If you live near a store or dispensary where marijuana is sold or a farm where it is legally grown commercially, should you be concerned about whether it will have an impact on the value of your home or your ability to sell it?
It’s been four years since Colorado and Washington became the first states to legalize recreational use of marijuana, including the sale, possession, and production of the drug. On election day, November 6, 2018, Michigan became the tenth state to legalize recreational marijuana. Utah and Missouri both voted to legalize medical marijuana. Medical marijuana is now legal in 33 states.
via Business Insider
About six in ten Americans (62 percent) say marijuana should be legalized, reflecting a steady increase over the past decade, according to a new Pew Research Center survey. But whether you support or oppose the legalization of marijuana, the stores that dispense it and places where it is grown may have an impact on real estate values. As more states legalize marijuana, the impact on local property values may become an issue for commercial and residential property owners.
Since the legalization of marijuana for recreational use has only been in effect for six years, very little empirical research has been conducted on the question of property values, and the studies have been addressing early stages of legalization and not long-term impact.
The most publicized study looked at Colorado home values over the three years following legalization. The study looked at dispensaries for medical marijuana that also sold marijuana to recreational users after legalization took effect. The study, called “Contact High: The External Effects of Retail Marijuana Establishments on House Prices,” used publicly available data to compare home values close to a dispensary with those slightly farther away.
The study found that 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 before and after recreational sales were legalized.
“We went into the project, and we weren’t really sure what to expect,” said James Conklin, a real estate professor at the University of Georgia who co-authored the paper. “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.”
The findings supported an earlier report written by two University of Mississippi professors and an economist from FNC that found legalizing retail marijuana in Colorado increased housing values on average- about 6 percent or $16,500 per property.
Not all research on property values has been positive. Earlier this year, a survey by the National Association of Realtors found that nearly 10 percent of Realtors in states where recreational or medical use is legal reported an increase in the value of properties located near marijuana dispensaries. However, 12 to 14 percent reported a decrease in values. Most Realtors who have sold a former “grow house” said that they had no difficulty making the sale (73 percent in prescription only states, 67 percent in both recreation and prescription legal).
The Jury is Still Out
Initial research suggests that there is no hard evidence that homes located near marijuana outlets or “grow houses” suffer a loss of value. However, the full story may not yet be in. Research to date has examined only two states, where home values have been soaring for reasons that have nothing to do with marijuana. Would results be different in markets like Chicago or Detroit? If marijuana stores do in fact have an initial neutral or positive impact on home values, what will be their impact on values over time? Will their impact on their neighborhoods eventually resemble retail liquor stores, which contribute to crime and urban decay?
A study by Ohio State researchers compared property crime near marijuana outlets with bars, liquor stores, and restaurants.
“The levels of property crimes were similar, although marijuana outlets were responsible for slightly more,” said Bridget Freisthler, lead author of the study and professor of social work at The Ohio State University.
However, alcohol outlets were responsible for about four times more violent crimes during the 34 months of the study than those that sold marijuana (372 vs. 93).
“Over time, as marijuana grows in popularity, densities of marijuana outlets may increase, resulting in higher crime,” Freisthler said. “There are definitely negative public health consequences, including increased crime. There may be economic benefits in terms of more tax revenue and money spent in neighborhoods. Citizens have to decide how they want to measure the benefits and costs.”