Got a Light?
2018 will be an interesting year, if the clouds on the horizon are any indication. But they’re not storm clouds, exactly: they’re clouds of pot smoke. As we all know, this year will see new federal legislation decriminalize the possession and distribution of marijuana and permit the retailing of cannabis by the provinces and territories. In Ontario, for example, the LCBO will be responsible for selling recreational weed, and plans to set up 150 stand-alone cannabis stores by 2020 with an initial 40 stores opening in 2018.
Not surprisingly, there is resistance on multiple fronts, including some municipalities that have voiced concerns about the impact of legal marijuana shops in their area. The City of Richmond Hill, north of Toronto, is one of them, having unanimously endorsed a statement saying it was not willing to host a cannabis retail establishment after allegedly being notified by the LCBO in late November that they were being considered as a potential location, citing the associated costs of policing as one of the reasons.
Perception is everything, and let’s face it, marijuana still carries a pungent stigma. But how justified are Richmond Hill’s concerns? Christopher Alexander, Re/Max’s regional director for Ontario-Atlantic Canada region, says having a marijuana retail location in the area could potentially reduce criminal activity by providing a legal channel to buy pot. “Crime should come down, which always has a positive impact on real estate prices,” he said.
Crime is obviously a concern to any municipality, but it’s Alexander’s second point that should also catch their attention. Interestingly, a U.S. study has come out suggesting that recreational pot could actually lift property values. Professors from the states of Wisconsin, Georgia, and California found that property prices for homes in Denver, Colorado (the state all cannabis advocates point to as a success story) near shops which converted from medical marijuana to recreational pot in 2014 saw values increase by 8.4 per cent, compared to those slightly further away. The study’s authors say the impact of a store’s conversion from medical to recreational pot on house prices was “highly localized.” The study used publicly available data to compare the prices of single-family homes within a 160-metre radius of the cannabis shop, compared to those further away, before and after recreational pot became legal in Colorado in 2014.
“While we hypothesize that some contributing factors may have included an increase in housing demand as a result of an increase in marijuana-related employment, lower crime rates, and additional amenities locating in close proximity to retail conversions, finding the specific channels that explain our results is an open puzzle that we leave for future research,” the authors wrote.
Beyond housing values, it is also valuable to note that marijuana retail locations could benefit neighbourhoods by driving foot traffic to merchants. “If it goes into a retail area and that spurs traffic for stores in that block or two, and they increase in value, there could be spillover to the residential neighbourhood,” says Queen’s University real estate professor John Andrew. “If you get excellent shopping and stores thriving in a particular area, people want to live near there.”
Obviously it’s too early for Canadian municipalities to predict what the overall effects will be, but nevertheless, municipalities will have to learn how to adjust to the emergence of recreational cannabis retailers on the Canadian landscape.