If you live in or around Denver, you already know what a nightmare the housing market has been for the last few years. And, chances are, you probably place some of the blame on the legalization of recreational marijuana in 2014.
New recreational cannabis markets–especially in a behemoth of a state like California–are looking to Colorado to predict what impact legalization will have on their communities. Luckily, a group of researchers studied the effect on housing prices in Denver both before and after recreational marijuana was legalized–and their results were surprising.
Rather than negatively impacting property values in the immediate vicinity of a dispensary, they found that selling recreational cannabis had a “large positive impact on neighboring property values.”
James Conklin, a real estate professor at the University of Georgia, co-authored the study and told The Cannifornian, “We went into the project and we weren’t really sure what to expect. We thought maybe there would be a negative impact. I think our takeaway after working on the project was that we don’t see a negative effect — we do see results point to a positive effect.”
In fact, they found that existing medical marijuana dispensaries that expanded to included recreational sales actually raised nearby property values. Single-family homes within 0.1 miles of a dispensary saw gains of 8.4 percent relative to houses located between 0.1 and 0.25 miles away. For homes in the 0.1 mile range, the average property value increase was $27,000 higher after legalization.
Moussa Diop, an assistant professor of real estate and urban land economics at UW Madison and co-author of the study, explained that “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. It’s an important piece of the puzzle as more and more voters and policy-makers look for evidence about the effects of legalizing recreational marijuana.”
However, as the researchers note, the correlation between legal marijuana and housing values is only one factor affecting the Denver market. Even before 2014, Colorado’s population was on the uptick and affordable housing was (and still is) in short supply.
So, while new cannabis markets are looking to Colorado to predict what will happen in their own communities, there’s no guarantee that what’s happened in Denver and the state will impact new cannabis markets in the same way.
Some realtors in California have expressed disbelief that legal weed will increase home values. Rick Smith, president of the Santa Clara County Association of Realtors, said that regulations prohibiting dispensaries from operating close to neighborhood schools would likely have a dampening effect on home values.
Oakland-based realtor Kerri Naslund-Monday agreed. “The demand here is so high already,” she said, “even without that element, that I don’t foresee it causing too much of an effect that could be measured.”