Home values in states that have legalized cannabis were higher and grew at a faster rate than in non-legal states, according to a recently published study. The research examining residential real estate prices found that home values in states with recreational cannabis have outpaced home values in other states by $48,983 over the past ten years.
Property values in the 23 states that have legalized recreational weed have risen by an average of $185,075 since 2014, according to the study from Real Estate Witch and Leafly. By comparison, real estate values in states that have not yet legalized adult-use cannabis rose by $136,092 over the same period. Typical home values in adult-use states were $417,625, 41% higher than the $295,338 in the states that maintain the prohibition of recreational pot.
The authors of the research note that of the 10 states with the largest increase in home values, seven have legalized cannabis for use by adults. Meanwhile, of the 10 states with the smallest increases in residential real estate values, nine have not legalized recreational cannabis.
Home values in states that have legalized medical marijuana were also higher than in states without legal medical cannabis. Home values in states with medical marijuana rose by $166,609 since 2014, while the value of homes in prohibition states rose by $137,320. The typical home in medicinal cannabis states is worth $337,360, compared to $281,343 in other states.
“This report stands as a testament to what insiders in the cannabis community have long known to be true: The presence of legal cannabis in cities and states does not diminish property values. In fact, it’s quite the opposite,” Josh deBerge, vice president of brand and communications for Leafly, said in a statement about the research. “Regulated cannabis offers a slew of economic benefits to local communities, and that is something this report makes quite clear.”
Home Values In Cities With Dispensaries Also Fare Better
Property values in cities with recreational cannabis states with weed dispensaries also fared better than in cities in adult-use states without pot shops. Home values grew by $168,292 in cities that are the home to dispensaries since 2014, $67,359 more than the $100,933 growth in cities with legal recreational cannabis but no dispensaries.
The study notes that the 23 states and Washington, D.C., that have legalized recreational cannabis are projected to average over $1 billion in overall cannabis revenue in 2023, coming to a total of just under $25 billion.
Tax revenues were also higher in states that have legalized cannabis. In 2022, the 12 states that reported a full year of cannabis tax revenue averaged an additional $307 million in tax revenue per state, totaling $3.7 billion. In California, where sales of recreational cannabis began in 2018, the state earned an additional $1.1 billion in tax revenue from cannabis in 2022.
The researchers note that cannabis tax revenue is often invested in communities, leading to a cycle of improvement in the quality of life for residents.
“The funds from legal weed purchases often go toward public programs and policies that aim to improve the quality of life for residents,” the study notes. “From there — the theory goes — more people will move to the area, some of whom will pay cannabis taxes, and continue a cycle of civic investment and improvement.”
Data on the way states allocate their recreational cannabis tax revenue is often available to the public, allowing citizens to see where their tax dollars are being spent. For example, California reports directing 60% of cannabis tax revenue to programs that prevent and address substance use among adolescents. The remaining 40% is split between environmental protection and law enforcement. Across all states with legal weed, the most popular spending categories for cannabis tax revenue include education, infrastructure, law enforcement and substance abuse treatment.