Legalising cannabis brings several obvious benefits, including an end to racially and socially unjust drug laws and increased access to medical marijuana. However, doing away with prohibition may also spark some more surprising advantages, with one study indicating that house prices tend to increase following cannabis legalisation.
How Cannabis Legalisation Affects House Prices
Property values are influenced by various factors, including local facilities and amenities, employment opportunities, healthcare, schools, and crime rate. According to new research conducted by Real Estate Witch, cannabis legalisation drives up house prices by affecting each of these variables.
This effect was first seen in Colorado after the state legalised recreational cannabis in 2012. Average property prices across the state jumped soon thereafter, as the newly legal cannabis industry created many jobs and business opportunities. Crime also fell, largely because cannabis possession was no longer considered a felony, resulting in a drop in unnecessary arrests and allowing law enforcement to focus on preventing real crime.
Elsewhere, the state of Oregon dedicates 40 percent of its cannabis tax revenue to funding schools. In contrast, Washington state uses the taxes it raises from legal weed sales to provide free healthcare to those who can’t afford private insurance. Consequently, these states have become more desirable places to live, illustrating how house prices can be radically affected by cannabis legalisation.
How Much Do House Prices Go Up By After Cannabis Legalisation?
In real terms, the amount by which property values increase once weed becomes legal is staggering. An analysis of data collected from across the US revealed that between April 2017 and April 2021, house prices rose by $17,113 more in states that passed recreational cannabis legalisation measures than in those where pot is either illegal or only allowed for medical purposes.
Crunching the numbers further, the study determined that every million dollars raised in tax revenue result in a $470 increase in the value of properties in states that have legalised cannabis. California has seen the biggest rise in house prices among states to have done so, with properties jumping in value by $128,341 over the past four years.
Dispensaries also play a major role, with values climbing most steeply in cities with numerous cannabis retail outlets. According to the report, house prices have risen by around $22,000 more in cities with recreational dispensaries than those that have passed cannabis legalisation measures but don’t allow dispensaries.
For each additional dispensary, a city contains, property values rise by an average of $519.
In recent months, the prohibition of recreational cannabis has been brought to an end in New York, New Mexico, Virginia, Vermont, and Montana. While pot sales are yet to begin in these states, the study authors calculate that house prices would have risen by over $61,000 by now had cannabis legalisation been pushed through four years earlier in these locations.
Wrapping up their report, the authors note that “states that have yet to legalise marijuana, or have only legalised medicinal use, are missing out on millions in tax revenue — and the opportunity to see property values rise.”