Economists' Outlook

Housing stats and analysis from NAR's research experts.

Q&A Corner: Marijuana and Real Estate: A Budding Issue

On April 16, NAR released the 2021 Marijuana and Real Estate: A Budding Issue report. The real estate industry and its professionals are constantly adapting to not only national and local trends, but also to local laws and regulations. With constant changes in the legal status of both medical and recreational marijuana, there undoubtedly have been direct changes to real estate from these laws and related businesses. In this report, we examined the similarities and differences of effects from marijuana legality on various aspects of real estate, as well as any shifts from the last time the study was conducted in 2020.

Matt Christopherson, Research Analyst, was the lead author of the report. In this conversational Q&A, he provided perspectives on how to use the report, insights into the data and the results he found to be most interesting.

What was the purpose of this report?

Matt Christopherson: As we know, the marijuana industry and marijuana laws are ever and quickly changing. Just in the past two months, four more states have legalized recreational marijuana and with these changes, nearly half of the American population will be residing in states with legalized marijuana. Obviously, this affects many personal lives, lifestyles, and spending habits but with that, these changes impact a multitude of industries. We wanted to measure the impact that the marijuana industry and legalization have on the real estate in particular.

What questions is this report trying to answer?

Matt Christopherson: The aim of this study was to measure what, if any, impact marijuana legalization has on a number of aspects of the real estate industry. We sought to find influences on property values, ease of selling and financing, addendums to leases and HOA rules, perception of crime, and property buying/leasing trends of marijuana-related businesses.

What did you find most interesting in this report?

Matt Christopherson: The most interesting trend we found was a bit of a balance of power between marijuana-related businesses and commercial landlords or property owners. We have seen that as marijuana has been legal for a longer period, more landlords are adding rules to their leases regarding growing or smoking marijuana, most likely to maintain the integrity and value of their properties. On the flipside, with more attractive interest rates as well as profits from a growing industry, many companies are switching to buying properties out right vs. leasing, which allows them to operate in their properties (legally) as they see fit.

How can our members use this data?

Matt Christopherson: As members’ states possibly change or update their marijuana laws, members can use this report as a reference guide of what changes to expect in their areas. Residential members can use (the data) to see possible changes to account for in property values near dispensaries, shifts in demand and inventory, and perception of and actual crime. For commercial members, this report can be used (to anticipate) what to expect to add into property leases, changes in property purchasing demand, and also values near dispensaries and growing land.

The marijuana industry presents yet another facet of states and local areas with which REALTORS® must constantly evolve, and this report provides the stepping-stones of what to expect.