Legalization Real Estate
NAR has no position on the legalization of cannabis. On the residential side, the effects seem mixed. The NAR report shows that “in states where marijuana has been legal for the longest, 27 percent saw a decline in residential property values near dispensaries and 12 percent saw an increase.” To adapt to the new reality, landlords are adding addenda to leases. When recreational marijuana is legalized, 58% to 67% of residential property managers have seen leases to restrict smoking on properties. Using Colorado and Washington as case studies, it becomes clear that the commercial benefits of marijuana legalization outweigh the potential costs in terms of home values. Further research in different markets over longer periods of time is needed to determine the true causality between marijuana legalization and crime (this study will be updated when the 2018 crime statistics are released). Real estate markets where recreational marijuana use is fully legalized could see an increase in opportunities as pharmacies and nurseries attract entrepreneurs and employment opportunities, and therefore increased demand for homes. Nevada, for example, could support more than 41,000 jobs and generate $1.8 billion in revenue with legalization. The legalization of marijuana in Colorado has led to a wave of new businesses, created jobs, and improved retail and other amenities. Crime rates also declined when law enforcement stopped prosecuting law-related marijuana cases.
Public concerns about the legalization of recreational marijuana generally focus on rising crime rates. Rising crime rates are leading to lower property values and low real estate investment, according to the narrative. In fact, 42% of Canadians believe a cannabis dispensary will have a negative impact on the value of local homes, according to a 2018 study[2]. Legalization has been shown to lead to new demand for housing, cannabis tourism, and a wave of new businesses. It`s also an incredibly lucrative opportunity for local and state governments to tap into a new source of tax revenue. These benefits have prompted some brokers and investors to pay close attention to markets where marijuana is legal. For example, as the first state to legalize recreational marijuana in 2012, Colorado is often seen as a model of how the ripple effects of legalization can affect states` futures — and so far, the effects have been promising. While all types of marijuana legalization are associated with higher house values, recreational marijuana has the greatest potential impact. Forbes Real Estate Council is an invitation-only community for real estate executives. Am I eligible? Do you have an idea for a real estate theme? Send us your suggestions. In addition to higher home values, home sellers in Colorado and Washington have enjoyed fewer days on the market compared to the national average, especially in recent years. After legalization in 2012, there was a significant drop in the number of days on the market for both states.
When marijuana legalization first appeared on a ballot in California in 1972, voters rejected it. But the tide of public opinion has turned. San Jose (Zillow`s hottest real estate market two years in a row) saw its biggest ever increase in home values in two years after legalization in November 2016, an increase of $303,200. Sales of recreational marijuana didn`t begin until January 2018, but the housing market reacted immediately. As legalization brings marijuana into the mainstream, it has raised questions for real estate professionals and citizens alike. Will legalization affect property values, for better or worse? Will communities begin to benefit from marijuana legalization – or will they suffer the consequences? “At this point, there is no doubt that this budding relationship between grass and real estate will last; Now, experts are wondering how much the marijuana industry can grow and what future impact it will have on real estate as a whole. As more states join the legalization party, the demand for commercial and residential real estate in these markets will only grow. For an industry that is prone to turnover, this is a great development that everyone could feel very good about. With cash on hand, marijuana legalization is often touted as the new backbone of an otherwise struggling economy, especially in rural communities. It has even been shown to significantly strengthen municipal tax bases and fund developments that were otherwise overlooked. And while home values are affected by a number of complex factors beyond the scope of cannabis legalization, there is evidence that legalization has an overall positive ripple effect in growth areas such as housing demand and employment opportunities. Even when we limited the comparison between recreational and medical legalization, that gap remained.
Places where recreational marijuana has been legalized have seen home values increase by $15,129 more than those that have legalized medical use only. To find out how marijuana legalization may affect real estate, we used publicly available data from Zillow and the U.S. Census, among others, to examine the relationships between home values, marijuana legalization, dispensaries, and tax revenues. We used multiple regression analyses to model current trends and predict future trends. There are thirty-six (36) states that have legalized cannabis for medical purposes, and ten (10) states and the District of Columbia that have legalized cannabis for recreational purposes. This issue is likely to impact the real estate sector, as business owners may try to acquire real estate or need financing for cannabis-related businesses. It is imperative that real estate professionals continue to track and monitor state cannabis laws as the industry grows and state laws on the subject vary. We assessed the relationship between home values and marijuana legalization using various multiple regression models.
Larger populations, growing businesses and more employees are all contributing to the growth of the real estate sector when cannabis is legalized. As more and more people move into a state, the need for multi-family housing and labor increases, as does the need for office space, shopping malls, and storage space. These investments can improve the quality of life in communities across the country while attracting tourism and new residents who drive real estate demand. As more states legalize marijuana, there is strong evidence that legalization leads to increased property values, especially in areas where recreational marijuana is allowed and retail dispensaries are welcome. In addition to the new business opportunities that marijuana legalization offers dispensaries, doctors` offices, and farms, there are also parallel businesses that are profiting from legalization. There are currently at least 13,000 to 18,000 cannabis ancillary businesses in the United States, ranging from transportation to tourism. Legalization affects almost every industry – and drags consumers with it. When America`s real estate history is written, there will be a chapter focused on marijuana legalization. I own a third-generation warehouse in Denver, the state where recreational marijuana was first legalized, so it`s impossible for me not to have to analyze the ripple effects. The legalization of cannabis has clearly had a positive impact on the real estate industry and the local economy.
Despite regulatory hurdles and patchwork legislation, the marijuana market shows no signs of slowing down, and for investors, markets where marijuana is legal offer a huge opportunity for high return on investment. Currently, cannabis is legal in 36 states plus Washington, D.C. for recreational, medical or both. And an interesting “side effect” of legalization has occurred in the real estate market. Even as marijuana becomes common and an overwhelming majority of Americans believe marijuana should be legalized, opponents of cannabis legalization have long taken a “not in my backyard” position, saying legalization would lead to higher crime rates and lower property values. Which companies offer the lowest real estate commission fees?: If you plan to sell or buy in a high-end area, you should save commissions.