NJ Weed Businesses Don’t Hurt Home Values – And May Even Help: Study

NEW JERSEY — When New Jersey residents voted to legalize recreational marijuana in 2020, many critics had a common worry: it would cause housing values to plummet. But as it turns out, having a cannabis business in your neighborhood might actually increase home values, a recent study claims.

Earlier this month, the Rutgers New Jersey State Policy Lab released a report on “The Detriments and Impacts of Allowing Cannabis Businesses: Evidence from New Jersey Municipalities.” Read the full report and learn more about its methodology here.

Notably, the study found that there is a “positive association” between the decision to allow cannabis-related businesses and home prices.

“For example, we find that the average home sale price increased by 1.6 percent in municipalities that allowed cannabis-related businesses compared to municipalities that did not allow these businesses, which is equivalent to a $6,366 increase for the average property in our data,” the study said.

Rutgers researchers added a caveat about the data:

“Unfortunately, our robustness checks suggest that there is not enough evidence to suggest that cannabis-related businesses caused this home price increase. However, there is suggestive evidence that allowing cannabis-related businesses does not negatively impact home sale prices, at least in the short-run.”

“Our results suggest state and local policymakers can be cautiously optimistic about the short-run impacts of allowing cannabis-related businesses in their jurisdictions,” the study added. “We find no evidence of a negative impact on property sale prices following the decision to allow cannabis-related businesses.”

Researchers said that not all towns and cities look at cannabis businesses in the same way. For example, municipalities most likely to allow cannabis-related businesses in their jurisdictions include those with larger populations and lower property values per capita, as well as those with “less affluent” and “more liberal” residents.

“Additionally, there is evidence that municipalities are more likely to allow cannabis-related businesses if one of their neighboring towns also allow cannabis-related businesses,” researchers said. “This suggests there might be economic and political pressure to allow cannabis-related businesses to stay competitive with neighboring towns for businesses and jobs.”

Each town and city in New Jersey was initially permitted to ban marijuana business within their borders, but can’t ban delivery services from operating in their neck of the woods. About 60 percent of all municipalities in the state “opted-out” of allowing cannabis businesses before the five-year deadline in August 2021, the study said.

The state applies its 6.625 percent sales tax to recreational cannabis purchases. Towns and cities are allowed to charge an additional 2 percent tax on any sales.

• See related article: 5 Things You Need To Know About Marijuana Legalization In NJ

The study got a big thumbs-up from pro-legalization nonprofit National Organization for the Reform of Marijuana Laws (NORML).

According to NORML, the findings of the Rutgers study are consistent with those of several others which have reported increased home values for properties located in close proximity to licensed cannabis establishments, as well as in states that have enacted legalization. Separate data has also reported that local jurisdictions which permit licensed marijuana operations experience job growth at higher rates than do localities that prohibit them.

“It’s time for local officials to put an end to the NIMBYism and unwarranted fears surrounding the establishment of licensed marijuana retailers,” NORML Deputy Director Paul Armentano said. “Cannabis is here and here to stay. Municipalities need to embrace this reality and provide the necessary oversight in order to hold these businesses accountable and to make this marketplace safe, transparent and profitable for the community.”

• See related article: Can You Get Fired For Weed In NJ? That Depends
• See related article: $2M Of Weed: NJ Sees More Than 12K Customers On First Day Of Sales
• See related article: Flaw In NJ Marijuana Law Is Jacking Up Prices, Expert Says

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