{"id":2271,"date":"2024-04-11T11:48:28","date_gmt":"2024-04-11T16:48:28","guid":{"rendered":"https:\/\/tomo.com\/blog\/?p=2271"},"modified":"2024-04-11T11:48:41","modified_gmt":"2024-04-11T16:48:41","slug":"retail-marijuana-dispensaries-could-drive-higher-home-value","status":"publish","type":"post","link":"https:\/\/tomo.com\/blog\/retail-marijuana-dispensaries-could-drive-higher-home-value\/","title":{"rendered":"Retail Marijuana Dispensaries Could Drive Higher Home Value"},"content":{"rendered":"\n
<\/div>\n\n\n\n

Like it or not, recreational cannabis is here to stay. As more states implement legislation that legalizes marijuana, THC products, CBD, and more, it is apparent that cannabis is now as much part of life for many Americans as happy hour drinks. However, many communities wonder whether a new dispensary will damage local home values. Does the boost in commercial activity help property values, or is it a sign of increased crime and economic downturn?<\/p>\n\n\n\n

<\/div>\n\n\n\n

While earlier research<\/a> in Washington State (drawing on data from 2012) showed a decrease in property values in the immediate vicinity of a cannabis dispensary, much of the current debate about whether to extend licensing happens at a larger, community level. So Tomo assessed various factors that cause real estate prices to fluctuate in Colorado, Michigan, and Oregon\u2014states where cannabis is legal and available from storefront merchants, with enough time in-market to identify the pre and post impacts of recreational cannabis dispensaries on home prices. We examined the annual increase (or decrease) in median home prices in Zip codes with a dispensary, compared to median home price changes in the surrounding Zip codes, and then aggregated findings across cities in multiple stats to uncover the trends.<\/p>\n\n\n\n

<\/div>\n\n\n\n

The result: On average, if a dispensary opens in your area, you\u2019re likely to see an additional $4,400 increase in your property value each year.<\/strong><\/p>\n\n\n\n

<\/div>\n\n\n\n

Rising home values, against the odds<\/strong><\/h4>\n\n\n\n

Cannabis dispensaries are often relegated to less desirable parts of the city. Whether due to the social stigma or perceptions of crime, 88% of Zip codes with recreational marijuana dispensaries had significantly lower median household prices than the surrounding areas. And this can coincide with outsized gains in property values over time.<\/p>\n\n\n\n

<\/div>\n\n\n\n

In Denver<\/a>, for example, Zip codes with dispensaries had an 80% lower median home price than the rest of the city. And, starting from a lower price point, the median home price in these areas has increased 6.9 percentage points higher than the rest of the city since 2020. To put that into perspective, median single family home prices in Zip codes with cannabis dispensaries increased $123,000 in the last four years, while the rest of the city only increased $16,000. <\/p>\n\n\n\n

<\/div>\n\n\n\n

A more extreme scenario is in Detroit<\/a>, where a typical home near a recreational dispensary sold for just $38,000 in 2020 (compared to $127,000 in the rest of the city). That same home would now sell for $70,000 (a nearly 2x increase in value), where the rest of the city grew by 31% during the same period.<\/p>\n\n\n\n

<\/div>\n\n\n\n

If you move to the west in the state, you can see a more common scenario. Dispensaries that opened in Kalamazoo, MI<\/a> were in an area with a 43% lower median home price than the rest of the city, but its 3-year home price increase was 8.8 percentage points higher than the rest of the city. In Grand Rapids<\/a>, it\u2019s the same story: Zip codes with a cannabis dispensary grew 3 percentage points higher than areas without; and in Whitmore Lake, MI<\/a>, values grew by 5.4 percentage points. That means that, in Whitmore Lake, home prices increased an additional $20,000, each year, compared to similar markets nearby without a retail dispensary.<\/p>\n\n\n\n

<\/div>\n\n\n\n
<\/div>\n\n\n\n

To predict prices, meet your neighbors<\/strong><\/h4>\n\n\n\n

Not all dispensaries are created equal. Some are scruffy mom-and-pop shops with battered signage out front. Others gleam like futuristic art galleries, full of white acrylic counters and fixtures. Still others revive or preserve historic buildings, adding tasteful features like vintage lighting, apothecary-style details, and gold lettering. Many higher-end dispensaries also employ security guards or other community safety staff to ensure that their space is kept clean, welcoming, and safe for everyone.<\/p>\n\n\n\n

<\/div>\n\n\n\n

In areas where recreational cannabis is on par with microbreweries, artisanal distilleries, hipster-chic coffee shops, and luxury tattoo parlors, a dispensary can signal significant growth in an already thriving neighborhood. In notably progressive Boulder, CO<\/a>, Zip codes with a dispensary average slightly higher than the areas without (over $1.5M, compared to $1.25M, in 2023). The value of these homes continues to rise 2 percentage points higher every year on average.<\/p>\n\n\n\n

<\/div>\n\n\n\n

Near Portland, OR, the median home price in Cornelius, OR<\/a> grew 23% in a zip code with a cannabis dispensary since 2021. This is nearly 2x the rate of home value increases elsewhere in the city, bringing the average median home price 3% higher in an area with a cannabis dispensary. Bear in mind that in states with legalization, recreational cannabis is taxed based on potency and quantity<\/a>. This money is earmarked for civic improvements, education, healthcare, and more\u2014all factors that would also positively impact home values and add to neighborhood appeal.<\/p>\n\n\n\n

<\/div>\n\n\n\n

The ongoing debate<\/strong><\/h4>\n\n\n\n

There are nearly 15,000 dispensaries nationwide, with 76% of those businesses in states (including Washington DC) where recreational use is legal. As more states like New York, New Jersey, and Connecticut move to permit retail marijuana, communities continue to debate whether or not they want to open a dispensary in their area. And, while marijuana use is becoming far less taboo\u201488% of Americans think marijuana should be legal<\/a> for recreational or medical use\u2014retailers continue to face strong political opposition, with many people citing the negative impact on their home values.<\/p>\n\n\n\n

<\/div>\n\n\n\n

And, as we see with homes in Ann Arbor, MI,<\/a> opening a marijuana dispensary isn\u2019t always a success. A notable outlier, Ann Arbor saw a significant decrease in home price after opening their first recreational dispensaries in 2023. Over the last year, prices decreased 0.84% – compared to the rest of the city, where home prices increased 6.6%.<\/p>\n\n\n\n

<\/div>\n\n\n\n

The difference is about $40,000 in home value, lost in just one year. We saw multi-year declines on single family homes in Portland<\/a>, too (though much less significant).<\/p>\n\n\n\n

<\/div>\n\n\n\n

But on the whole, we typically see slight, often nominal, increases in home values. It\u2019s only one business in an entire community, after all, so we wouldn\u2019t expect a radical outcome. If you have a dispensary open in your area, there\u2019s a good chance it\u2019ll lead to more cash in your pocket. Put that in your pipe and smoke it!<\/p>\n\n\n\n

<\/div>\n\n\n
\"\"<\/div>

Claire Rudy Foster<\/a><\/p>

Claire Foster writes about money, ethics, and where the two intersect. Their work has been featured in The Washington Post, The New York Times, The Guardian, and more. Foster lives in the Pacific Northwest.<\/p><\/div><\/div>","protected":false},"excerpt":{"rendered":"

Does the boost in commercial activity really help property values? Find out if a dispensary moves into your neighborhood…<\/p>\n","protected":false},"author":30,"featured_media":2278,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[58],"tags":[],"class_list":["post-2271","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/tomo.com\/blog\/wp-content\/uploads\/2024\/04\/cannabis-dispensary-real-estate-tomo-jpg.webp","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/2271","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/users\/30"}],"replies":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/comments?post=2271"}],"version-history":[{"count":4,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/2271\/revisions"}],"predecessor-version":[{"id":2281,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/2271\/revisions\/2281"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media\/2278"}],"wp:attachment":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media?parent=2271"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/categories?post=2271"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/tags?post=2271"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}