In 2012, Colorado and Washington became the first states to legalize recreation Cannabis consumption.
Sure that was great news for the average stoner looking to have a good time. But more importantly legalization has allowed these states, specifically Colorado, a proving ground for successful economic systems. These processes of trial and error are being monitored by the entire country, from the individual consumer to the Unites States House of Representatives. One area that has been directly impacted in these guinea pig states, contrary to industry skeptics, is the housing market. In March 2015, Denver experienced a 10% raise in annual home prices, the second largest in the country behind yearly leader San Francisco.
The jump in housing prices has in no way impacted the demand for housing in the state’s capital. In fact, Denver averages 24,000 vacant listings at any given time, but right now that number has plummeted to around 4,000. That means 84% of the normal Denver housing market is being snatched up for one reason or another. Furthermore, apartment vacancies are just 3.9%, the lowest since 2000. Most agents around the real estate industry are contributing it to the passing of recreational Cannabis legislation.
“The pot industry is creating jobs we didn’t have before. It’s brand new, it adds a whole new factor to the area; you have real estate needs, housing needs, job needs.” – Kelly Moye – Re/Max Agent with 24 Years experience in Denver.
While the legalization of recreational Cannabis is certainly a factor in this housing boom, it is not the sole reason for the industry’s growth. Medical Cannabis laws in Colorado continue to be among the most all encompassing systems in the country. Not only do the laws include a wide variety of ailments, but medical dispensaries within the state are more accessible than anywhere in the country. Because of this, Denver is seeing an influx of families whose children (or other family members) require a medical Cannabis treatment previously denied to them by their former state’s legislation. How long can this last? Most experts predict the industry will grow for the next five to seven years, depending on recreational legalization from other states.
“We are going to continue to see an increase in population growth based on marijuana until other states start picking up recreational laws,” – JP Speers – Agent – Birkshire Hathoway Home Services
Recreational and medical Cannabis legislation has also had a big impact on the commercial real estate market. With the demand for Cannabis in Colorado at an all time high, opportunists are looking to supply dispensaries, but are having a hard time finding available warehousing for their cultivations. While Colorado state law permits medical and recreational use, each county provides a specific policy as to the cultivation of the crop. The result of which being that growers have flooded counties in which cultivation is legal, causing the commercial real estate boom. In fact, Denver is experiencing an industrial vacancy rate right around 3%, the lowest percentage in decades. This trend has commercial real estate agents excited.
“This industry has come on so fast that initially I was uneasy — it seemed like a fad. But what’s making it sustainable is supply, demand and capital. Supply is deficient, demand is excessive, and capital is abundant.” – Brad Calbert – President of Colliers International in Denver
These positive real estate trends act as a ‘big picture’ foundation for other states in regards to future legislation. Formerly, activists who opposed Cannabis legalization claimed the industry would have little positive societal impact. However, after observing the Colorado housing boom, along with the drop in Denver’s unemployment rate(Down from 6.5% to 5% since 2013), even skeptics are being forced to give credence to the real value behind the industry. Sure each market will be different, but the creation of jobs and new housing developments go hand in hand with states that are brave enough to take those steps. Colorado and Washington are reaping the benefits their progressive thinking has provided them, as groundbreakers often do. Perhaps more importantly, these states are providing a first look into the positive, big picture impact the Cannabis industry can have inside a community. These impacts are precisely what is needed to further de-stigmatize the industry and will directly lead to future legalization at the state, and possible federal, level.
Is the Denver housing boom caused by the Cannabis industry a good or bad thing? Do you think it will lead to future legalization elsewhere? Join the conversation and comment below!