Cannabis legalization and real estate: what happens to property values? How has recreational cannabis legalization impacted the real estate market?
This year, Illinois joined 10 other states and Washington, D.C., in legalizing recreational cannabis use.
Nearly $3.2 million of marijuana and cannabis products were sold on January 1st in Illinois, and there are still dispensaries with lines out the door today. A group of Girl Scouts recently cashed in on the hype, with the help of their parents, selling 230 boxes of cookies after setting up shop outside a Chicago dispensary.
There’s no doubt that cannabis legalization is stimulating the local economy, but homeowners and Realtors alike have been watching for its effects on real estate. And, with a new report from The National Association of Realtors (NAR), we now have some insight into how residential real estate has been impacted in states where marijuana and other cannabis products have been legalized.
Cannabis Legalization and Real Estate: What Happens to Property Values?
In states where marijuana and cannabis products have been legal longer, nearly 30 percent of Realtors saw a decrease in property values near dispensaries while over 10 percent of Realtors saw an increase in home values, NAR’s report found.
“There is a growing NIMBY [not in my back yard] realization in some communities that having cannabis dispensaries close by might not be good for property values, even as it might line the pockets of some communities that desperately need the revenue,” notes Ilyce Glink, author of 100 Questions Every First-Time Home Buyer Should Ask, and publisher of ThinkGlink.com. “As more states legalize marijuana and other cannabis products, it will be interesting to see how the local costs to policing these changes, such as increasing traffic stops and accidents, might shift public perception about the value prop.”
Numerous studies are looking into the effects of cannabis legalization on home values and over time, as researchers have more data to analyze, we’ll get a clearer picture of its impact on the real estate market.
Cannabis Legalization, Real Estate and Homeowner Associations
The Realtors report that Homeowner Associations (HOAs) are setting rules restricting marijuana consumption and growth. Addendums are being added to leases that restrict the smoking and growing of marijuana, citing issues of smoke, smell and moisture. Glink and Sam Tamkin, a real estate attorney, recently answered a question about cannabis use in condos in their nationally-syndicated column, “Real Estate Matters.”
Questions about the growth and consumption of marijuana and cannabis products are also starting to appear on seller’s questionnaires.
Cannabis Regulation in Public Spaces and Private Homes
Glink expects to see more regulations put in place regarding cannabis use in housing developments and public spaces, similar to those that regulate the use of tobacco. For now, in Chicago and other places where marijuana has been legalized, the potent smell lingers in buses, trains, bars, the hallways of apartment buildings and wafts out onto the street.