Real Property Sector Seems to Benefit from Marijuana Legalization
Pot legalization and the benefits to it's communities
You may think that homeowners are scrambling to get away from marijuana farms and greenhouses but that’s just not the case, according to various studies.
In fact, the opposite seems to be true. The value of real property in areas near dispensaries and farms are rising exponentially, which could be bad news for homeowners but good for the cities or the states that legalize recreational and medical cannabis.
This trend is more pronounced in Colorado where property values have been continuing to rise since 2015. A realtor told CNN in June 2015 that the price of real estate, even undeveloped land, soared after the legalization of marijuana.
But that’s to be expected since the marijuana industry in Colorado is creating more jobs. The Centennial State was one of the first to ever legalize recreational marijuana, and it served as the benchmark for the other states that followed suit.
Marijuana Industry’s Economic Impact
A study on the economic impact of marijuana on the state was conducted by the Marijuana Policy Group in 2015, and it found that the industry had an economic impact equivalent to $2.39 billion in 2015, along with 18,000 new jobs. The total sales revenue for that year was almost $1 billion.
After marijuana was legalized, the mean value of homes rose by 8-10 percent for single-family houses that were close to the farms or what it termed as retail conversions. This was the result of the 2015 study titled, “Contact High: The External Effects of Retail Marijuana Establishments on House Prices,” conducted by the University of Wisconsin-Madison, University of Georgia, and California State University, Sacramento.
Supply and Demand
It’s really about supply and demand. As the industry creates more jobs, more workers and those looking to profit from cultivation, manufacturing, distribution, and retail are likely to flock to where the opportunity lies. They need somewhere to live, preferably in close proximity to their workplace.
Property owners also saw the opportunity to increase the asking price for their properties due to the demand.
Property Value Hits the Roof
According to Realtor.com, the median value of houses immediately skyrocketed from just $248,000 to $298,000 in just two years since the first dispensaries opened in January 2014. In fact, it created a whole new specialization in real estate: realtors who specialize in finding homes for potential buyers who want to be near accredited farms or space where they can grow their own marijuana.
A comparative study of the cities and towns in Colorado that have legalized marijuana sales and those that have not, revealed a trend: Areas where selling marijuana is legal typically have higher home values compared to those with no marijuana dispensaries.
By January 2018, there were 70 cities and towns with dispensaries in Colorado. By comparison, there were only 25 in 2014.
In the Years to Come
It’s interesting to note how property values will behave in the coming years—whether or not it will continue to rise or plateau—since the marijuana industry in Colorado is projected to grow in double figures every year through 2020.
For now, however, this is one of the unforeseen effects of legalizing medical and recreational cannabis. Whether that’s good or bad will depend on where you stand.
Give us your feedback on this article below. Do you support this trend? Would you migrate with others into these local towns and cities or steer away and why?