Legalization Boosts Commercial Real Estate Sales

In a National Association of Realtors study titled Marijuana and Real Estate: A Budding Issue, 34 percent of respondents indicated increased demand for warehouses in states that have legalized cannabis since 2016 with nearly the same share (33 percent) saying there has been no perception of an increase in crime around dispensaries.

Two in three respondents from newly-legal states said there had been no change in residential property values near dispensaries, along with 85 percent of respondents from medical-only states, and 60 percent of respondents from states that had legalized cannabis before 2016.

The majority of all respondents – just two percent of which were cannabis specialists in residential real estate – said they had never tried to sell a grow house but more than 70 percent of realtors surveyed said a grow house would be “easy to sell.”

Dr. Jessica Lautz, vice president of demographics and behavioral insights for NAR, said that cannabis operations and use both touch real estate in some form.

“As more states legalize marijuana, the real estate market will progressively have to adjust,” she said in a statement.

Half of respondents from ‘old’ legal states indicated they had added addendums to leases restricting cannabis cultivation, compared to 25 percent of those surveyed from newly-legal states, and 11 percent from medical-only states. Another 67 percent from old legal states said they’ve added addendums banning smoking, along with 58 percent from newly-legal states, and 41 percent from medical-only states.

“When the business of marijuana is discussed, some have a tendency to focus on only the buyers and sellers of the product. However, these numbers show that marijuana has been a boon to commercial real estate.” – Lautz, in a press release

The survey found between 18 percent and 24 percent said that landlords were unwilling to take cash at all, but only about 10 percent of those said that they wouldn’t take cash from cannabis operators because it was from a federally banned activity. In all, 31 percent of respondents from medical-only states said landlords would take cash no questions asked, along with 27 percent from old legal states and 24 percent from newly legal states.

The cash question is important as cannabusinesses are often restricted from most financial services and have to pay for expenses, such as rent, with cash. The vast majority of respondents – between 75 percent and 89 percent – said they were not currently leasing to a cannabis business.

A report last year from RE/MAX focused on post-legalization real estate found that some regions with large cannabis operations were experiencing a shortage in houses and an increase in prices.