Clever Real Estate, a free nationwide service that matches property buyers with full-service realtors, has published a new study into the impact(s) of cannabis legalization on home property prices. 

A key takeaway from the research suggests that the growing presence of dispensaries across the U.S. is having a direct effect on the value of residential homes.

The research, which pulls data from the U.S. Census, Zillow and various other sources, indicates that “home values increased $6,338 more in states where [cannabis] is legal in some form, compared to states that haven’t legalized [cannabis]” between the years 2017 and 2019.

Cannabis tax revenue contributes to rising home property prices 

According to the team of researchers at Clever Real Estate, one of the main reasons why home values are increasing in states with legal cannabis retail stores is because of higher tax revenue. 

After all, states that have enacted regulated cannabis markets are pulling in more tax revenue, which means “new investment in things such as public services and infrastructure.” 

Consequently, the company found that cannabis tax revenue is steering property value in a northerly direction. Specifically, home values appeared to increase by $470 for every $1 million in additional tax revenue. 

A fine example is Illinois, which sold approximately $670 million in cannabis during 2020. From this amount, the state generated $205.4 million in tax revenue; much of which has been used to fund numerous causes, including organizations that focus on preventing/stopping street violence. 

Clever Real Estate’s report also hypothesizes that states with legal adult-use cannabis markets tend to see the most substantial property value gains.

“Between April 2017 and April 2021, property values rose $17,113 more in states where recreational [cannabis]is legal, compared to states where [cannabis] is illegal or limited to medicinal use,” reads an excerpt from the report.

Moreover, in states that have enacted legalization but have not yet launched sales, “home values are predicted to increase by an average of $61,343.”

Home property prices increase more in cities with legally-operating dispensaries 

Based on the findings of this new study into the impact(s) of cannabis legalization on home property prices, cities with recreational cannabis dispensaries saw home values increase $22,090.

In cities where recreational cannabis is legal, but dispensaries are not yet available to consumers, similar property increases were not noticeable. In fact, the researchers pointed out that property values increase by $519 with each new dispensary introduced in a city.

“When we controlled for other factors, we found that home values in areas that have legalized recreational [cannabis] leapt by $17,113 more than places where [cannabis] is illegal or only allowed for medicinal use,” said the researchers. “Even when we limited the comparison to recreational versus medicinal legalization, this disparity persisted. Places that legalize recreational [cannabis] saw home values increase by $15,129 more than those that only legalized medicinal use.”

With these findings in mind, Clever Real Estate’s researchers deduced that it is not just the increased tax revenue that is boosting property prices but also, the presence of the cannabis retail stores themselves.

“The dispensaries act as commercial amenities that the public puts a premium on being nearby,” they concluded.