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Cannabis shops raise property prices

You'll have less call for these people if you reside near a shop selling cannabis products. Photo: Alex Smith
You’ll have less call for these people if you reside near a shop selling cannabis products. Photo: Alex Smith

A study in the United States has indicated that shops selling cannabis products raise a neighbourhood’s property prices.

Undertaken by James Conklin of the University of Georgia, Moussa Diop of the University of Wisconsin-Madison and Herman Li of California State University, Sacramento, it found that the property prices of houses within 525 feet (a tenth of a mile) of cannabis shops in Denver, Colorado, increased by 8.4 percent more than those marginally further away, a rise equating on average to $27,000. Another study by Cheng at al in 2016 found that residential property prices rose by six percent. Publicly available data was employed. The increase could be because more foot traffic is attracted to merchants or crime is reduced. Colorado legalised medical cannabis in 2000 and the recreational variety in 2018.

When there’s more foot traffic

John Andrew, a professor of real estate at Ontario’s Queen’s University, explained that more foot traffic was good for shops in surrounding blocks and might have “spillover” for residential property prices: “If you get excellent shopping and stores thriving in a particular area, people want to live near there.” Greg Eckler, who founded an estate agent in Denver in 2013, christened this “the Starbucks effect.” True, he has had people asking about nearby shopping and restaurants but has never had anyone ask about cannabis dispensaries, and he holds that there might be some stigma in the same way that houses are worth less if the local prison is visible. But Eckler does believe some folk are moving to Colorado “because of marijuana.” This view was echoed by Lathen Gorbett of the Portland estate agent M Realty: “We see a lot of people looking to move to Portland, and one of the attractions is the fact that we have legalised marijuana.” Many such folk aren’t even stoners but are attracted to a “liberal, forward-thinking city.”

The impact on crime

As for crime, Christopher Alexander, regional director for Ontario-Atlantic Canada of Real Estate Maximums, which has more customers than any other US or Canadian real estate network, commented that if there is a legal avenue for purchasing cannabis, “Crime should come down, which always has a positive impact on property prices.” One possible reason is that with ready access to cannabis, people drink less alcohol. Another is that with greater tax receipts, government can provide more services. Yet another is that more jobs are created, making people less inclined to criminality and increasing demand for housing.

Further evidence of the impact of cannabis shops on crime was the 2017 study by Tom Y Chang of the University of Southern California’s Marshall School of Business and Mireille Jacobson of the Paul Merage School of Business at the University of California at Irvine. Entitled Going to pot? The impact of dispensary closures on crime, it found that when hundreds of medical marijuana dispensaries in Los Angeles were closed in 2010, crime immediately increased compared to locations where a dispensary remained open, and the same happened with restaurants. Crime instantly fell again when restaurants reopened. This, the authors believe, is because both types of establishment contribute to an area’s “walkability score,” where there are “more ‘eyes upon the street’,” which deters some forms of crime, particularly property crime and theft from vehicles.

Contrast this with the opinions of opponents of cannabis legalisation who harp on that more crime would be attracted.

Header image via VaporVanity