As more states legalize marijuana use for medical and recreational purposes, the real estate industry has already seen an impact. Studies largely show an increase in residential property values in states with legalized marijuana. In particular, homes near retail dispensaries mostly saw increases in values compared with homes further away.
Property managers must consider both state and federal laws when developing marijuana related policies. Multifamily property managers may prohibit smoking of both marijuana and tobacco in their buildings. If leasing property to a cannabis business, understand special lease provisions that may apply.
Investors are increasingly interested in marijuana establishments, particularly after dispensaries’ positive performance throughout the pandemic. Recently, several cannabis REITs (real estate investment trusts) have been established to help investors capitalize on the potential growth in this area.
Brokers may be curious how changing marijuana laws affect their employee policies. Be aware of your state’s cannabis use laws, as well as any laws that protect employees’ off duty use. Stay up-to-date on pending legislation in your state, as new marijuana laws are being considered with some frequency.
See References for more information.
NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.
Marijuana Real Estate: How Recreational Pot Is Impacting the Neighborhood (The Zebra, Apr. 5, 2024)
“To understand where the housing market fits into marijuana’s impacts on the economy, we looked at housing trends in key states and compared growth to the national average. We discovered these correlations:
New Study Finds Home Values Are 41% Higher in States with Legal Recreational Cannabis (PR Newswire, Nov. 1, 2023)
“Home values in states with recreational cannabis have outpaced home values in other states by $48,983 over the past decade, according to new research from Real Estate Witch, an online publication owned by Clever Real Estate that connects readers with expert real estate advice, and Leafly, a leading online cannabis discovery marketplace and resource for cannabis consumers. Recreational cannabis is currently legal in 23 states and Washington, D.C. Property values in those states have risen by $185,075 since 2014, compared to $136,092 in states without recreational cannabis. Typical home values in a recreational state are $417,625, 41% higher than in non-recreational states ($295,338).”
Does the Decision to Allow Local Cannabis-Related Businesses Impact Home Sale Prices? (Rutgers New Jersey State Policy Lab, Oct. 21, 2022)
“Our study’s findings suggest there is a positive relationship between home sale prices and the decision to allow cannabis-related businesses. For example, we find the average home sale price increased by 1.7% more following the deadline to opt-out in municipalities that allowed cannabis-related businesses compared to the average home sale price change in municipalities that did not allow cannabis-related businesses. A 1.7% increase in the home sale price for the average parcel in an “opt-in” municipality is equivalent to a $6,763 increase.”
How Marijuana Legalization Affects Lease Agreements (Legal Templates, Apr. 9, 2024)
“Marijuana laws will likely continue to change in the U.S., and it will be up to landlords to take matters into their own hands.
By staying informed and up-to-date on local laws, landlords can craft lease agreements and other legal documents that maintain their control over their property.”
Fair Housing and Marijuana – Do You Have to Permit Its Use? (Fair Housing Institute, Jan. 15, 2023)
This article and two videos examine different scenarios related to reasonable accommodations for medical marijuana use, considering property policies, state laws, and property types.
Can I Say “No Pot in My Apartments” When It’s Legal in My State? (Rental Housing Journal, Jan. 2, 2023)
“Rental Housing Journal did an interview with Seattle, Washington attorney Bret Sachter, an expert in tracking the progression and transformation of marijuana laws, to discuss some common questions property managers have about marijuana and tenants.
“I’ve been asked this a lot,” Sachter said, “but it does not come up as often as you might think. The overarching issue here is that, with few exceptions, people can do what they want to protect their property, even if the prohibited behavior is not illegal. You can prohibit smoking, prohibit pets, but with marijuana it’s much easier because it is federally illegal. So you can pretty much prohibit it if you want to no matter what, even medical marijuana,” Sachter said.”
Regulating Cannabis Smoking in Multi-Unit Housing (Public Law Center at Mitchell Hamline School of Law, Mar. 2022)
While this fact sheet includes many questions specific to California law, it also offers information about regulating marijuana use in in multi-unit buildings, laws pertaining to federally subsidized housing, and resources for learning more about cannabis regulation and tobacco control policies.
Marijuana and Real Estate: A Budding Issue (National Association of REALTORS®, Apr. 2023)
“The legalization of marijuana continues to impact the real estate industry. If marijuana is legal within a state, the product is grown, harvested, stored, sold, and consumed within state lines. As such, commercial practitioners are finding increased demand for warehouses, land, and store fronts for marijuana. Residential practitioners are navigating an environment of marijuana being used and/or grown within rental properties, homeowner associations creating rules about consumption and growth, and title questions selling a home where the product has been grown and consumed.”
High Times, Low Times (Create, Dec. 27, 2022)
“The cannabis industry seems to be riding a groundswell of support. At last count, 37 states had legalized medicinal cannabis use and 21 had legalized recreational use. However, the industry faces significant headwinds, including a lack of access to banking and an uneven and lengthy licensing and permitting process. These dynamics, veteran commercial brokers report, have resulted in the most complicated and protracted deals of their careers.”
New Why Commercial Real Estate Investors Are Setting Their Sights on Cannabis (EisnerAmper, Feb. 23, 2022)
“What initially caught the eye of many commercial real estate (CRE) investors and opened the market for the cannabis industry was its performance during the pandemic. Cannabis dispensaries were deemed essential in many states and allowed to continue operating, as opposed to traditional retailers, which took a major hit when they were forced to close. During that same time, multiple states reported legal marijuana sales from dispensaries reaching all-time highs, according to the International Journal of Drug Policy.”
How Cannabis Legalization is Shaping Commercial Real Estate (Mann Report, Jan. 24, 2022)
“Property has always been considered an attractive investment and cannabis has only improved it. In the U.S., the value of industrial-zoned properties in the commercial real estate sector is $1.5 trillion. When comparing the U.S. cannabis industry’s economic impact against total GDP, estimates illustrate that cannabis development projects will create a Total Addressable Market of $50 to $75 billion in commercial real estate, accounting for about half of a percent of industrial real estate.”
Cannabis and Employment: Medical and Recreational Policies in the States (National Conference of State Legislatures, Jan. 22, 2024)
“Medical cannabis is legal in 38 states. About half of these states have policies that somehow address anti-discrimination for medical cannabis patients. Significantly fewer states require employers to carve out accommodations for these patients.
The following table includes states that have some kind of statutory or constitutional language requiring employers to not refuse employment or otherwise discriminate against a qualifying medical cannabis patient (or medical cannabis “cardholder” in some states).”
Marijuana in the Workplace (SHRM, Nov. 17, 2022)
“The legal landscape surrounding marijuana and the workplace is dynamic and changing quickly. Employers must navigate a labyrinth of federal and state statutes and court decisions when developing substance-abuse policies and drug-testing practices around cannabis.
Employers can use these resources to keep up with the newest developments.”
It's Time to Rethink Marijuana Policy, Testing (HR Specialist: Employment Law, May 2022) E
The article offers tips to companies which are planning to drop their workplace testing for marijuana amidst the increasing number of U.S. states legalizing medical and recreational marijuana. Also cited are the percentage of workplace drug tests that came back positive for marijuana as per Quest Diagnostics data, and some tips like revising employee policies on marijuana testing and adding language to the no-smoking policy.
The following eBooks and digital audiobooks are available to NAR members:
American Landlord Law (eBook)
The Complete Landlord.com Ultimate Landlord Handbook (eBook)
Complete Landlord and Property Managers Legal Survival Kit (eBook)
Every Landlord's Legal Guide (eBook)
Strategies for Working with Small Tenants (eBook)
What Every Landlord Needs to Know (eBook)
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