Can Weed Boost Real Estate Values?

Can Weed Boost Real Estate Values?

Besides producing medicinal effects and a nice feeling of getting high, legal cannabis produces economic benefits, too. For example, two recent studies show that having legal weed available in your town could increase your town’s property values.

According to a recent study published by the Journal of Contemporary Economic Policy, housing prices in Denver, Colorado increased by an average of 7.7 percent within a half-mile radius of a new dispensary.

While this development is certainly encouraging, other factors can obviously influence property values, as well, leading researchers to indicate that their findings might be a tad premature.

“Ultimately however, our data do not allow us to directly determine the underlying mechanisms driving this result, so these potential explanations should be considered speculative,” they wrote in their study.

We’ve also talked a bit about how weed-friendly Dutch coffeeshops are popular tourist destinations. Doctoral student Igor Gonçalves Hoehne de Castro wanted to see what would happen if one shut down. One effect he found was that rental costs of nearby Airbnb’s dropped by roughly three percent if a coffeehouse closed within 250 meters of the property.

Numerous coffeehouses have closed in Amsterdam in recent years due to new laws, most notably new regulations in Amsterdam which prohibit coffeehouses from operating with 250 meters of a school. According to Marijuana Moment, de Castro’s study found that these shops “‘present a positive impact’ on rental prices for lodging close to the shops — presumably because people who rent through Airbnb are ‘tourists’ who are ‘sensitive to distances.’”

“The findings of this study suggest that, for the city of Amsterdam, the de facto legalization of cannabis actually has a positive externality,” de Castro wrote. “This result puts new evidence to the debate of drug laws and policies, a matter that still lacks data and research.”

These two studies show that property values can indeed be influenced by the nearby presence of legal weed suppliers.

In Amsterdam, this is very understandable, as many tourists visit the city in order to patronize coffeeshops. When it comes to housing prices in American cities, however, these results might be a bit more surprising. While people who regularly buy cannabis at a dispensary might agree to pay a bit more to be close to one, a 3 percent increase seems a bit high.