Colorado Cannabis Legalization Increased Denver’s Property Values, Study Finds
Article Published by: mjinews.com
It’s no secret that the advent of Colorado cannabis legalization increased demand for industrial real estate, but how has it affected housing prices?
According to a new study, “Contact High: The External Effects of Retail Marijuana Establishments on House Prices,” the property values for houses within .1 miles of a retail cannabis dispensary in Denver have increased by more than 8% since recreational cannabis sales began in 2014.
By using publicly available data from the Colorado Department of Revenue’s list of retail licenses and the City of Denver’s property information, researchers at the Wisconsin School of Business were able to study how property values were affected by retail conversions, i.e., medical cannabis dispensaries converting to recreational cannabis sales.
“The presence of retail marijuana establishments clearly had a short-term positive impact on nearby properties in Denver,” said Moussa Diop, Wisconsin School of Business assistant professor of real estate & urban land economics and co-author of the study.
For those houses within .1 miles of a retail conversion, the average increase in property value was $27,000 for a single-family home.
According to Diop, “This suggests that in addition to the sales and business taxes generated from the retail marijuana industry, municipalities may experience an increase in property taxes. It’s an important piece of the puzzle as more and more voters and policy-makers look for evidence about the effects of legalizing recreational marijuana, as the issue is taken up by state legislatures across the country.”
It’s important to note that the study also compared property values of houses within .1 miles of a retail conversion to houses within .1 miles of a medical cannabis dispensary that hasn’t converted to recreational sales.
“Those properties located near a retail conversion do experience a larger price increase – relative to those near a non-converter – after conversion. This provides evidence that it is the actual conversion to retail that is increasing neighboring property values,” researchers explained in the study.
As this study highlights, Colorado cannabis legalization may make the case for medical-only states to reexamine the potential secondary benefits of legalizing a recreational market.
About Michael King
Michael King is an experienced professional with a background in finance, private equity, real estate and consulting. He is currently a principal in one of the leading Cannabis consulting firms in the country — Duard Ventures.