According to a new study published in the journal Contemporary Economic Policy, having your home located near a cannabis dispensary could actually boost the value of your home.
Conducted by Colorado State University assistant professor Jesse Burkhardt and graduate student Matthew Flyr, the study examined the effects medical and recreational dispensaries have had on housing prices in Denver, Colorado.
Colorado is one of 10 states that has legalized marijuana for both medical and recreational use, and it’s residents have seen a rise in the value of properties located near dispensaries of both types.
According to the study, the value of properties located within a quarter mile of a dispensary has increased an average of 7.7 percent, while prices for properties located between a quarter and a half of a mile from a dispensary have increased an average of 4.7 percent.
Based on these findings, the researchers stated “Our results suggest that despite potential costs, legalization is capitalized as a net benefit in housing prices,”
This effect apparently “diminishes for homes further from new dispensaries but is consistent over time.” In fact, the study found that “Once beyond 0.5 miles, housing prices were not affected by the opening of new dispensaries.”
Why Dispensaries Positively Affect the Value of Neighboring Homes
In the study, the researchers compared the opening of new cannabis dispensaries to the opening of new grocery stores. They also noted that while new cannabis dispensaries appear to affect property values in the same way as new grocery stores, the ways that grocery stores affect property values are “more obvious” than cannabis dispensaries.
The researchers did acknowledge the limitations of the study: “If public sentiment surrounding marijuana is positive, homebuyers may also prefer to select into neighborhoods with more dispensaries for convenience. Ultimately however, our data does not allow us to directly determine the underlying mechanisms driving this result. So these potential explanations should be considered speculative.”
In another study published last year by the CATO Institute, researchers determined that homes within 0.1 miles of a cannabis dispensary in Denver jumped an average of 8.4 percent following the opening of a dispensary.
In conclusion, researchers theorized that, “Potential explanations include, but are not limited to, a surge in housing demand spurred by marijuana-related employment growth, lower crime rates and, additional amenities provided by locating in close proximity to retail conversions.”
Another factor may be that other studies have indicated that the presence of cannabis dispensaries does not increase crime in nearby communities like stores that sell alcohol and tobacco do.
The Future of Legal Cannabis
Although the U.S. Government has yet to legalize cannabis nationwide, 10 states have legalized recreational cannabis within their borders and 32 states have legalized cannabis for medical purposes.
In addition, New York Governor Andrew Cuomo recently announced he would push to legalize recreational cannabis in his state in 2019.
As more U.S. states legalize both medical and recreational cannabis, property owners living near both types of dispensaries are likely to see an increase in their property values as well.