cannabis california retailIn 2016, California voters approved Prop 64, the Adult Use of Marijuana Act, by nearly 2 million votes. In addition to legalizing adult use and possession of cannabis, the law creates a statewide regulatory regime for commercial cannabis activity, but also provides discretion to local jurisdictions to prohibit or restrict such businesses. Almost 18 months later, and despite the state having finalized its commercial cannabis regulations, roughly 75% of all jurisdictions in California continue to forbid cannabis stores (medicinal as well as adult-use) from setting up shop; the percent of jurisdictions that ban adult-use stores is even higher.

Unsurprisingly, most cannabis stores in California are concentrated around the San Francisco Bay Area and the greater Los Angeles metropolitan area, leaving most places in the rest of the state without access to storefront medicinal or adult-use cannabis (delivery to such areas is also a challenge, and is the subject of ongoing litigation). Stated reasons from city and county governments include fear of increased crime and teen drug use, and potential harm to property value. A prime example is Marin County, just across the Golden Gate Bridge from San Francisco, where despite a rich history in cannabis culture (it’s the birthplace of “420”), and despite Marin voters having approved Prop 64 by nearly 70%, no city has adopted legislation to allow adult-use cannabis stores anywhere in Marin County (although there are now options for non-storefront adult-use delivery, such as in Fairfax and San Rafael, and there are signs of potential progress in Novato).

But a newly collected body of evidence-based research suggests that the fears and prohibitions are unsupported by the facts. The report, from the authors and editors at Leafly, looks at 42 studies that considered crime, teen cannabis use, or effect of cannabis stores on property values. It found that crime rates in areas around cannabis stores either decreased or were not significantly affected one way or the other. The study also found that the existence of cannabis stores did not cause any increase in teen cannabis use, and that teen use has continued to decline generally over the past 20 years.

As for the effect of cannabis stores on the property values in their surrounding neighborhoods, the report observes:

Modern cannabis retail stores are moving from the industrial fringes of town to prestige locations in high-value shopping districts. What were once unregulated, crudely adorned storefronts are now state-licensed, tightly regulated, and elegantly designed boutiques. … Those stores require significant financial investment, command premium rents, and attract discerning customers. Most are clean, well lit, and welcoming additions to their neighborhoods.

The authors specifically noted a peer-reviewed study from the libertarian Cato Institute that looked at the effect on surrounding home values in Colorado when medicinal-only dispensaries were converted to adult-use cannabis stores starting in 2014 after a change in state law. That study found that “single-family residences close to a retail conversion (within 0.1 miles) increased in value by approximately 8.4 percent relative to houses that are located slightly farther from a conversion.” In line with this study, the Leafly report found overall that home values either increased or were not significantly affected by the addition of a cannabis store, and speculated that this positive result may be due to increased housing demand from cannabis job growth, and/or the public perception of cannabis as a symbol of innovation taking place in America’s most successful cities as well as an attractive amenity that enjoys ever-increasing public support.

The report comes at the same time California’s legislature is considering AB 1356, a bill that would modify existing law to require any jurisdiction in California that voted more than 50% for Prop 64 to allow for a minimum number of medicinal or adult-use retail cannabis licenses that would otherwise be allowed under existing state law absent the local ban. The law would exempt jurisdictions whose voters voiced disapproval for authorizing commercial cannabis retail businesses.

Daniel Dersham
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