(The Center Square) – How cannabis dispensaries affect real estate values remains unclear for many real estate agents across the country, even in states where recreational marijuana has been legal for years.
A survey by the National Association of Realtors conducted in March 2023 found that 44% of real estate agents in states where recreational marijuana has been legal since 2018 reported no change in commercial property values near dispensaries. In those states where recreational cannabis had been legal the longest – California, Alaska, Nevada, Oregon, Washington, Maine, Massachusetts and Colorado – 15% of agents said commercial property values near dispensaries had declined slightly and 3% said values decreased substantially. Additionally, 7% of respondents reported values increased slightly and 3% reported values increased substantially.
States with legal prescription cannabis were more likely to report increased values, 17%, that’s compared to 9% in states where recreational and prescription cannabis has been legalized since 2018, according to the survey.
The results for residential real estate values were just as muddy. Eighty-three percent of respondents in states where recreational and prescription cannabis had been legal before 2018 reported either no change (35%) in residential values near dispensaries or were not sure (48%). In states where recreational and prescription cannabis has been legalized since 2018, the number of respondents who were not sure was 55%.
“I think part of not being sure is it’s very hard to attribute this specifically to value changes,” NAR Senior Research Survey Analyst Matt Christopherson told The Center Square. “But on top of that, we’ve had a continued increase in home prices for a couple of years. So it’s hard to pinpoint if the changes are due to marijuana legalization or simply due to low inventory and continued buyer demand.”
Another takeaway from the report: “Largely what we see is it does not really affect the property values, residentially, at least,” Christopherson said.
Cannabis legalization has affected many parts of the real estate industry. NAR, the largest real estate trade organization, tracked what legalization trends mean for the industry. Its 2023 Marijuana and Real Estate survey was emailed to a random sample of 75,000 residential real estate agents and 53,000 commercial real estate agents. It received 3,291 responses, for an overall response rate of 2.6%.
Realtors reported seeing a decline in commercial property purchases by marijuana industry-related businesses and a corresponding increase in leasing activity, according to the new study, “The 2023 Marijuana and Real Estate: A Budding Issue.”
The report examines the effects of marijuana legality on various aspects of real estate. The survey polled NAR members and divided the responses by states that have legalized medical marijuana only and states that have legalized marijuana for medical and recreational use both before and after 2018.
In states that legalized recreational marijuana in the past five years, 18% of commercial agents reported an increase in property purchasing over leasing in the past year by marijuana businesses. That’s down from 29% in 2021. For states that legalized cannabis more than five years ago, 14% reported an increase (compared with 20% in 2021). In states where only medical marijuana is legal, 4% reported an increase, a drop from 21% in 2021.
“State laws have evolved to legalize the use of prescription and recreational marijuana,” Jessica Lautz, the group’s deputy chief economist and vice president of research, said in a statement. “As more states adopt cannabis laws, Realtors® are at the forefront of commercial real estate activity and are working with clients to find land, warehouses and storefronts for this growing business.”