Consequences on the Land of Marijuana Laws

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Citizens are having their say at the ballot box and recreational marijuana is passing by initiative state by state to become the law of the land we all live on.

Let’s take a quick look at some of the issues that have cropped up alongside legalization and how those issues affect overall quality life, including real estate:

• Higher land prices - Consistently across all states with legalized recreational marijuana land values have risen (and lots of other areas, too).

• Environmental issues - Hello drought-ridden California - you can have your marijuana and grow it, too! You just can’t also grow crops for food, have sustainable rivers and streams, or shower anymore.

• Societal issues - Voters wanted giant fences and deafening fans? And lively new crime (butane hash oil WHAT)?

• Increased tax revenue - That’s more like it. THAT was definitely on the ballot, mostly.

• Jobs - Technically, yes!

Land Prices

• Realtor.com points out that home prices are rising in states that have passed legalization. And because individual counties are often given the option by the state how to regulate, some counties have rules to keep marijuana grows out of residentially zoned properties entirely, or to manage the farming or other commercial enterprises as their voters see fit.

• Some are chagrined, however, that they’ve been priced out of markets in their own neighborhoods. Initially, areas in Colorado experienced rapid increases in home prices and inventory fell. In states where there are outdoor grows, such as Oregon, they’ve had the same bump in property values for farmland. While increases price some younger buyers out of the market, it could be a boon for those who already own.

• Increases in land value, however, may be somewhat tempered by the other issues that accompany corporate grow operations. Some reports claim that there’s a growing body of discontent with living near large commercial grow sites, and some communities are pushing back against the free-for-all caused by lack of enforcement. #NIMBY

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Environmental Issues

• Quick primer - where do farmlands get water? There are several legal options, such as accessing the water rights that run with the land, using collected rainwater through a properly executed rain catchment system, or purchasing water from a water hauler. Any for-profit commercial grow operation must disclose their lawful source of water on their application and if the intent is to use groundwater, must have a water right permit to do so. Maybe legalization will bring illegal growers off of federal lands where they divert streams for their own use and their water usage can be regulated like all of the other farmers. Maybe.

• Water rights are an evolving issue, and property owners in rural communities where commercial grows are operating out of the water table should make sure they are monitoring it before their property values drop lower than their wells. One strategic finding from the report, “A Baseline Evaluation of Cannabis Enforcement Priorities in Oregon” published in January of last year was, “Illicit cannabis grows have consumed 1.04 billion gallons of water since 2004 and consume roughly 442,200 gallons of water daily during the growth season.”

• Paving over prime farmland for indoor greenhouses, equipment, and roads? It’s FINE, because container nurseries do it, too!

• Salmon, it turns out, aren’t big fans, no matter the legal status.

Societal Issues

• If the already bleak plight of farm worker immigrants wasn’t bad enough picking lettuce, now we have “trimmigrants”.

• With high dollar crops comes high dollar crime. (“Who would come sneak around somebody’s property in the middle of the night?” Uh, thieves?)

• Then there are people like a cannabis company owner in Colorado who, bless her heart, complained on NPR that she could lose her business license just for "not having the right label on a (marijuana) product." Really?? Despite the documented increase in accidental consumption by children of marijuana food or candy items? Please let’s don’t set federal food and drug labeling back a hundred years.

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Tax revenue

• For 2016, Colorado brought in over $500 million in tax revenue, with Washington behind them with $256 million, and Oregon at $60 million. Can’t say it’s not doing great things for schools! (Although future tax revenue is not quite so bright with cannabis prices dropping…)

• But apparently it could be doing so much more. It is has been widely reported that Oregon is producing three times the amount of marijuana used in-state. Where is the rest of it going? Licensed states, Oregon specifically, are shipping product to unlicensed states and overseas. Unfortunately for the coffers of Oregon, that’s called the black market, and while everyone from NPR to the U.S. Attorney for Oregon knows it, no one pays taxes on it.

• High taxes in other legalized states like California further fuels the black market, again, leaving the states with nothing to tax.

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Jobs

• Jobs, jobs, jobs! Well, kind of. Realtor.com again reports that while jobs are being created, most of the jobs created by the marijuana economy in Oregon are paying less than $52,000 a year, which hardly qualifies them to buy a median priced home this year at $318,000. Just to put a bare minimum 5-10% down requires a cool $15,000 - $31,000 in cash. On an average $11 an hour, part-time? Unrealistic. Other states aren’t any better as Zillow puts Colorado with the median home price hovering around $344,000 and no signs of slowing down. Do the math, it’s just completely out of reach for anyone in that income range. Ah, but how about a loan that allows for less than 5% down payment? Read on...

• There’s a catch-22, many who work in the marijuana industry are denied credit because according to creditors ‘it’s a business activity that is not permitted by federal law’. So that means you need to save, wait, doing the math, divide by 11, multiply by the number of years, carry the 1, oh, right, $318,000.

That’s a quick look at some of the unintended consequences of laws still so new that before the ink dries on the parchment, the next round of states will follow at their own ballot boxes. PSA - before you cast your ballot, know how those laws will affect your life, and your real estate.

Karla Allen is a researcher and writer for a variety of trades for At Your Pace Online, an online education provider, including ayporealestate.com.