Retail Marijuana Deregulation and Housing Prices

53 Pages Posted: 9 Mar 2020 Last revised: 10 Jun 2020

See all articles by Donggeun Kim

Donggeun Kim

University of Oklahoma - Department of Economics

Sean O'Connor

University of Oklahoma - Department of Economics

Brent Norwood

University of Oklahoma - Department of Economics

Date Written: June 9, 2020

Abstract

Despite federal law, twelve American states and Washington D.C. have legalized recreational marijuana since 2012. Using a national housing data set from the online real estate listing database Zillow.com, we identify the cross and inter-state effects of marijuana legalization on house prices in different points of the price distribution function. We find positive effects upwards of ten percent in the top half of the price distribution following successful legalization ballot initiatives, and between five and fifteen percent across the distribution after the state enacts the ballot initiative and the first legal sales take place. A spatial difference-in-differences model reveals that within Colorado and Washington, prices in neighborhoods with new dispensary openings nearby experience a seven percent price appreciation. To summarize, our results suggest that there are second order benefits to marijuana legalization.

Keywords: Retail Marijuana Legalization, Housing, Cross-State Analysis, Spatial Analysis, Urban Development

JEL Classification: R21, R11, R12, R52, O18

Suggested Citation

Kim, Donggeun and O'Connor, Sean and Norwood, Brent, Retail Marijuana Deregulation and Housing Prices (June 9, 2020). Available at SSRN: https://ssrn.com/abstract=3537860 or http://dx.doi.org/10.2139/ssrn.3537860

Donggeun Kim (Contact Author)

University of Oklahoma - Department of Economics ( email )

308 Cate Center 1
Room 336
Norman, OK 73019
United States
4054299238 (Phone)

Sean O'Connor

University of Oklahoma - Department of Economics ( email )

308 Cate Center 1
Room 336
Norman, OK 73019-2103
United States

Brent Norwood

University of Oklahoma - Department of Economics ( email )

729 Elm Avenue
Norman, OK 73019-2103
United States

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