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Legalizing Marijuana Increases Housing Prices, Study Finds

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So much for “there goes the neighborhood.” A new analysis suggests that states that legalize marijuana actually see a boost in housing prices, with the effect most pronounced once nearby retail outlets open for business.

Economists at the University of Oklahoma attempted to tease out the impact of adult-use cannabis legalization by examining listings on Zillow.com and tracking them against legalization in Colorado and Washington State. Their findings suggest legalization “has beneficial spillover effects at both the state and local levels,” casting doubt on the parade of horribles sometimes warned of by law enforcement and other critics.

“Concerns about the potential effect on crime rates and the difficulty in policing impaired driving have been cited as reasons to slow-walk the path to full recreational legalization,” the study’s authors write. “This research contributes to the discussion, providing evidence that recreational marijuana legalization (RML) has large positive spillover effects on the local housing market.”

marijuana legalization and housing prices

Via SSRN.

Specifically, neighborhoods in Colorado and Washington saw a 7 percent price increase as marijuana retailers there opened shop, the study, which was published online this week by SSRN, found. “Considered together, this research suggests that there are second order benefits associated with marijuana legalization that policy makers and voters should be aware of when deciding the drug’s legal status.”

“Once recreational marijuana becomes available to buy easily at a dispensary and tax revenue is generated, there is significant home price appreciation.”

It’s not the first time researchers have looked into the effects of legalization on nearby home values. In 2018, researchers at Colorado State University found that home prices within a half mile of a retail cannabis store went up by 7.7 percent. A 2017 study, “Contact High: The External Effects of Retail Marijuana Establishments on House Prices,” found an 8 percent increase in the value single family residences that were “close to a retail conversion,” or store opening, compared to homes that were farther away. A 2016 analysis had similar findings, concluding that “legalization leads to an average 6% increase in housing values, indicating that the capitalized benefits outweigh the costs.”

The new study takes the past findings and pulls them into sharper focus. It concludes that legalization tends to impact the values of more-expensive homes differently than less-expensive ones, though homes of all price levels saw increases. The study also identifies variables that may work to lift residential property values in states that legalize, such as increased tax revenue to fund schools.

“Marijuana’s liberalization provides a novel source of tax revenue which states have used to fund capital expenditures, especially in education and it acts as an amenity via the dispensaries that distribute it,” the paper says. “The creation of a new legal market has direct implications for the local economy, as it establishes new dispensary jobs and reduces arrest rates. All of these factors have well-established impacts on housing markets.”

One of the analyses performed by the researchers found that prices among more expensive homes increased immediately following a successful ballot drive to legalize marijuana. Meanwhile, homes in less-expensive areas didn’t see much of a price increase until cannabis stores actually began to open.

As they describe it, the economists found “positive effects in the top of the distribution following the success of the ballot measure legalizing recreational marijuana, but no effect in the lower half.”

“The greatest impact occurs once it becomes legal to sell marijuana, with large positive effects across the price distribution, especially in the middle three deciles,” they write. “Heterogeneous responses to a policy shock have not been well-researched in the housing literature, making the findings here one of our major contributions.”

Legalization itself led to “positive effects upwards of ten percent in the top half of the price distribution,” the study says, “and between five and fifteen percent across the distribution after the state enacts the ballot initiative and the first legal sales take place.”

Why the lopsided effect? The economists say a number of mechanisms could be at work, with a big one being access to liquidity among the rich: “The wealthiest households can more rapidly move to (legal) states if they believe there to be some positive spillovers from legalization.”

The researchers attempted to address some confounding variables in their analysis, such as by assessing house prices by square foot rather than taking each property as a whole. “Geographic heterogeneity in our sample suggests that simply using house price as the dependent variable could bias the results since treatment homes are in high-price states,” the authors write. “By using house price per square foot as the dependent variable, we can ensure that this potential source of bias is accounted for.”

They also took particular note of when stores actually opened. “If the primary mechanism in our cross-state models is the economic development effect,” the study says, “then it is possible that the impact is only felt once the first dispensaries open and a large volume of marijuana sales take place, thereby generating tax revenue.”

“[W]hen a dispensary opens nearby, homes closest to it appreciate in price the most. This is consistent with our interpretation that new dispensaries act as amenities in the local housing market.”

One big question the researchers still can’t answer: Will it last? “Without the benefit of foresight,” they write, “our research is not able to determine whether the positive effect will persist.”

Other big unknowns remain, such as whether the effect was due to more people immigrating to the state after legalization, which would mean states that legalize later could see a diminished effect.

But for now, the effect is robust. And from what the researchers can tell, people don’t just seem to want the benefits of legal marijuana. They also want marijuana stores themselves to be near their homes. When the economists modeled home prices by distance to the nearest outlet, the data “show price appreciations for homes as the distance to the nearest dispensary decreases.”

“This demonstrates that [it is] not simply the benefits of increased tax revenue, but also the existence of the dispensaries themselves, that is driving the price increases,” the researchers found. “The dispensaries act as commercial amenities that the public puts a premium on being nearby.”

Illinois Sold Almost $35 Million Of Marijuana In Second Month Of Legal Sales

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Ben Adlin is a Seattle-based writer and editor. He has covered cannabis as a journalist since 2011, most recently as a senior news editor for Leafly.

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Canopy Growth Says GW Pharma Infringed On CBD Extraction Patent In Federal Lawsuit

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Two of the biggest players in the marijuana space are heading to federal court over a dispute related to an alleged violation of a patent for a cannabis extraction method.

Canopy Growth Corporation, a Canadian-based marijuana company, filed a lawsuit on Tuesday against GW Pharmaceuticals, a UK-based firm that produces the Food and Drug Administration-approved cannabis-derived anti-seizure medication Epidiolex.

The legal action came on the same day that the U.S. Patent and Trademark Office issued a new patent to Canopy that gives it broad and exclusive rights to a process of extracting cannabinoids from plant material in the U.S. That issuance is giving Canopy more leverage to pursue litigation and potentially receive damages from GW if the suit plays out in its favor.

Canopy’s original patent—which was issued in 2014 (and initially filed as an international patent application in 2001)—was more narrow and gave companies like GW leeway to adopt their own extraction practices that fall outside the scope of the patent.

That’s not the case anymore, and if the U.S. District Court for the Western District of Texas sides with the plaintiffs, it could have far-reaching implications for the marijuana industry.

Canopy is claiming that GW’s infringement of a patented extraction method “has been and continues to be willful and deliberate.” Because of this infringement, “Canopy has suffered and continues to suffer damages and irreparable harm,” the suit says.

The looming issue for the industry is that, unless GW is able to prove that the patent is invalid, that could mean Canopy would have exclusive rights to an extraction process that is widely used across the market—leaving any company that relies on this method at risk of litigation.

Canopy’s exclusive rights won’t last indefinitely, of course. The newly issued patent that is the basis of its latest iteration is set to expire in a little under a year and a half. But even in that timeframe, Canopy could profit immensely from exclusivity and it could have a chilling effect on competitors in the interim.

“It really could be a major threat to the extraction industry. Once they know about [the patent], companies might be considered to be willfully infringing the patent, which can potentially triple damages if they are sued,” Larry Sandell, a patent attorney and litigator with Mei & Mark LLP, told Marijuana Moment. “Although there are steps that can be taken to reduce infringement liability risks, CO2 extractors may essentially have this anvil hanging over their head as the business continues on—at least until the patent expires or someone succeeds in knocking it out.”

It remains to be seen whether Canopy will pursue litigation against other companies that use the extraction process. GW is one of the biggest players, as the pharmaceutical firm that earned the first U.S. federal approval for a cannabis-derived medication.

“The lawsuit asserts that GW manufactures CBD—the active pharmaceutical ingredient in Epidiolex, GW’s leading cannabinoid product—using Canopy Growth’s patented CO2-based extraction process,” Phil Shaer, chief legal officer at Canopy Growth, told Marijuana Moment. “We have no interest in restricting access to Epidiolex, but the company should be fairly compensated for GW’s use of our intellectual property.“

A spokesperson for GW told Marijuana Moment that the company “is aware of the patent infringement lawsuit filed by Canopy Growth.”

“As a policy, we do not comment on any pending litigation except to say that based on our preliminary review of the complaint, we are confident in our position and will vigorously defend against this lawsuit,” they said.

One possibility would be for Canopy to license out its extraction method to other businesses that produce cannabis products.

But that’s not likely to sit well with others in the burgeoning industry. And it could be the case that GW or other companies will challenge the legitimacy of the very patent in question in court.

On a symbolic level, all of this speaks to the growing pains of a corporatizing industry—a fear expressed by some advocates as the market has expanded. And how it shakes out in this case could, at least in the short-term, be of significant consequence to cannabis businesses throughout the country.

Read Canopy’s new patent and suit against GW over a cannabis extraction process below: 

Canopy vs. GW CBD Extractio… by Marijuana Moment

Mitch McConnell Cheers Lack Of Marijuana Banking Protections In New COVID Bill

Photo by Kimzy Nanney.

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State Of Montana Launches Online Hemp Marketplace To Connect Buyers And Sellers

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Say you’re a Montana farmer who has planted acres of industrial hemp. As harvest nears, you’re looking to offload it. Where do you go to find a buyer?

Montana’s Department of Agriculture says it has the answer.

The state this week announced the launch of an online “Hemp Marketplace,” unveiling an online portal meant to connect the hemp farmers with buyers in search of seeds, fiber and derivatives such as cannabidiol, or CBD.

“The Hemp Marketplace concept originated from the same idea as the department’s Hay Hotline,” the Agriculture Department says on its website, “only instead of hay and pasture, the online tool connects buyers and sellers of hemp and hemp derivatives.”

Listings are free of charge.

Montana online Hemp Marketplace screenshot

Montana Department of Agriculture

Montana farmers have embraced industrial hemp since the state legalized its production under a federal pilot program. The first legal crop was planted in 2017, and in recent years the state has led the country in terms of space dedicated to the plant. In 2018, for example, licensed farmers in Montana grew more acreage of hemp than any other U.S. state. While other states have since eclipsed the state’s hemp production—the crop became broadly federally legal through the 2018 Farm Bill—Montana remains an industry leader.

But to make revenue, farmers have to be able to sell their crop. That’s where the new hemp marketplace comes in. The online portal is essentially a sophisticated bulletin board for buyers and sellers, split into “Hemp for Sale” and “Hemp to Buy” categories.

“With hemp being a relatively new crop grown in Montana, the department recognizes that these markets are still developing,” Department of Agriculture Director Ben Thomas said in a statement. “The Hemp Marketplace was designed to help facilitate connections between buyers and sellers. I’m looking forward to seeing how the marketplace will continue to advance the industry.”

Listings include what type of products are on offer (or being sought), whether a given crop is organic and even whether laboratory testing data is available. The portal also organizes products into one of four varieties based on whether the hemp seeds have been certified by regulators. None of the products may contain more than 0.3 percent THC—the upper limit for what qualifies as hemp under both state and federal law.

Meanwhile, Montana voters are set to decide on Tuesday whether the state will legalize hemp’s more infamous cousin, high-THC marijuana. According to a poll released this week, passage looks likely: The survey, conducted by Montana State University at Billings, found that 54 percent of likely voters plan to support legal cannabis on the ballot. Another 38 percent said they were opposed, while 7 percent remained undecided.

At the federal level, officials at the Drug Enforcement Administration are still working to revise rules around marijuana and hemp to reflect Congress’s move to legalize hemp broadly in 2018. While the public comment on the proposals closed earlier this month, nine members of Congress cautioned the agency against adopting its proposed changes, warning some could put hemp producers at risk of criminal liability. Already a number of arrests and seizures have been made by law enforcement officers confused whether products were legal hemp or illicit marijuana.

The U.S. Department of Agriculture (USDA), meanwhile, has faced separate criticism over its own proposed hemp rules, though it has been more proactive in addressing them. Following significant pushback from the industry over certain regulations it views as excessively restrictive, the agency reopened a public comment period, which closed again this month.

USDA is also planning to distribute a national survey to gain insights from thousands of hemp businesses that could inform its approach to regulating the market.

Montana Marijuana Legalization Ballot Measure Has Solid Lead In New Poll

Photo courtesy of Brendan Cleak

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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Missouri Launches Medical Marijuana Sales At State’s First Dispensaries

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Less than two years after Missouri voters approved a ballot measure to legalize medical marijuana, dispensaries made the state’s first cannabis sales to patients on Saturday.

N’Bliss Cannabis opened the doors of two separate St. Louis County locations, in Ellisville and Manchester.

“Missouri patients have always been our north star as we work to implement the state’s medical marijuana program,” Dr. Randall Williams, director of the Missouri Department of Health and Senior Services, said in a press release. “We greatly appreciate how hard everyone has worked so that patients can begin accessing a safe and well-regulated program.”

Officials have touted the speed with which they have gotten the voter-approved cannabis program off the ground, saying it is “one of the fastest implementations of a medical marijuana program in the United States.”

Via Missouri Department of Health and Senior Services.

“A tremendous amount of work has occurred by the licensed facilities and our team to get us to this point, and we continue to hear from more facilities that they are ready or almost ready for their commencement inspection,” Lyndall Fraker, director of the Section for Medical Marijuana Regulation, said in a press release. “We look forward to seeing these facilities open their doors to serve patients and caregivers.”

The impending launch of sales on Saturday was first announced by the Missouri Medical Cannabis Trade Association on Friday and reported by The Springfield News-Leader.

The state, which has so far licensed 192 dispensaries and expects most of them to open their doors by the end of the year, posted an interactive map that tracks the status of approved medical marijuana businesses.

For months, regulators have been caught up in lawsuits and appeals challenging their licensing decisions, with revenues that would otherwise go to supporting veteran services instead being allocated to covering legal costs.

Missouri isn’t the only state to see medical cannabis sales launch this weekend. Virginia’s first medical marijuana dispensary also held its grand opening on Saturday.

Meanwhile, recreational sales of marijuana rolled out in Maine last week—four years after voters there approved a legalization ballot measure.

Another New Jersey Poll Shows Marijuana Legalization Passing By A Huge Margin

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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