Puffed Up Prices: Estimating the Effect of Cannabis Retailers on Local Property Values

Abstract

This paper investigates the degree to which the costs and benefits of cannabis retailers are capitalized into local residential property values. Using a unique application of firm entry decision modeling alongside a difference‐in‐differences estimation strategy, I study transactions before and after the entry of nearby dispensaries in Massachusetts. At the property level, I find a 2.7%–4.5% entry effect, while average ZIP-code price remains unaffected. This research challenges a common perception that such outlets will negatively impact local economic welfare, providing empirical evidence that could be used to help inform municipal zoning and licensing decisions.