Cannabis Law Prof Blog

Editor: Franklin G. Snyder
Texas A&M University
School of Law

Wednesday, October 18, 2017

Does the Legalization of Marijuana Actually Increase Property Values?

Despite worries that an increase in dispensaries would decrease the value of the homes nearby, there seems
 to be an opposite effect.
Reporting on a recently released study by researchers at University of Wisconsin Madison and California State University Sacramento, Colorado Springs Independent revealed that the prices of homes in Denver increased in 2014 after Colorado’s Amendment 64 was passed, which legalized recreational marijuana: Home Prices

In particular, the report found that single-family residences within .1 mile[s] of [recreational dispensaries that were newly converted from medical dispensaries] increased in value by over 8 percent more relative to comparable properties farther away (between .1 and .25 mile away) over that year. That’s an average of almost $27,000 in added value, whereas homes more than .1 mile away from a [dispensary] weren’t impacted.

Although great news for Denver, and possibly an incentive for legalization in other states that are debating on whether to legalize the drug, researchers also caution that that the increase in property values could also be due to other factors such as “a surge in housing demand spurred by marijuana-related employment growth, lower crime rates, and additional amenities locat[ed] in close proximity to retail conversions.” Nonetheless, all of these changes were related, at least in part, to Colorado’s legalization of recreational marijuana.

These findings are in stark opposition to concerns voiced by opponents of legalizing marijuana, who have constantly cited increasing crime rates and decreasing property values as an anticipated result of legalization. And while the study was fairly small, another study in 2016 by researchers at the University of Mississippi found similar, positive results. The study found that in municipalities that passed ordinances to allow for the sale of marijuana in response to Colorado’s legalization of recreational marijuana in 2012, those municipalities experienced a 6% increase in housing values on average. Both studies even went as far as to consider retail dispensaries as amenities that could be included in the estimation of property values.

With the increase in the number of states legalizing both medical and recreational marijuana, we will soon be able to determine whether the effect of increasing property values is a trend among these states or only a stroke of luck for Colorado.

--Taylor Wood

http://lawprofessors.typepad.com/cannabis_law/2017/10/does-the-legalization-of-marijuana-actually-increase-property-values.html

Finance, Medical Marijuana, Recreational Marijuana, Research | Permalink

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