Legalization movements often have opponents. These groups and individuals sometimes argue that cannabis dispensaries bring crime and vandals, lowering home values.
But new research from Real Estate Witch shows that theory may not have merit. In fact, 2023 data shows that homes in states with legal cannabis saw a greater increase in home values compared to states without adult use.
RELATED: Majority of Americans would try medical cannabis with one caveat
Real Estate Witch is a publication owned by Clever Real Estate that features real estate advice for home buyers. In partnership with Leafly, Real Estate Witch analyzed home value data in the U.S. from 2014 to 2023. They used dispensary data from Leafly and home value information from Zillow. The Motley Fool and DISA Global Solutions compliance services company provided U.S. cannabis legalization information.
It is worth noting that various factors contribute to home value outside of whether or not cannabis is legal. A lack of available houses for sale can increase pricing. The noise pollution, schools, parks, and crime rates of specific towns can also play a role.
Does cannabis legalization mean higher home values?
Adult-use cannabis is currently legal in 23 states and Washington D.C. In these states, home values have climbed an average of $185,075. Those that haven’t legalized saw an increase of $136,092. Homes in recreational states have an average cost of approximately $417,625, 41 percent higher than those in states without adult-use cannabis programs.
Seven of the top ten states with the highest increase in home value in 2023 have legal weed, and two have medical programs. The only state in the top ten with absolutely no cannabis access is Idaho. Interestingly, most analyses of migration to Idaho in the last few years show that people are moving from states with legal weed, like California, Arizona, Washington, and Colorado.
The study lumped medical-only states into the “without legal cannabis” group. Getting granular with it, states with medical cannabis also saw an increase of $29,289 more in home value compared to those without adult use or medical access. The typical cost to buy a house in medical states is 21 percent higher than those without.
Cities may considering opting in to dispensaries
Real Estate Witch also revealed that private real estate in cities that opt into having dispensaries is more expensive than localities that opt out of having cannabis businesses in city limits.
Regulations in some states grant city and county governments from barring cannabis businesses from operating there. But those elected officials may reconsider. Homes in cities with recreational dispensaries saw a $67,359 increase in property value compared to places where dispensaries are banned.
Turns out that bolstering creativity and potential medicinal value aren’t the only possible benefits of cannabis. Legalization could mean a higher home value, especially for those who live in a city with dispensaries. It looks like voters in states without adult-use programs just got more incentive to consider pushing for policy updates.