Study Shows Homes Near Cannabis Dispensaries Have Increased In Value

After Cannabis was legalized for recreational use in Colorado, rumors have sparked claiming that multiple changes have come about because of the new industry. This is most true in Denver, where Colorado’s Cannabis industry is centered. Some specific changes claimed to be related to Cannabis are increases in population, economic booms from tourism and a rise in housing costs.

Now, the claimed increase to housing costs has a more solid foundation due to a recent study from the University of Wisconsin Madison.

Colorado Cannabis Raises Home Values Near Dispensaries

This study determined that housing prices in Denver immediately next to recreational marijuana dispensaries have risen dramatically from the time that these dispensaries were opened to sell recreational Cannabis. This study found that prices for single-family homes within 0.1 miles of a Dispensary rose from the last year before recreational Cannabis began rose greatly in 2014, after its inception. The study found an 8.4 percent increase in that one year for these homes in Denver. In other municipalities that legalized recreational Cannabis in Colorado, housing values increased by 6% from 2013 to 2014.

A quotation from this study from one of the study’s authors demonstrates how big of a change was found. She said “[t]he presence of retail marijuana establishments clearly had a short-term positive impact on nearby properties in Denver” and “[t]his 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."
According to the study, the homes within 0.1 miles of a dispensary averaged a property-value benefit of $27,000. With the industry still in its infancy, the study also stated that there could be other factors that could be increasing these property values. A few other factors could be less crime, other neighborhood amenities and the new demand for housing in these areas. It Is however very clear that the uptick in housing demand is specifically linked to Cannabis and crime reduction has been directly linked to the high level of security at Cannabis dispensaries. 

The direct tie between Cannabis and the housing boom is shown in the more than 23,000 jobs created by the Cannabis industry there since January of 2017. As more states legalize the recreational use of Cannabis, Colorado still continues to draw many people due to the Cannabis industry, and therefore, home prices have risen by 20% from 2016 to 2017 in most of Denver’s surrounding municipalities. The population of the county that Denver sits in also grew by almost 50,000 people in the three years starting in 2013, which seems to match all of the other trends coming out of that county related to job growth from Cannabis. 

Based on these numbers, it seems safe to say that the Cannabis industry in Colorado has done quite a bit to create job growth, bring people to Denver and to therefore increase housing prices to meet these new demands. As the industry continues to grow, more about these trends will be seen.