High Demand: The impact of Cannabis Legalization on Housing and Real Estate Dynamics in Denver, Colorado

• In Event: Roundtable: Drugs & Substance Abuse

Abstract

Background: Legal cannabis markets in the United States are generating billions in revenue, but federal banking restrictions prevent businesses from accessing traditional financial services. In cities like Denver, this has prompted cannabis entrepreneurs to reinvest profits in real estate, particularly in downtown corridors. This influx of cash may have contributed to rising property values, reduced affordability, and shifts in residential mobility. Hypothesis: We hypothesize that Denver’s legalization of recreational cannabis catalyzed a lagged but significant transformation of its housing market through capital reinvestment, not direct policy mandates. Methods: Using a Synthetic Difference-in-Differences (SDiD) approach, we compare Denver to a weighted synthetic control composed of non-legalized cities between 2010 and 2023. Outcome variables include Zillow measures of rent and mortgage demand, monthly payments, affordability indices, and Google’s residential mobility index. Covariates include cannabis use rates (NSDUH), homelessness, overdose deaths, treatment rates (CDC), violent crime (UCR), cannabis tax stringency (Blanchette, Pacula, Smart, Lira, Pessar & Naimi, 2022), and state-level economic indicators from the BEA. Policy Implications: This study informs ongoing debates about how cannabis policy shapes urban equity, and contributes to research on affordability, displacement, and the role of real estate markets in legalized jurisdictions.

Authors

• Danye Medhin, Georgia State University

• Leanne Confer, Georgia Southern University

• Jared Greathouse, Georgia State University