Vermont’s Real Estate Could Rise Even Higher Thanks to Marijuana
The U.S. and marijuana go way back, and for much of this history, cannabis has been seen in the wrong light - until recently. According to a recent Pew Research poll, +90% of American adults are in favor of legalizing cannabis, highlighting just how popular the plant has become. Now, 15 U.S. states and Washington D.C. have legalized recreational marijuana, and 36 states have legalized medical marijuana.
Here’s how legal marijuana could impact Vermont and the Green Mountain State’s real estate industry.
Vermont’s Legalization Status
Vermont’s relationship with cannabis started back in 2004 when the state legalized medicinal use of the plant. Vermont legislators then successfully legalized possession and cultivation of cannabis for adults 21 and older in 2018, and have recently passed a bill that would allow adult-use marijuana sales. Retail sales will begin in 2022, giving the state time to figure out how they’d like to roll out this new industry.
Cannabis & Real Estate
Real estate markets with fully legalized marijuana for recreational use may attract more homebuyers, including marijuana consumers, entrepreneurs, and job seekers. With more marijuana stores opening up, the demand for labor will be on the rise, and the need for homes is expected to follow suit. Increased property sales and higher rents will be the most significant payoffs of Vermont’s decision to legalize cannabis.
Interestingly enough, new dispensaries' impact on housing prices is similar to the concept of a new grocery store opening in a neighborhood. A preference for neighborhoods with more dispensaries for convenience could indicate that marijuana stores are increasingly seen as one of the top amenities for some homebuyers.
Key Facts Regarding States That Have Legalized Cannabis
While the Green Mountain State gets all of its buds in a row, it’s worth looking to other markets where marijuana has been legalized for a significant chunk of time to estimate the potential impact of legalization on the local real estate market. There’s a significant difference in real estate value between states that have legalized cannabis and those that haven’t. For example:
- From 2014 - 2019, cities with retail dispensaries saw their home values increase $22,888 more than cities where marijuana is illegal.
- In cities where only medicinal marijuana is legal, home values increased at a comparable rate to cities where marijuana is illegal; a statistically significant increase in home values could not be attributed to medicinal marijuana legalization alone.
- States that legalize recreational cannabis have seen an immediate bump in home values following legalization, even without retail dispensaries opening up. From 2017 to 2019, cities where recreational marijuana became legal saw home values increase by $6,337 compared to cities where marijuana is illegal (controlling for population, initial home values, and GDP).
Big Growth in the Northeast
The Northeast has watched its cannabis industry expand rapidly. In 2018, there were only 187 dispensaries across nine states. Today, there are 424 dispensaries and retailers operating in the Northeast.
Amid the pandemic that’s staggered local revenue streams, retail cannabis has been a welcome source of income for many communities. While Vermont’s future tax revenue and real estate prices are yet to be impacted, we can look at states in the Northeast like Massachusetts that have set a hopeful precedent.
Between December 2018 and May 2019, adult-use marijuana brought in nearly $2.9 million in local tax revenue, according to the Massachusetts Department of Revenue. The following fiscal year, cannabis drew roughly $14.9 million for cities and towns.
Clearly, residents are welcoming the industry with open arms, which is a win-win-win for them, their communities, and their local real estate agents.