The wave of marijuana legalization across various states is reshaping the real estate landscape. A 2023 survey by the National Association of Realtors (NAR) has unveiled that real estate agents are witnessing shifts in lease agreements, property values, and other aspects, contingent on whether their states have legalized recreational or medical marijuana. This trend is leaving its imprint on both residential and commercial real estate sectors.
According to the survey, there’s been a noticeable shift in the types of real estate transactions in states where marijuana legalization has occurred. Specifically, 25% to 29% of NAR members observed a surge in warehouse demand in states with full marijuana legalization. Storefronts in these regions saw an 18% jump in popularity, while the demand for land escalated by 13% to 15%. Additionally, 18% of the members noted an interesting trend in states where recreational marijuana was legalized in the last five years: clients showed a preference for purchasing properties over leasing them. This trend was slightly less pronounced, at 14%, in states where marijuana had been legal for over five years. In stark contrast, a mere 4% of members reported a similar inclination in states where only medical marijuana was legalized.
While these numbers may be intriguing, they do not present any particular challenge for realtors. However, selling properties formerly used as grow houses can pose a slight obstacle. 25% of residential real estate agents experienced difficulty selling a grow house in states that had legalized marijuana over five years ago. Only 15% of realtors reportedly sold a grow house in 2023, but the properties do seem to be harder to sell, even in areas where cannabis has been legal for some time. By contrast, roughly 50% of NAR members had no issues leasing a property where marijuana had been used previously in states where medical marijuana is legal. Approximately two-fifths of members in states where both medical and recreational marijuana is legal reported the same. Judging by that data, there seems to be more of a stigma against selling marijuana than using it.
The most significant numbers were reported from realtors who noticed addendums made to lease agreements by landlords in states where recreational marijuana use is legal. 56% to 65% of residential real estate agents reported that landlords added clauses restricting smoking on properties to lease agreements. Homeowners associations have also increased rules against smoking and growing marijuana in common areas and exposed areas. The data showed the opposite for commercial real estate agents; more than two-thirds of members reported seeing no addendums to lease agreements regarding the sale of marijuana in states where only medical marijuana is legal, and 49% to 63% reported the same in states where medical and recreational marijuana is legal.
Commercial NAR members noted that the most significant concern raised by clients leasing to a cannabis business was the smell. Other issues raised included theft of cash on property, moisture issues, and fire hazards. Most members did not report a significant change in crime perception, indicating that the cultural stigma against marijuana has been decreasing as it has become legalized.