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Implications of marijuana legalization on the real estate industry

Written by Posted On Thursday, 12 May 2016 17:42
Implications of marijuana legalization on the real estate industry

Every U.S. state’s decision, whether to legalize or criminalize marijuana use, comes with a series of consequences that can affect various sectors and industries. Today, there are currently 24 out of 50 states that have legalized medical marijuana, but its use still remains a criminal offense under the federal law.

Colorado and Washington led in legalizing medical marijuana which opened doors for many other states to follow suit. Back in 2015, Huffington Post reported that these first two states raked in at least $200 million in tax revenues. California, Alaska, and the District of Columbia all reported having massive tax revenues from legal pot sales alone. In fact, earlier this year, CNBC reported that legal pot sales have hit a $5.4 billion mark in 2015. Figures could hit the $6 billion mark by the end of the year as predicted by Fortune.

Even medical cannabis startups are enjoying statewide marijuana legalization, as funding platforms emerge. Investopedia revealed that aside from tech startups, medical cannabis startups such as Med-X continue to leverage against tech startups in terms of market demand. Med-X, which produces all-natural products for cannabis cultivation, consequently, is the first medical cannabis company to run a Regulation A+ crowdfunding initiative.

Now, while the government entities and legal marijuana producers are enjoying the benefits of medical marijuana’s legalization through tax revenues and sales, another sector is affected: the property sector.

The impact of marijuana legalization continues to be felt throughout the country and especially in states that have voted for its legalization. More than finding land to cultivate marijuana, migration and relocation of people in search of medical marijuana and job opportunities in these states has increased.

In Denver, home prices have dramatically increased by double digits since the state legalized marijuana in 2012. CNN Money goes on to report that in March 2015, Denver saw its second-largest home price increase by as much as 10 percent. The impact of Colorado’s marijuana legalization contributed to its job growth by as much 68 percent in 2015. Reports from the National Marijuana News stated that in December 2015, the state issued 26, 929 occupational licenses to medical cannabis company employees.

“The pot industry is creating jobs we didn't have before," real estate agent, Kelly Moye told CNN Money.

Washington, on the other hand, has another story to tell. The state council voted on banning private membership organizations on the list of public venues where consumption of marijuana is prohibited. Implications of this ban are rather broad and the Washingtonian continues to explain that businesses could be shut down. Clubs, which usually allowed smoking marijuana, may reject medicinal users who can’t travel to DC’s few clinics. Landlords may force tenants who consume marijuana out of their properties, in as much as federally financed housing, which contradicts both state and federal laws.  Under federal law, marijuana use is illegal, while the State of Washington allows recreational use of marijuana.

California, in 2011 decriminalized possession of marijuana for medical use under the Compassionate Use Act. In order to qualify for its medical purpose, a person must be a qualified patient or a caregiver. Nonetheless, possession with the intent to sell thereof may constitute possible jail time This same regulation raised legal questions against the basis of California realtors who ban medical marijuana use on their properties. But under federal law, realtors may ban anyone in possession and smoking of marijuana.

This puts realtors in a state of confusion and limitation. Realtors, according to the California Real Estate publication may have clients asking for properties to grow or dispense marijuana. However, the realtors should be aware of the federal criminal liability they must face, though California allows medical marijuana use.

As more states lift their marijuana prohibition, the real-estate industry is experiencing the implications of these regulations. Some of these reasons may be realtors banning the use of marijuana on their properties, others, on the part of land intended to grow marijuana. The real estate industry continues to be tied down by contradictions from the federal and state laws. Even banks, which are under federal law, sometimes deny mortgages on properties deemed for marijuana use and cultivation.



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Angelique Moss

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