The legal cannabis trend is having unexpected effects
The legalization of cannabis continues around the world at a pace. In the past few years, numerous countries have legalized medical marijuana, including, recently, the UK. At the same time, a growing number of countries have announced plans to legalize the use of cannabis for recreational purposes.
The manner in which the acceptance of marijuana consumption has caught on suggests that it is an issue that people are now prepared to accept. We do take for granted, however, that implementation has been thought through. Economics is always a consideration for any government policy. One area which has been considered is the effect on real estate when cannabis is legalised in an area. Evidence from some areas which have legalised show an, pronounced effect on house prices that they weren’t expecting.
Public preconceptions about the effect of legalizing cannabis
Before cannabis was legalized, people assumed that changing the law in that way could have a negative impact on the value of real estate in affected areas.
Cannabis was an illegal drug, the thinking went; therefore the use of cannabis was associated with illegal activities – theft, violence and other negative social effects. However, the reality was that, once the legalization of the drug was rolled out, people began to notice an effect that was the exact opposite of what they had expected.
Initial Changes – An Influx of People to States Which Legalised
ECONOMICSThe first noticeable relevant change, in the US states which legalized cannabis, was the movement of people into the states that have legalized the drug and from those that have not.
The first noticeable relevant change, in the US states which legalized cannabis, was the movement of people into the states that have legalized the drug and from those that have not.
People voted with their feet when Colorado changed their laws. Many moved house to live in a state where they could legally consume cannabis. Similarly, entrepreneurs were drawn to Colorado in the hope of establishing a business in the highly profitable trade.
Denver is one example of a city which has seen its population growth since the State legalized cannabis. Source
Overall, there has been a clear net influx in the population of areas where users can legally purchase and use cannabis. The supply of accommodation has not changed to nearly the same degree in the same time.
Social &Cultures – Cannabis is not viewed now as it once was
Whenever people are making decisions about where they want to live, the socio-cultural practices of the place they’re moving to play a major role in the decisions.
As it turns out, these days, people generally do not mind living in areas where the use of cannabis is legal. Public perception has changed so much that the drug is now considered a social norm in States which have legalized. Indeed, over time, perhaps as people realize that they have personal friends who enjoy cannabis, a growing proportion of the population supports legalization. The numbers of people who are interested in the medicinal and recreational use of cannabis seem to outweigh those that are opposed to it.
MONEYThe legalization of the drug has had positive effects on the real estate markets, which is likely to prompt more governments and businesses to advocate for it.
Real Estate Markets Rose in States Which Legalised
The surge in population in States which have legalized almost instantly resulted in an increased demand for housing. As a result, the price of undeveloped land also went up because the chances of generating reasonable revenues from a real estate project increased significantly. Legalisation was a boon for everyone connected to the construction industry.
It also created a situation where real estate speculators and investors have begun to closely follow the trends of the legalization in an attempt to make targeted real estate investments before the prices go up. It’s something to think about in countries that have not fully legalized the use of cannabis, such as the US and the UK.
Cannabis legalization is good news for house prices
Medical and recreational use of cannabis is gaining popularity, prompting bodies of authority to legalize it in order to ensure that the consumption is safe and properly regulated.
The legalization of the drug has had positive effects on the real estate markets, which is likely to prompt more governments and businesses to advocate for it.
In Australia, there is probably little desire within the government to raise house prices in the major city areas. They have just dedicated no small amount of resource to taking some of the heat out of the housing market. It is, however, interesting to think about what might happen in rural areas which are struggling with dwindling populations as people move to cities if they legalized cannabis.