Property Value Changes Significantly When Cannabis Retail Opens Up, But Not In The Way You Think
Cannabis retail is like fertilizer for the neighborhoods it lands in because everything gets better: greater property value and less crime.
Cannabis is great medicine for a variety of illness and disease — but new research suggests it also has a positive effect on America’s financial wellbeing: it increases property value.
The news comes as welcome relief to many concerned homeowners in places like Denver, Colorado. Anti-cannabis activists wring their hands over “bad element” that would sprout up beside, and around, legal cannabis dispensaries, resulting in lowered value of commercial and residential properties.
When Cannabis Retail Moves In, Housing Prices Go Up
According to the research, published in the journal Real Estate Economics, the presence of a legal dispensary causes the prices of home in Denver to appreciate at a faster rate than state average. Specifically, single-family residences within 0.1 miles of a medical cannabis retailer that converted into a retail cannabis store increased their value by 8 percent more than houses that were located further away.
And the statistics speak to more than just home prices. Prices in the housing market are based only partially on the brick-and-mortar aspects of a home. The desirability of a neighborhood also weighs heavily on how much a home costs and how much that price raises and lowers over the span of a few years. A more desirable location will make the home increase in value, while a neighborhood that loses its luster will drag home prices down.
Other factors that can determine home prices are which public school district it’s in, how ‘walkable’ it is, and proximity to attractive (or unattractive) eating and shopping locations.
A welcomed new business will increase business traffic, which is great for nearby shops (especially if the clientele is upscale) and can even attract new businesses to the area. Small mom-and-pop restaurant or a corner bars will see an increase in their property value as well.
Even Vacant and Rural Land Prices Go Up!
But, that’s not all that can be affected by new cannabis shops. The price of rural land is driven by amenity values, development potential, commodity prices and productive capacity. In lay man’s terms, undeveloped land isn’t priced solely on its intrinsic value. Instead, most of the value of vacant lots come from what directly surrounds it.
Researchers from the United States Department of Agriculture discovered that rural land in Humboldt County, California, were greatly affected by cannabis production. In fact, the more cannabis, the better. The department found that a doubling of the median existing cannabis density in a watershed was associated with a 3-4 percent price increase in Humboldt County’s rural land.
What About Increased Crime Though?
Doomsday anti-cannabis activists warn that dispensaries will increase neighborhood crime. The thinking goes like this: If cannabis shops attract drug users, the areas in which they’re located will increase in crime because drug users are prone to participating in illegal activities.
Not surprisingly, that thinking proved to be ill founded. Thanks to another researcher who examined property values in Denver, we know that retail cannabis dispensaries are associated with a decrease in neighborhood crime.
That research, performed by two members of the Federal Reserve Bank of Philadelphia, tracked changes in retail cannabis shops with neighborhood crime statistics, noticing that there was a significant change in crime in the immediate area around cannabis dispensaries. Specifically, they determined that when a neighborhood of 10,000 residents added a cannabis shop, the crime rate dropped by 17 crimes a month or 19 percent. That’s 204 fewer crimes per year per neighborhood!
That’s great news, but more interesting than the “what” is the “why.” In this case, the author surmised that the dip in the crime rate came about because of the displacement of illicit markets. That’s exactly the opposite of what people feared. Instead of attracting criminals, legal cannabis shops attract law-abiding citizens, and force criminals to take their business elsewhere. Why? Because no one wants to buy cannabis illegally when there is a safe and legal option readily available.
Taken together, these statistics clearly point to one happy trend: cannabis shops increase the value of a neighborhood, both by raising property prices and by lowering criminal activity. And this holds true for both urban and rural locations.
If we want our public policies to truly make life better for the people in our communities, the facts are clear: Neighborhoods that open retail cannabis shops become healthier, more valuable communities. Mr. Rogers would be pleased.