Pubdate: Tue, 8 Nov 2016
Source: San Francisco Chronicle (CA)
Copyright: 2017 Hearst Communications Inc.


If the craziest and most contentious presidential election in modern
history is making you feel somewhat lightheaded, a little disoriented,
maybe even a tiny bit stoned, well, just you wait.

Lost amid the endless (and sometimes endlessly entertaining) stream of
insults, scandals, and outright atrocities of the 2016 campaign is the
fact that it isn't just the leadership of the free world at stake on Nov
8. Voters in California, Massachusetts, Maine, Arizona, and Nevada will
also decide whether to legalize recreational marijuana-and it looks like
most will vote yes (although Nevada is still iffy). They'd be joining
Alaska, Colorado, Oregon, and Washington, which permit the recreational
use and sale of marijuana. Washington, DC, allows recreational use but not
retail sales.

Why should everyone, even cannabis abstainers, care? Because when it comes
to housing, economics, and lifestyle, this could be a national game

If these ballot initiatives pass on Tuesday, some form of legal marijuana
will be available in about half the states in the nation-not only making
stoners happy but potentially creating more than 100,000 new jobs and
billions of dollars in new tax revenues. California, the most populous
state in the U.S., boasts the sixth-largest economy in the world. (The
Golden State was also the first to legalize medical marijuana, in 1996.)

Although marijuana remains a Schedule 1 drug that is illegal under federal
law, state legalization opens the door to new, above-board industries,
adding jobs and tax revenue, while toking tourists in the communities
where it will be sold. (Sales of the green stuff might be allowed in a
state, but not in every municipality.)

And yes, legalization of recreational marijuana is likely to have a big
impact on home buyers, owners, and sellers. Home prices have already risen
in the four states where it's legal.

But that doesn't mean that all homeowners in states getting the ganja
go-ahead will benefit equally. The data team analyzed
residential real estate in the recreational marijuana states and found
that certain kinds of cities typically benefit more than others.

Also, a home's proximity to a marijuana business affects its
value-although not always in the way you'd think.

So let's light this up, shall we?

The prospects of employment-as well as the desire to legally grow, buy,
enjoy, and otherwise self-medicate with weed-have led to an increased
demand for housing. Simply put, more people seem to move to states with
legalized marijuana, boosting home prices.

"The legalization affects both the demand and the supply in the
residential housing market," says University of Mississippi economics
professor Cheng Cheng, one of the authors of a study on how legalizing
retail marijuana in Colorado has given a lift to local real estate. Areas
where it's legal are "going to attract more home buyers, including
marijuana users as well as entrepreneurs and job seekers."

The state of Colorado provides the best data on what happens when
recreational marijuana is permitted, since it has been legal there the
longest. The Centennial State legalized medical marijuana in 2000 and then
medical dispensaries in 2010. Two years later, voters approved
recreational sales of the green stuff.

Since the first shops opened their doors on Jan. 1, 2014, the median home
sale price in the state has shot up from $248,000 in the first half of
2014 to $298,000 in the first half of 2016, according to the

That's partly due to the state's population surge, rising 1.9% from July
1, 2014, to July 1, 2015, according to the U.S. Census. That makes it the
second-fastest-growing state in the nation, just behind North Dakota.
There's no direct evidence tying the legalization of the drug to the
population boom, but real estate agents say more of their clients are
relocating to the state because of it.

"About 60% to 70% of my clients are buyers coming in from out of state,"
says real estate broker Rona Hason, of Need Room to Grow Realty in the
Denver suburb of Lakewood, CO. She specializes in selling homes where
buyers can grow their own cannabis.

Of course, marijuana isn't the only lure. The state has a reputation for
being an outdoorsy paradise, and many tech, financial, and other large
companies are expanding operations there. It's also receiving refugees
from more expensive cities such as San Francisco and New York.

For many Colorado transplants, the ability to pick up a bag of legal weed
or some cannabis-laced edibles is "an added bonus," says Boulder-based
Realtor Jennifer Egbert of Re/Max Alliance Downtown. But she adds that
many marijuana-using transplants fall in the medical category.

Home prices tend to be higher in the roughly 60 Colorado cities and towns
where cannabis is legal than the more than 200 where it's not.

For example, where cannabis is legal, the median sold price was $302,500
in the second quarter of 2016, according to the analysis.
That's 13% higher than the $267,200 median sold price in the more than 200
localities where the green stuff is illegal.

In addition, homes have been appreciating by 12% annually since 2014 where
it's legal. That's compared with just 9% in areas where it's illegal.

So it's nothing but green, resin-coated pastures, right?

Not so fast. Within the areas that have legalized marijuana, there's a bit
of a cannabis caste system.

Colorado homes within a half-mile of a marijuana business often have lower
property value than homes in the same county that are farther out. But not
all marijuana business are a buzzkill for home values.

Neighborhoods with grow houses are the least desirable, with an 8.4% price
discount. But retail shops, especially with the rise of the new generation
of stylish pot boutiques, have almost no negative impact.

Just look at Denver's marijuana business locations in the map below. Grow
houses (blue dots) tend to bypass the most desirable, upscale
neighborhoods and find their way into more inexpensive ones. The places
with the highest number of marijuana businesses per capita are Elyria
Swansea, Globeville, and west Northeast Park Hill, according to the Denver
Post. All three are low-income neighborhoods.

Perhaps that's partly due to the literally stinky business of growing
cannabis-even with the use of air purification systems, the odor tends to
permeate the immediate area, so many folks don't want to live near large
grow sites.

"I believe what we are seeing is that the marijuana industry is buying up
real estate. And in Denver, those three neighborhoods are really the
cheapest you can buy," says Candi CdeBaca, a longtime resident of
Globeville whose home faces a large marijuana grow operation.

Since the areas are cheap to begin with, there is more potential for home
price growth-CdeBaca says her property taxes have been soaring.

There wasn't enough data available to run similar analyses in Alaska and
Oregon, where recreational shops only opened last month. Our data team
didn't include Washington state because the list of cities that permit
sales was murky, as some cities where it was legal have now issued a
moratorium on sales licenses.

But while marijuana businesses themselves may be associated with lower
home values, they can give sorely needed economic support to struggling
small towns.

In Colorado's rural Clear Creek County, a local mine that has provided the
bulk of the county's tax revenue plans to close within the next few years.
However, some of that money is being replaced by the marijuana industry,
which kicked in more than $125,000 this year through August, according to
the state's Department of Revenue.

"We have more tax revenue for schools," says area Realtor Joshua Spinner,
of Clear Creek Realty Colorado. "There are people moving to our county
because it is more rural and they do want to grow."

Another big beneficiary is Edgewater, just 15 minutes outside Denver. The
tiny town has about a half-dozen dispensaries that stay open hours later
than those in Denver. Could it be a coincidence that median sold home
prices in Edgewater have jumped 18% annually since 2014, compared with 13%
in Denver?

Many of the jobs created by legalized marijuana are lower-paying
positions, like store clerks.

However, it's not all peace, love, and high home prices. Many of the jobs
created by the marijuana industry tend to be menial, like shop clerks,
drivers, and agricultural workers.

In Oregon, for example, the more than 2,100 jobs created by the cannabis
industry are expected to earn about $46 million in 2016, according to the
Oregon Cannabis Jobs Report. But only about 1,300 of those employees work
full time. And many of them, such as bud tenders and managers, make only
$11 to $25 an hour-which is just $22,880 to $52,000 a year.

Those lower salaries can make buying a home, let alone paying rent each
month, quite a challenge.

Still, as more lenient attitudes toward marijuana take hold across the
nation, it may benefit an area's image to get on the legalization

"We see a lot of people looking to move to Portland, and one of the
attractions is the fact that we have legalized marijuana," says real
estate broker Lathen Gorbett of M Realty in Portland, OR, adding that many
of these folks aren't even smokers.

"They see that we are a liberal, forward-thinking city."

This article "Will Legal Marijuana Give Home Prices a New High?" appeared
first on Real Estate News and Advice from
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