Massachusetts & Marijuana’s Budding Relationship
People have been debating the legalization of marijuana for years, raising concerns over potential negative impacts to their state. But in states like Colorado and Washington, where marijuana has been legal for almost 10 years, all signs point to success - and a range of benefits to boot. The Bay State’s marijuana industry is in its infancy, having achieved legalization in 2016, but looking to states that have successfully integrated this new controversial industry can be enlightening.
Here’s how legal marijuana could impact Massachusetts’ real estate industry for years to come.
Marijuana & Real Estate
As marijuana intersects with real estate, the demand for both residential and commercial properties has increased significantly over a short time span. What’s noteworthy here is the positive impact on both residential and commercial properties. Especially commercial, which has experienced a surge of new energy throughout the state, largely powered by pot.
According to a study, "Contact High: The External Effects of Retail Marijuana Establishments on House Prices", property values jumped ~8% — around +$27,000 — on homes within 0.1 miles of a dispensary in Denver. Outside of Denver, the National Association REALTORS® shows real estate agents are seeing a slight increase in home values near dispensaries. In states where recreational marijuana use is legal, between 7% - 12% of REALTORS® have seen an increase in residential property values. It’s important to take note of both hard data and anecdotal evidence from agents on the ground to gain a well-rounded perspective of the current landscape.
“In Massachusetts, home values rose by 31% between 2014 and 2019 compared to 30% nationally during that same period,” said Francesca Ortegren, a data scientist with Clever Real Estate. “One reason that Massachusetts saw less of a boost in home values than other cities when dispensaries opened is that home prices here are already among the highest in the country.”
Commercial real estate in Massachusetts’ will likely benefit the most from the legalization of marijuana. Throughout the state, commercial properties and warehouses are in need of a facelift, giving the marijuana industry an opportunity to not only clean up these areas, but also to be a positive force of change in the communities they serve.
According to a report by the National Association of REALTORS® “Marijuana and Real Estate: A Budding Issue” in places where marijuana was legalized, 16-21% of agents said they saw an increased demand for land, 34-42% saw an increased demand for warehouse space, and 18-19% noticed an increased demand for retail spaces. Again, this highlights the expanse of the marijuana industry and how many resources it requires to grow.
The Proof Is in the Pot Profit
As we examine the impact of marijuana on Massachusetts, it’s worth looking to other states, like Colorado, to understand the true growth potential offered by this budding industry - particularly in regards to profits. Colorado’s first retail dispensary opened on January 1, 2014, and sales since have generated over $984,000,000 in tax revenue. Additionally, the average home value in Colorado has increased 58% since legal commercial sales began. Colorado has quickly become the pot capital of the U.S., offering proof of marijuana’s positive impact.
If we look to the Bay State, we can see similar trends emerging. In Massachusetts, marijuana sales recently surpassed $1 billion since the new system was launched just two years ago. This resulted in $122 million in tax revenue that the state plans to use to support state and local needs. If sales continue at this pace, Massachusetts could soon exceed even Colorado’s sales. The potential for the marijuana industry here is clear, and it’s looking like the industry will break through the grass ceiling.
Big Growth in New England
The Northeast has watched the cannabis industry expand rapidly. In 2018, there were only 187 dispensaries across nine states. Today, Massachusetts alone has over 206 dispensaries.
Amid the pandemic that’s jostled local revenue streams, retail cannabis has been a welcome source of income for many communities. 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.
How to Capitalize on a New Industry
Legalized marijuana has already shifted societal norms, created a large legal gray area, and generated a lucrative source of tax revenue. Most importantly for real estate agents, it’s created jobs, bringing more people into your community. In terms of residential real estate, the marijuana industry has created over 320,000 jobs nationwide, including more than 13,000 in the Bay State alone. The industry is far-reaching, so jobs are diverse and require a variety of skill sets.
This surge of workers can be a great opportunity to get your foot in the door and establish yourself within this industry’s community for future leads.
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