How legalization in the US is having a huge impact on real estate
We know that cannabis legalization can change everything from alcohol consumption rates which significantly declined, to the number of people who find themselves reliant on opioids, yet another burden on society that seems to be lifted. We’re obsessed with finding out everything possible about this incredible plant in search of all the good it can do, but some changes are going on in the background, not impacting consumers enough for media agencies to catch on, and one of them is a new trend that is trackable in the US housing market.
Demand for commercial real estate goes up
In the early days, we didn't see quite as much movement in real estate for cannabis. A lot of investors were still nervous about expanding too fast without knowing for certain what was going to happen next, and many property owners were hesitant about the legal implications of renting spaces to these types of businesses. It was an incredibly slow progression, but an obvious one, nonetheless.
To date, less than a dozen states are left, still refusing to accept cannabis as a reasonable market product, which means that there is a lot of data to look at on this topic. Some of the most notable key points from the list of discovered trends include:
US states with medicinal and recreational cannabis for more than 3 years saw a 42% increase in demand for modern warehouses as well as commercial properties.
US states with both recreational and medicinal legislation experienced a 27% surge in demand for storefronts and a 21% increase for bare land.
32% of US states with legal weed brought forward commercial lease addendums.
30% saw lease addendums that addressed the sale of cannabis products.
What about residential real estate?
This is where things start to shift in another direction, as residents in states with cannabis legalization saw their homes decrease by 27% in value if they were unfortunate enough to be too close to a dispensary. Oddly enough, some neighbourhoods reacted differently, with 12% seeing a significant increase due to the introduction of a dispensary to the neighbourhood.
Rentals are a whole different issue, with most residential property managers between 58% and 67% seeing a new demand to add addendums to residential leases, specifically to prohibit the smoking of cannabis both indoors as well as outdoors. Because of this, most rental homes are no longer appealing to cannabis consumers, pushing them harder than ever to either move or buy.
Real estate markets in states with fully realized legalization have seen this change quickly come into effect as interest in the plant continues to grow, and though it is unclear how or why this is happening, agents, business owners, and renters are all celebrating the economic drive and movement. It’s something that the country and its people desperately need in the wake of the pandemic and the doom and gloom surrounding it which still heavily lingers today.
Some people will suffer from this adjustment through a reduced home value or lesser availability on the rental scene, but in many states, cannabis business is booming and it’s just getting started, so it will be interesting to see how it all turns out.