In those US states that have legalised cannabis, the place where you buy it is known as a “marijuana dispensary”. In the civilised world, it’d be called a “coffee shop”. There’s growing evidence that if you reside near one, the value of your house will rise.

A house in Denver whose price probably shot up after the legalisation of cannabis. Photo: Mary-Frances Main

A house in Denver whose price probably shot up after the legalisation of cannabis. Photo: Mary-Frances Main

By £18,000 to be exact

The latest evidence is a study recently undertaken by the real estate marketing firm Clever. This used data from the popular real estate website Zillow. It found that house prices rose by almost $23,000 (currently about £18,000) from 2014 to 2019 in cities that permitted retail cannabis dispensaries compared to those where the drug remained illegal. In the report, Luke Babich, Clever Real Estate’s co-founder and chief strategy officer, summarised the situation: “Investors see the opportunity to enter a new market, and home values respond.”

It starts as soon as the drug is legalised

House prices ascended by an average of $6,000 (£4,600-ish) immediately after legalisation for recreational purposes. This was before a marijuana dispensary could open. Legalisation just for medical use had no effect. Clever’s report read: “[R]eal estate investors can find blazing housing markets in cities where recreational cannabis is legalised.”

But won’t there be a rise in crime? No, there won’t.

As noted by Clever’s researchers, opinion polls often find that people disapprove of cannabis legalisation because they fear there will be a rise in crime. That would negatively affect house prices. California saw recreational legalisation at the beginning of 2018. A study by the University of California, Riverside, that looked at south Los Angeles found that marijuana dispensaries brought no increase in violent crime. Shops selling alcohol or cigarettes, on the other hand, did. The dispensaries often have safeguards along the lines of security guards and cameras that these other shops lack. State officials often admit to being pleased by this effect of legalisation.

Let’s look at Colorado

More evidence was provided by Colorado State University and published in the journal Contemporary Economic Policy late in 2018. This found the opening of a marijuana dispensary to lead to a rise in house prices of 7.7 percent for houses within 0.25 miles and five percent for houses between 0.25 and 0.5 miles.

Colorado legalised cannabis for medical purposes in 2010 and recreational in 2012. 180 dispensaries have opened in the state since legalisation. House prices in cities in Colorado with at least one marijuana dispensary rose almost twice as much as those nationally. In Sheridan, a town 10 miles south of Denver with a population of just over 5,000, house prices rocketed by more than 90 percent from 2014 to 2019. In nearby Edgewater, the rise was nearly 80 percent.

Availability of legal cannabis is “an added bonus”

The rise in prices might just be a matter of demand. Jennifer Egbert of the Boulder, Colorado, estate agent Re/Max Alliance Downtown is certain that the availability of recreational cannabis is “an added bonus”.

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