NAR Study Reveals Drop in Commercial Property Purchases by Cannabis Businesses, Rise in Leasing Activity

A new study conducted by the National Association of Realtors (NAR) has indicated a significant decrease in commercial property purchases by cannabis industry-related businesses. The report, titled “2023 Cannabis and Real Estate: A Budding Issue,” analyzed the impact of cannabis legalization on the real estate market, revealing an increase in leasing activity among cannabis businesses.

NAR members’ responses were grouped by states that have legalized only medical cannabis and those that have legalized cannabis for both medical and recreational use, before and after 2018. In states that have legalized recreational cannabis within the past five years, the study found that 18% of NAR’s commercial members reported an increase in property purchasing over leasing by cannabis businesses in the past year, down from 29% in 2021.

Of those states that legalized cannabis more than five years ago, the figure dropped to 14% (20% in 2021). For states where only medical cannabis is legal, the number fell dramatically from 21% in 2021 to just 4%. The study also revealed an increased demand for warehouses, land, and storefronts for marijuana businesses.

Jessica Lautz, NAR deputy chief economist and vice president of research, said, “As more states adopt cannabis laws, realtors are at the forefront of commercial real estate activity and are working with clients to find land, warehouses, and storefronts for this growing business.”

Interestingly, the study found that lease addendums restricting cannabis growth and smoking have declined in states where recreational cannabis is legal, while medical-only states have seen an increase in smoking-related addendums.

Lautz highlighted that as state laws continue to change, realtors are learning new ways to navigate the residential market, advising clients on the latest industry developments. The Cannabis and Real Estate survey was emailed to a random sample of 75,000 NAR members practicing residential real estate and 53,000 members practicing commercial real estate. The survey received 3,291 responses, yielding an overall response rate of 2.6%.

The National Association of Realtors represents over 1.5 million members involved in all aspects of the residential and commercial real estate industries, making it the largest trade association in America.