1996 marks a watershed moment when California became the first state to legalize medicinal marijuana. 19 years later, the legalization of a once strictly outlawed substance has now been legalized for medicinal purposes in 23 states. Another dramatic shift occurred when Colorado and Washington were the first two states to legalize marijuana for recreational use January 2014, and with Alaska, Oregon, and Washington DC voting to follow suit in November.
With laws changing toward legalization, let’s discuss, on this notorious day, the facts of the legalization of marijuana and how it affects the economy, the job market, and the real estate industry.
Marijuana and the Economy
It’s officially been over a year since the state of Colorado legalized marijuana, not only for medicinal purposes but also for recreational sales and use. The hype about legalizing marijuana was the belief that the sales and taxes on the substance would boost the economy. CNN Money reveals that the state of Colorado raked in $53 million in tax revenues from marijuana sales. It does not stop there! “In 1992, Colorado enacted a Taxpayer Bill of Rights (TABOR), which provides that if state and local tax revenue grows at a rate that exceeds the combined growth of the inflation rate and the population, the excess must be refunded back to the taxpayers,” says Forbes. Little did they know, the state would be faced with shelling out approximately $30.5 million in pot taxes to its residents!
While $53 million in tax revenues is no small amount, it fell short of what economists projected. CNN Money’s same article quotes Phyllis Resnick, an economist at Colorado State University: “It’s definitely lower than expected,” he said. Frankly, economists overestimated the power of the marijuana industry and its impact on our economy. $21.5 million in tax revenue is up in smoke, says Forbes, and it’s no surprise. High taxes on legal marijuana keep pot smokers purchasing through the black market or at much lower tax rates medicinally.
Marijuana and the Job Market
The legalization of marijuana has, in fact, impacted the job market. The Marijuana Industry Group reported 10,000 jobs were created in Colorado due to the marijuana industry. The Colorado Department of Revenue admits that the unemployment rate of 4.2% as of February 2015, is an all-time low since 2008. This new industry also might prove to be a competitive annual salary/wage for current job seekers. Esquire states the most common salary bracket, for more than half of the openings within the industry, were reported at $30,000-$50,000. Retail associates in dispensaries received $10-$12 per hour. Workers of Walmart and McDonald’s have recently made news demanding a livable wage too.
Though the legalization of marijuana created more jobs, are we also putting workers at risk? Many would argue that new changes in laws will increase the use of the drug by workers. Americans against marijuana do not look past the harmful effects marijuana use has on the body. Forbes admits that the legalization of marijuana has definitely complicated things for employers: “drug abusers are more likely to become sick or injured, are less productive, can be more distracting to co-workers, have increased absenteeism, and can be a danger to themselves or others.”
Marijuana and Real Estate
The medicinal marijuana industry alone is a multi-billion dollar business. The partakers in the industry are most likely looking to buy or upgrade a home. “The influx of [legal] pot dealers looking to capitalize on opportunity need not only a space for their business, but also a roof of their own,” says Agent Harvest. They have families and normal lives too! Add together all of these ingredients, and the future net worth of marijuana “grow” houses could potentially skyrocket. Think about it, your land could be as good as gold, or more accurately, Platinum.
California, Colorado, Washington, and more are changing their marijuana laws and “more than half of the nation’s 1 million REALTORS® reside in jurisdictions with laws that allow for medical or recreational use of marijuana,” states NAR in an article on the legalization of marijuana. For homeowners and buyers, concerns have been raised about marijuana users and businesses popping up next door. Could this cause residents to move or not buy homes? Past or present grow homes have a stigma, says Market Watch. Though there is an increasing acceptance of marijuana, people do not want it in their neighborhood.
Market Watch also admits that “mortgages will not be given to marijuana-related businesses easily, as banks are federally chartered.” Marijuana is still illegal on a federal level; therefore, mortgages will not be given as easily to those who plan to start a marijuana business in their home.
Could marijuana legalization complicate the loan process and cause more headaches for REALTORS®? Be prepared to ask your clients these questions:
- What is your viewpoint on marijuana grow houses in your neighborhood?
- What is your viewpoint on marijuana users in your neighborhood?
- Do you mind raising a family where one or both may be present?
- Will the state possibly change their current marijuana laws, changing the way you sell homes?
- Are you planning to become a legal marijuana grower?
When we dig deep into controversial topics like this, it might seem a little hazy. Don’t worry! Get ahead of your competition and educate yourself on all the new laws and guidelines that might affect your local real estate. No one knows what the future holds on these hot marijuana issues, but you can count on the same professional fact to hold true: those that keep themselves educated and ahead of their competition, become the experts that future home buyers and home sellers will turn to for help.
*Platinum does not promote or offer any opinion on the legalization of marijuana.