[Carruthers]

Legal cannabis helps homes to hit a high

Cannabis does not just make humans high, it also has the same effect on house prices.

Research has found that in those areas of Colorado that voted for full legalisation of marijuana, property values have risen on average by a groovy 6 per cent. Meanwhile in those that chose to keep prohibition, there has been a distinctly mellow response in the housing market.

The research was possible because of the way Colorado has introduced a law change, passed in 2012.
Although the state itself repealed legislation banning cannabis, it was left to the hundreds of individual municipalities to decide whether or not they wanted to allow its sale.

This in effect created a natural experiment. While the stoners of Boulder, Basalt and Red Cliff chose to join the tokers of Silver Plume in embracing the herb, nearby Severance, Cokedale and Two Buttes kept the status quo. From a purely economic perspective though, which was right?

Cheng Cheng, a researcher at the University of Mississippi, said that when he began the investigation he genuinely did not know which way the market would go in response.

By comparing property prices before and after full legalisation, and looking to see what happened in those areas with no change, his paper in the journal Economic Inquiry showed that there was a clear effect.

In the first quarter after sales were allowed, prices jumped by 3 per cent. Then they continued increasing by the same amount again, at a more steady rate.

“We think the major benefits could come from the easier and legal access to recreational marijuana, the new entrepreneurial and employment opportunities and the increased tax revenues for local governments that were created by the legalisation,” said Professor Cheng.

Does this mean, though, that Britain should follow Colorado’s lead? “If our study is any indication, marijuana legalisation could bring large net benefits for housing market participants,” Professor Cheng said. “That does not necessarily imply that everyone will be better off. ” He also said that long-term health and crime effects could outweigh those benefits.

Sometimes I find life very puzzling.

The Times