial landlord must not knowingly permit leased premises within their building to be used in connection with producing or trafficking controlled substances, precursors, or cannabis. The operative word is "knowingly." This is not a strict-liability offence where mere occurrence of drug activity on the property creates liability. The prosecution must establish that the landlord knew and permitted it.
The Act ties to prescribed offences under federal law, including section 7.1(1)(a) of the Controlled Drugs and Substances Act (Canada), which addresses possession of items intended for the production of a controlled substance without lawful authority. Because the underlying offences are set out by regulation, some implementation detail remains to be finalized. The province is filling in parts of the framework through regulations, and until those are complete, certain aspects of enforcement will continue to be clarified. That is a reason to prepare carefully rather than a reason to assume the law lacks teeth.
The reason "knowingly permitting" is the standard, rather than simple occurrence, is that the legislature paired it with a defence. A landlord who genuinely did not know, and who took reasonable measures to prevent the activity, is meant to be able to answer the charge. The work of preparing for July 1 is largely the work of being able to make that answer convincingly.
Penalties: Fines, Imprisonment, and Premises Closure
The penalty structure is significant, and it scales with whether the landlord is an individual or a corporation and whether it is a first or subsequent conviction.
| Offender type | First conviction | Subsequent conviction |
|---|---|---|
| Individual | $10,000–$250,000 fine and/or up to two years less a day imprisonment | $5,000–$100,000 per day from the offence date |
| Corporation | $25,000–$1,000,000 | $10,000–$500,000 per day from the offence date |
The per-day structure on subsequent convictions is worth pausing on. A fine calculated per day from the offence date can accumulate quickly, which is one of the strongest reasons to address any suspected activity promptly rather than letting it continue.
Beyond fines and imprisonment, the Act gives police a separate enforcement tool. Police may close non-residential premises and bar entry unless a court orders otherwise. A landlord seeking relief from a closure must post a cash bond of at least $10,000, and that bond is forfeitable if another charge arises. For a commercial landlord, a closure order can mean lost rent, disrupted tenants in neighbouring units, and reputational harm well beyond the fine itself.
It is also worth noting that, depending on how a corporate landlord is involved, individuals connected to the corporation can face exposure where they caused, authorized, permitted, or participated in the offence. That is not automatic personal liability for every director or officer simply because the corporation is charged; it depends on the individual's actual involvement. Incorporated landlords should not assume the corporate structure alone insulates the people running it.
The "Reasonable Measures" Defence: How Ontario Commercial Landlords Can Protect Themselves
The most valuable thing a commercial landlord can do before July 1, 2026 is position themselves to rely on the reasonable measures defence. The Act provides that a landlord may avoid liability by showing they took reasonable measures to prevent the activity. Crucially, the statute does not define "reasonable measures." Courts will decide what qualifies, case by case, and they are likely to weigh what was proportionate to the risks actually present.
Because the standard is undefined and context-specific, there is no official checklist that guarantees a successful defence. What follows is not a definitive list but a set of steps that law firm guidance and the structure of the Act suggest a court may credit as evidence of genuine, ongoing prevention:
- Tenant screening at the time of leasing, including appropriate background checks, so that lease decisions are made with reasonable diligence.
- Explicit lease prohibitions against illegal drug activity, paired with audit and inspection rights and the right to terminate on discovery of illegal use.
- Scheduled, documented inspections of the premises, with written records of what was observed and when.
- Prompt reporting of suspicious activity to police or other authorities, rather than ignoring red flags.
- Record retention that creates a paper trail demonstrating active, continuing prevention.
Two cautions belong with this list. First, the absence of records is itself a weakness. If a landlord cannot show what they did, it is far harder to establish that reasonable measures were taken. Documentation is not bureaucratic busywork here; it is the evidence. Second, there is a real risk of overcorrecting. Aggressive surveillance or intrusive inspections can generate tenant complaints around quiet enjoyment and may raise concerns under the Ontario Human Rights Code. A sensible inspection regime should be reviewed by legal counsel so that the steps taken to build a defence do not create a different legal problem.
What This Means for Your Commercial Leases
Many commercial landlords are operating under leases signed long before Bill 10 existed. Those leases may say nothing about illegal drug activity, may lack the inspection rights needed to monitor for it, and may not give the landlord a clean path to terminate if it is discovered. That is a gap worth closing before July 1.
Reviewing existing commercial leases is the most immediate action item. The review should look for explicit drug-activity prohibitions, broad inspection rights exercisable on reasonable terms, immediate termination rights on discovery of illegal activity, and tenant representations regarding lawful use of the premises. Where those provisions are missing, landlords can consider amendments on renewal or, where appropriate, negotiated amendments to current leases. New leases entered into going forward should be drafted with these provisions built in from the start rather than retrofitted later. Strengthening your commercial lease documentation now is the single most concrete step toward a defensible position under this new Ontario landlord liability regime.
Frequently Asked Questions
Can an Ontario commercial landlord be prosecuted for a tenant's drug activity?
Yes, but only where the landlord knowingly permitted the premises to be used for producing or trafficking controlled substances, precursors, or cannabis. The standard is knowledge, not mere occurrence, and a landlord who took reasonable measures to prevent the activity has a defence under the Measures Respecting Premises with Illegal Drug Activity Act, 2025.
Does this law apply to residential landlords in Ontario?
Not as of July 1, 2026. Order in Council 758/2026 brought the Act into force only for commercial landlords. Residential landlords and sublessees are currently excluded, though the Act allows the regime to be expanded to residential landlords by future order.
Can directors and officers of a corporate landlord be personally liable?
They can be exposed where they caused, authorized, permitted, or participated in the offence. It is not automatic personal liability simply because the corporation is charged; it depends on the individual's actual involvement in the conduct.
What happens if police close my commercial premises under this law?
Police may close non-residential premises and bar entry unless a court orders otherwise. A landlord seeking relief must post a cash bond of at least $10,000, which is forfeitable if another charge arises.
Sources & Official Resources
Ontario Statutes Cited
- Measures Respecting Premises with Illegal Drug Activity Act, 2025 — SO 2025, c 6, Sched 8
- Protect Ontario Through Safer Streets and Stronger Communities Act, 2025 (Bill 10) — Legislative Assembly of Ontario
Federal Statutes Cited 3. Controlled Drugs and Substances Act, SC 1996, c 19 — Section 7.1
Regulatory Instrument 4. Order in Council 758/2026 — Bringing Act into force July 1, 2026 for commercial landlords (referenced in BLG, May 2026)
Helpful Resources 5. Law Society of Ontario — Find a Lawyer or Paralegal
Contact Hadri Law
If you own or manage commercial property in Ontario and your leases have not been reviewed under this new legislation, the window before July 1, 2026 is the time to act. Reviewing your leases, building documented compliance procedures, and understanding your exposure under the Measures Respecting Premises with Illegal Drug Activity Act, 2025 puts you in a far stronger position should questions ever arise. Hadri Law has helped businesses across Toronto and the GTA with corporate and commercial matters, including commercial leasing and risk planning.
Call +1 (437) 974-2374 for a free consultation. We serve clients in English, French, Spanish, and Catalan.
This article provides general information and is not legal advice. The Act is supported by regulations that may continue to be developed, and every situation is different. Contact a lawyer to discuss your specific circumstances.
