According to a new study by the National Association of Realtors (NAR), states with legal medical or recreational cannabis for more than three years demonstrated major increases in demand for commercial properties. Residential properties close to dispensaries were not always as lucky. The study, Marijuana and Real Estate: A Budding Issue, was announced in a Feb. 11 press release.
In states that have legalized medical or recreational cannabis for at least three years, 42 percent had an increase in demand for warehouses, 27 percent had an increase for storefronts and 21 saw percent had an increase for land.
The correlation between cannabis and property value in states that legalized earlier is a bit more complicated. In states where that legalized some form of cannabis before 2016, 21 percent had increased in the value of commercial properties in proximity to dispensaries, but 18 percent reported a decrease.
“As more states legalize marijuana, the real estate market will progressively have to adjust,” said Dr. Jessica Lautz, vice president of demographics and behavioral insights for NAR. “From property owners, to manufacturers, to those who simply want to engage for leisure—it all touches real estate in some form.”
The most commonly reported concern of commercial property owners was the odor factor when they leased out to cannabis-related businesses. Other concerns involved the potential for the theft of cash on property, moisture issues and fire hazards.
The study investigators also noticed a ripple effect on residential properties—and association with a dispensary isn’t always a good thing when it comes to those types of properties. In states where cannabis had been legalized the longest, 27 percent had seen a decrease in residential property values near dispensaries, but 12 percent had seen an increase. One reason for the decrease in residential property values, however, was the effect of homeowner associations.
In short, having dispensaries nearby was most beneficial to commercial properties, but not as beneficial to residential properties. A separate analysis, however, revealed that real estate values were boosted after cannabis was legalized in Denver, Colorado; Seattle, Washington; Portland, Oregon and in Californian cities.