The debate of what impact Cannabis dispensaries have on property value is one that has lasted since the legalization of the substance began. It has become an even more pressing concern for property owners in recent times, as many states continue to relax laws on the use of medical and recreational Cannabis.
Generally, in real estate, housing values are notably influenced by the characteristics of neighboring properties. The type, condition, amenities, use, and overall appeal of adjacent properties can create a ripple effect on surrounding property values. For example, families would buy residential properties near educational institutions instead of opting for areas that lack convenient access to schools and colleges.
In the case of Cannabis dispensaries, there’s not enough evidence backing whether they affect property values or not. It has been a riddle and that’s because Cannabis remains a Schedule I substance at the federal level, even though many states have legalized it for medical and recreational use.
Here’s What You Need To Know
While research provides varying perspectives, a comprehensive understanding requires a closer examination of local regulations, community dynamics, and broader economic factors influencing the real estate landscape.
Studies examining the relationship between dispensaries and property values have yielded conflicting results. Some suggest that proximity to dispensaries may actually have a positive impact on property values, while others indicate the opposite.
For example, a 2018 study carried out by the Cato Institute  reported that in January 2014, when Colorado had just legalized Cannabis, property values near dispensaries or within 0.1 mile of marijuana businesses in Denver increased in value by 8.4 percent compared to properties far away.
However, another study by Miron suggested that home values had been increasing in areas like Portland, Denver, and Seattle since 2011 and hardly have anything to do with the legalization of recreational use of Cannabis.
Supporting the Cato Institute report, more recent research  found that cities and states where recreational and prescription Cannabis is legal saw a $22,888 increase in single-family home values between 2014 and 2019 compared to states where retail Cannabis is illegal.
Amidst the confusion among landowners, another study by the National Association of Realtors (NAR)  revealed mixed results. The survey revealed that among states where recreational marijuana has been legal the longest, 27 percent saw a decrease in residential property value while 12 percent saw values increase.
In the same vein, another 2023 marijuana and real estate survey by the National Association of Realtors revealed that 44 percent of real estate agents reported no change in commercial property values near dispensaries in states that legalized Cannabis. 15 percent of agents said California, Alaska, Nevada, Oregon, Washington, Maine, Massachusetts, and Colorado saw a decline in property value while 3 percent said values decreased substantially.
These conflicting studies and reports have made it challenging for landowners to decide whether it is a smart decision to lease their properties to Cannabis businesses.
Local Regulations and Community Attitudes
The commercial real estate industry is greatly influenced by state and local regulations. This is even more so for Cannabis storefronts. For example, municipalities with strict regulations and zoning restrictions may experience different outcomes compared to regions with more permissive policies.
Public perception and community attitudes toward cannabis dispensaries can also play a role. In areas where there is greater acceptance of the cannabis industry, the impact on property values may be less pronounced.
Some studies have explored the potential correlation between dispensaries and crime rates. It’s worth considering that the perceived or actual increase in crime around dispensaries could impact property values.
According to research by Ohio State Researchers,  comparing the crime rate near marijuana retailers, liquor stores, bars, and restaurants, property crime rates were comparable, with marijuana outlets being accountable for a slightly higher proportion.
A contributing factor to the crime rates and the fear it raises is the presence of Cannabis stores operating illegally. Homes located within a few miles of illegal Cannabis stores may lose value fast as crime rates continue to grow.
Other factors that may affect the value of properties around Cannabis warehouses and storefronts are:
- Market Trends: Property values are influenced by broader market trends, economic conditions, and demographic factors. Changes in these variables may overshadow any direct impact of dispensaries on property values.
- Case-by-Case Basis: Real estate impacts are often location-specific. A dispensary’s influence on property values in one neighborhood or city may differ significantly from another.
Considering all of the above, it is hard to pinpoint the real effect of marijuana dispensaries on home prices and other types of real estate. The legality of Cannabis and whether it has a negative or positive impact on the housing market remains a budding issue with no definite response.
The impact of dispensaries on property values remains a nuanced and context-dependent subject. Existing research presents a mixed picture, with some studies suggesting a potential influence on property values, while others find no significant correlation.
Local regulations, community attitudes, crime rates, and broader economic factors all play roles in shaping the real estate landscape around dispensaries. Ultimately, the question of whether dispensaries lower property values is intricate and necessitates a case-by-case analysis, considering the unique dynamics of each locality.
As more and more states and cities warm up to the Cannabis industry, more home buyers may be willing to stay residentially around Cannabis establishments. However, this doesn’t guarantee the profitability of a real estate property. A lot more goes into ensuring this and you’ll need the help of Cannabis real estate professionals to guarantee it.
At Zoned Properties, our Cannabis real estate specialists do the due diligence required to ensure any dispensary you invest in is profitable both now and in the future. Begin your journey to a successful, worry-free Cannabis business by sending us a message to find the right dispensary for you.