Legalizing marijuana is associated with an immediate increase in housing prices, according to a new report published by the online service Clever Real Estate.
According to the study, “States that legalize recreational cannabis see an immediate bump in home values following legalization, even without retail dispensaries opening up. From 2017 to 2019, cities where recreational marijuana is legal saw home values increase $6,337 more than cities where marijuana is illegal” – this was determined after controlling for potential confounders. There was an even greater increase in overall home prices for cities that regulated retail marijuana facilities By contrast the report did not identify a similar significant increase in home prices in cities where only medical cannabis was legally regulated.
According to NORML, “Regarding crime rates following the passage of legalization, the study failed to identify any overall trends in legal states that significantly differed from the national average. ”
The study states: “The crime rate increases in Washington and Colorado are consistent with nationwide violent crime trends since 2014. … Using Colorado and Washington as case studies, it’s clear that the market benefits from marijuana legalization outweigh the potential costs in terms of home values,”.
Below are some of the “Key Insights” found by the report:
- Cities that allow retail dispensaries saw home values increase $22,888 more than cities where marijuana is illegal from 2014 to 2019 (controlling for population and initial home values)
- CATO research supports our findings, suggesting homes close in proximity to marijuana retail dispensaries increase in value
- For cities where only medicinal marijuana is legal, home values increased at a comparable rate to cities where marijuana is illegal; a statistically significant increase in home values could not be attributed to medicinal marijuana legalization
- States that legalize recreational cannabis see an immediate bump in home values following legalization, even without retail dispensaries opening up. From 2017 to 2019, cities where recreational marijuana is legal saw home values increase $6,337 more than cities where marijuana is illegal (controlling for population, initial home values, and GDP).
“Our research reveals the opposite is true: On average, in states where recreational marijuana is legal, cities with retail dispensaries saw home values increase $22,888 more than cities where marijuana is illegal from 2014 to 2019. Per a CATO Institute study, homes close to retail dispensaries (within 0.8 miles) increased in value approximately 8.4 percent compared to those further away. This effect appears to bring up the entire city’s home values at a rate higher than the national average.”
They continue; “Colorado’s first retail dispensaries opened in January 1, 2014, and medical and recreational sales have generated over $948,000,000 in tax revenue. Denver has 180 dispensaries, the most of any Colorado city, and its housing market has seen unprecedented growth since recreational legalization in 2012.”
The full text of the report, titled How Legalizing Recreational Marijuana Impacts Home Values, can be found by clicking here.
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