Getting high or getting low? the external effects of coffeeshops on house prices

Mike Langen, Erdal Aydin, Piet Eichholtz and Nils Kok

Real Estate Economics, 2022, vol. 50, issue 2, 565-592

Abstract: Cannabis legalization is a hotly contested policy topic. While beneficial to some, cannabis dispensaries may create negative externalities for others. This paper studies the external effects of coffeeshops—Dutch cannabis sales facilities—on house prices. We employ a difference‐in‐difference framework around a change in regulation, leading to exogenous coffeeshop closings. We find that closings have a negative effect on house prices. Compared to homes nearby remaining coffeeshops, homes nearby closing coffeeshops decrease on average 1.6–8.5% in value. The findings are robust to a battery of tests and unaffected by the subsequent use of coffeeshop locations.

Date: 2022
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https://doi.org/10.1111/1540-6229.12365

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