Marijuana legalization has benefitted local economies, producers help boost home sales and prices; retail NIMBYism lurks, but with few real effects
Canada’s largest cannabis producers are being credited with micro-booms in some local economies, and the trickle-down effects are visible in nearby housing sales and price increases. This trend is more pronounced in Eastern Canada, where there’s a greater number of large-scale cannabis producers.
Smiths Falls, Ontario is a market transformed by Canopy Growth, the largest cannabis producer in the world, employing 1,300 people and boasting a market value of more than $11 billion. The surrounding Rideau-St. Lawrence region is experiencing a housing shortage due to the spike in demand. Home sales in the area rose by 27.1 per cent year-over-year, and average prices are up by 10.5 per cent.
It is expected that similar growth related to marijuana legalization will impact other regions as well. Some markets to watch include Windsor-Essex, where Aphria has set up shop in nearby Leamington, Ontario with 1,000 employees. The area saw September 2019 home sales increase 7.82 per cent year-over-year and average prices rose 9.10 per cent.
In Atlantic Canada, the area surrounding Wentworth, Nova Scotia will be of interest, with Breathing Green Solutions in operation. September 2019 home sales in the area increased exponentially year over year, new and active listings are down, and months of inventory dropped from 45 in 2018 to nine in 2019, as reported by the Nova Scotia Association of Realtors. Similarly, Atholville, New Brunswick is also experiencing an economic renaissance thanks to Zenabis Global Inc., employing more than 420 people from the town and neighbouring communities.
As the legal cannabis industry continues to give these regions an economic boost, local housing markets are expected to follow.
While Eastern Canada is the hot spot for cannabis producers and some large-scale producers present in Western Canada, the west is seeing a much heavier influx of cannabis retailers. The trend is being led by Alberta, where the provincial government has allowed private industry to lead the way. While cannabis storefronts were met with resistance in some markets across Canada, the expected backlash didn’t transpire or manifest itself with negative impacts on residential real estate.
Calgary alone has more than 50 retail locations and Greater Vancouver has 23, compared to Toronto’s six storefronts. None of these markets have seen a meaningful impact on real estate activity or values. This is despite the results of a RE/MAX consumer survey, which found that 65 per cent of Canadians would not like to live near cannabis retail stores.
However, a 2019 poll of RE/MAX brokers reveals that two in 10 Canadians (21 per cent) already live in proximity to legal cannabis retail, and the vast majority of them (72 per cent) say living near one is not a factor in their decision to move.
Regional Market Insights
The feared backlash surrounding cannabis storefronts in communities has not yet had any real impacts on property sales or values since marijuana legalization took place one year ago. Here what RE/MAX brokers have seen from consumers at ground level.
Greater Vancouver Area, BC
The Greater Vancouver Area currently has 11 cannabis retail locations, which have opened over the course of the past year since marijuana legalization took effect. Most of these retail outlets are located in commercial areas, not in close proximity to residential neighbourhoods. Because of this strategic geographic placement, attitudes toward cannabis have not changed negatively and many existing homeowners are not bothered by cannabis retail stores in their neighbourhood. When it comes to homebuyers considering a move to a new neighbourhood, cannabis retail stores are not yet on their radar, since retail stores aren’t in the vicinity of residential neighbourhoods.
Victoria currently has five cannabis retail outlets, most of which opened over the course of the year since legalization took place. Attitudes to cannabis are largely indifferent and stores have yet to make an impact on the home-buying habits of prospective buyers. Marijuana legalization and the opening of new retail stores have not yet affected the value of or interest in detached or multi-family residential properties.
Calgary has in excess of 50 cannabis retail locations, which have opened their doors over the course of the past year. The residential market has not been affected by the presence of cannabis retail, with many of the stores being located on busier commercial streets. Similarly, cannabis retail stores are not yet a factor for prospective homebuyers. While marijuana legalization has not directly impacted home sales or values here, Calgary’s residential market is currently challenged due to other economic factors that are unique to the region.
The city of Regina currently has six cannabis retail locations which have opened over the course of the past year since legalization. Due to the location of these stores, primarily in commercial areas, the residential housing market in the region has not been significantly impacted by the rise of these new storefronts. Cannabis retail stores are not impacting home-buying decisions. Buyers in the region are more concerned with the availability of other liveability factors, such as close proximity to schools, restaurants and green spaces.
Saskatoon has four cannabis stores, all of which have opened in the past 10 months. While the presence of cannabis retail is largely accepted, and most stores are not in close proximity to residential areas, thus having little to no impact on homebuyers’ purchasing decisions. However, NIMBYism could rear its head, should the number of legal cannabis stores increase substantially in the coming months.
Winnipeg currently has five cannabis retail stores which have opened over the course of the year. The arrival of these shops has not had a significant impact on the residential housing market in the region, with the exception of shifting attitudes toward cannabis being more accepted than it was prior to legalization. Of the minimal proportion of homebuyers who do inquire about cannabis retail locations, Baby Boomers and Generation X are most likely to ask about it when determining the right neighbourhood for their next purchase. Cannabis legalization and new retail stores have not yet affected the value or interest in multi-family dwellings or detached homes.
The city of Toronto currently has six cannabis retail locations which have been open since April 1, 2019. Most of these stores are located in the downtown core and the residential housing market in the region has not been significantly impacted by their rise. On the other hand, the emergence of cannabis retail stores is actually attracting U.S. tourists who come to Toronto to enjoy the “cannabis experience.” Since legalization, homeowners in the region are more accepting of the presence of cannabis retail stores in their communities.
Hamilton & Burlington, ON
Hamilton and Burlington each have two cannabis stores, the majority of which opened this year. Attitudes have shifted, with many in the region bemoaning the presence of the high number of illegal dispensaries prior to marijuana legalization. The proximity of cannabis retail stores to neighbourhoods have had no impact on the attitudes of buyers of any kind of dwelling, including multi-family and detached homes.
There are 10 cannabis retail locations in London which have opened since April 2019. Attitudes have changed since legalization, with many buyers and tenants in the region inquiring about vacant commercial spaces to open a store. On the other hand, some commercial landlords have refused cannabis retail operation to take place on their properties. Prospective buyers house hunting in London aren’t displaying concerns about the presence of cannabis retail stores in the locations they’re considering buying a home in, with most of these outlets being located in commercial or retail areas.
Markham & GTA, ON
While Markham is the home to Medreleaf HQ, the city has voted to opt out of allowing cannabis retail stores within the municipality. There is an option to vote again to reverse the decision but have not moved forward on any motion to do so. The concerns of Markham’s city council included proximity to schools and the possible impact that cannabis could have on children in the region.
Ottawa currently has three cannabis retail locations, all of which opened in April of this year. While there has been little to no impact on the residential market in Ottawa proper, the nearby community of Smiths Falls has been transformed by the presence of producer Canopy Growth and its economic impact. In fact, the area is currently experiencing a housing shortage. Some buyers ask about the presence of cannabis smokers in condos, expressing concerns over the nuisance of smoke and the smell.
Halifax has two cannabis retail locations, open since October 2018. Initial resistance to marijuana legalization quickly dissipated as Haligonians adjusted to the new reality. Prospective homebuyers do not inquire about nearby cannabis retail stores; being too close or too far is not a factor in their decision to buy. Given the new cannabis allowance to grow plants within private dwellings, homebuyers are encouraged to consider the negative side effects of growing plants indoors when shopping for a home. Condo owners and tenants are subject to ongoing discussion/regulation updates relating to cannabis growth and consumption within buildings.
With the growth of the industry, particularly with pending legalization of edibles and topicals this December, attitudes may change in the future with more cries of NIMBYism. However, the legal cannabis industry is still young, and how it affects the residential real estate market will depend on the full expression of the retail landscape.
Key Findings from the 2019 RE/MAX Cannabis Survey
- Two in 10 (21 per cent) of Canadians live near a cannabis retail store.
- Among those already living near a cannabis store:
-Most Canadians (72 per cent) believe that living near one is not a factor in deciding to move
-Almost a third (31 per cent) say that having a retail cannabis store in the neighbourhood would deter them from purchasing a home
-25 per cent would move if a cannabis store opened up in their neighbourhood
-44 per cent say they would like to live near a cannabis store