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Contact High: The External Effects of Retail Marijuana Establishments on House Prices

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  • James Conklin
  • Moussa Diop
  • Herman Li

Abstract

Using publicly available data from the city of Denver and the state of Colorado, this study examines the effects of retail conversions (conversions from medical marijuana to retail marijuana stores) on neighboring house values in Denver, CO. The study period reflects a time before and after retail marijuana sales became legal in Colorado in 2014. Using a difference‐in‐differences approach, we compare houses that were in close proximity to a conversion (within 0.1 miles) to those that are farther away from a conversion. We find that single‐family residences close to a retail conversion increased in value by approximately 8% relative to houses that are located slightly farther away. We perform a battery of robustness checks and falsification tests to provide additional support for this finding. To our knowledge, this is the first study to examine at a microlevel the highly localized effect of retail marijuana establishments on house prices and hope that it can contribute to the debate on retail marijuana laws.

Suggested Citation

  • James Conklin & Moussa Diop & Herman Li, 2020. "Contact High: The External Effects of Retail Marijuana Establishments on House Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(1), pages 135-173, March.
    • Handle: RePEc:bla:reesec:v:48:y:2020:i:1:p:135-173
    DOI: 10.1111/1540-6229.12220
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    1. Parisa Kavousi & Taylor Giamo & Gwen Arnold & Mateo Alliende & Elisabeth Huynh & Jaclyn Lea & Rachel Lucine & Alexandria Tillett Miller & Alana Webre & Aneka Yee & Adrianna Champagne‐Zamora & Keith Ta, 2022. "What do we know about opportunities and challenges for localities from Cannabis legalization?," Review of Policy Research, Policy Studies Organization, vol. 39(2), pages 143-169, March.
    2. Manuel Sánchez-Pérez & María Belén Marín-Carrillo & María Dolores Illescas-Manzano & Zohair Souilim, 2023. "Understanding the illegal drug supply chain structure: a value chain analysis of the supply of hashish to Europe," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.

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