Hits from the Bong: The impact of recreational marijuana dispensaries on property values
Danna Thomas and
Regional Science and Urban Economics, 2021, vol. 87, issue C
We exploit a natural experiment in Washington state that randomly allocates recreational marijuana retail licenses to estimate the capitalization effects of dispensaries into property sale prices. Developing a new cross-validation procedure to define the treatment radius, we estimate difference-in-differences, triple difference, and instrumental variables models. We find statistically significant negative effects of recreational marijuana dispensaries on housing values that are relatively localized: home prices within a 0.36 mile area around a new dispensary fall by 3–4% on average, relative to control areas. We also explore increased crime near dispensaries as a possible mechanism driving depressed home prices. While we find no evidence of a general increase in crime in Seattle, WA, there is a significant increase in nuisance-related crimes in census tracts with marijuana dispensaries relative to other census tracts in Seattle.
Keywords: Real estate markets; Local externalities; Drug legalization (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:87:y:2021:i:c:s0166046221000156
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