In Colorado, legalizing cannabis has earned the state almost $2 billion in marijuana sales, including general scholarship funds for students headed to college and around several hundred million dollars in tax revenues. It has also made property values more lucrative in and around the city of Denver, and certainly in areas that have close proximity to retail pot shops.
Specifically, cannabis outlets are adding 8.4 percent more value onto homes closer to them than farther away. At least, that is what the Wisconsin School of Business at the University of Wisconsin-Madison had to say, which just last week released a research report conducted by assistant professor of real estate & urban land economics, Dr. Moussa Diop, as well as the University of Georgia’s James Conklin and California State University’s Herman Li.
The team found no negative impacts on property or housing prices since marijuana went legal. In fact, they found the opposite: Values were on the rise near retail shops. As the study indicates, property values rose 8.4 percent for single-family homes located within 0.1 miles of weed stores, whereby homes situated a little farther from a store, between 0.01 miles and 0.25 miles, saw less growth in value.
Diop emphasizes the importance of noting the relationship between housing prices and marijuana legalization, especially when considering the socio-economic effects of legalizing recreational weed for adult use. Diop said, “The presence of retail marijuana establishments clearly had a short-term positive impact on nearby properties in Denver.”
“This suggests that in addition to the sales and business taxes generated from the retail marijuana industry, municipalities may experience an increase in property taxes,” Diop explained. “It is an important piece of the puzzle as more and more voters and policymakers look for evidence about the effects of legalizing recreational marijuana, as the issue is taken up by state legislatures across the country.”
The research finally kills all frequently raised concerns about cannabis shops causing property values to decline. The Sacramento Bee published an article just last week about homeowners in California frightened about the destructive influence of marijuana on home values. The focus of that story was on cultivating cannabis, however, and not selling it.
The study did not focus on identifying why properties located near marijuana retailers were gaining value faster than samples used for comparison. Its authors did mention a few theories, however, including an increase in demand for housing as a direct response to escalating growth in marijuana-related employment.
According to a Cannabis Jobs Count conducted by Leafly, legalizing the herb has been directly responsible for creating 26,891 full-time jobs in the state of Colorado, which is an increase from 23,407 just a year ago. Another study published last year indicated similar property price charts in Colorado. According to its analysis:
“Since the first shops opened their doors on Jan. 1, 2014, the median home sale price in the state has shot up from $248,000 in the first half of 2014 to $298,000 in the first half of 2016.” Its authors did note that price escalations were partly because of rapid population growth in the state. Between 2014 and 2015, Colorado was the second fastest-growing state nationwide.
The authors wrote, “There is no direct evidence tying the legalization of the drug to the population boom, but real estate agents say more of their clients are relocating to the state because of it.” Not all cannabusinesses have the same effects on property values, however. Residences near recreational stores have comparable prices to those farther away; they just appreciated at a 4.8 percent faster rate.
In contrast, homes near cultivation facilities have pricing 8.4 percent below comparable residences, but their value appreciates 3.8 percent faster than homes located far away from growing sites. Diop and her team of researchers also raised the possibility of decreasing crime rates and more amenities springing up around those pot shops.
For the study, the researchers used a list of retail licenses issued by the Colorado Department of Revenue, as well as information on residential properties in the City of Denver’s Open Data Catalog.