A new analysis found that home values in states with legal recreational marijuana have outpaced their counterparts by nearly $50,000 over the past decade.
So forget about buying a new front door or renovating the kitchen. The cheapest way to make your home more valuable might be to call your state legislature and tell them to legalize marijuana.
The data comes from Real Estate Witch, an educational platform for home buyers and sellers, which examined the differences in home values in each state between 2014 and 2023. States limited to medical marijuana also saw a noticeable rise in home values, outpacing non-medical states by about $29,000.
Matt Brannon, data analyst and author of the report, points out the findings don't necessarily mean that legalizing marijuana definitely causes spikes in home value, but said there's a strong correlation between less restrictive marijuana policies and increased economic development.
"When a state legalizes cannabis, it doesn't just mean more dispensaries," Brannon explains. "It also means more people need to be hired in industries that support cannabis — new jobs in transportation, marketing, financial and legal services, as well as other fields that indirectly support cannabis businesses."
The upshot, Brannon says, is more new jobs and development. He notes that Leafly, a resource for cannabis consumers that partnered with Real Estate Witch for the study, reports that the weed industry supports about 428,000 full-time jobs in the U.S.
Recreational Cannabis Associated With Upticks in Home Value
Cannabis legalization has quickly picked up momentum over the past decade. When the Real Estate Witch report was published in late October, 23 states and Washington, D.C., had legalized recreational weed. Since then, Ohio has also joined the growing group of states with legal marijuana, with residents voting to legalize recreational weed in early November.
The study found that recreational legalization brings benefits that go well beyond the purchase of the plant itself. In recreational states, home values have risen by an average of $185,075 since 2014. In states without recreational cannabis, property values rose $136,092 over that timespan — a difference of about $49,000.
The picture becomes even clearer when looking at the average home in these states today. Houses in recreational states are now valued at $417,625 on average, while homes in non-recreational states are worth about $295,338, according to the report. That's a 41% difference.
That price disparity has become more pronounced in the last decade. In 2014, home values in recreational states were worth $73,303 more than in non-recreational states. Ten years later, the gap has widened to $122,287.
Changing Home Values in Cities With Dispensaries
Digging deeper into the data, the Real Estate Witch study found that in legal states, cities with dispensaries have seen more significant boosts in home values than cities without dispensaries in the same states.
In cities with active recreational dispensaries, home values increased $67,359 more than in cities where recreational cannabis is legal but that don't have dispensaries.
Cities with dispensaries have seen an average home value increase of $168,292 since 2014, while cities where recreational cannabis is legal but where dispensaries have not opened, have seen a price bump of only $100,933.
That finding might surprise some critics of marijuana legalization, who contend that dispensaries are magnets for crime and bring down property values. In fact, a study published in October by the Annals of Regional Science found that, in Washington state, cities with dispensaries demonstrated "no significant impact on local crime in the average neighborhood."
The Real Estate Witch report is one of the first studies to find a quantifiable financial benefit to having a marijuana dispensary in the neighborhood. Within a few years, Brannon said he expects to see more home buyers and real estate investors putting money into cannabis-related opportunities.
Medicinal Marijuana Also Boosts Home Values — Just Not as Much
Medicinal marijuana legalization is an incremental step taken by many states that aren't ready for full recreational legalization. Today, 37 states and Washington, D.C., have legalized medical marijuana.
Although each state has unique laws, medicinal cannabis programs generally require users to get a doctor's prescription and then apply for a permit or license from the state government. In medicinal states, the sales and supply of cannabis are often more tightly controlled than in recreational states.
As medicinal states offer a more limited type of legalization, they experience more limited financial benefits. Since 2014, states with medicinal marijuana have seen home values increase by $29,289 more than in states without medical weed — $166,609 compared to $137,320.
Heading into 2024, the average home value in a medicinal state is 21% higher than in non-medicinal states, coming in at $337,360, compared to $281,343 in states without legalization.
Another Explanation for the Uneven Rise in Home Values
Although the study presents a strong link between rising home values and legal marijuana, some experts believe more nuance is needed when interpreting the study's conclusion.
Brad Poulos, cannabis expert and lecturer at Toronto Metropolitan University, said he suspects the correlation is more related to the different regions of the country where these states are found.
"The states without legal frameworks tend to be more rural and would, as a result, have lower home values," Poulos said.
The flip side of this is that the markets that have legalized recreational cannabis might be desirable for other reasons — cultural, geographical, or otherwise — and that the price bump that seems to be influenced by marijuana legalization is actually the product of other factors, some of which, like a tolerant atmosphere or an entrepreneurial culture, may have led to marijuana legalization.
This article was produced by Real Estate Witch and syndicated by Wealth of Geeks.