Local housing markets see "economic renaissance" thanks to cannabis

Although NIMBYism persists for local cannabis retailers, big cannabis producers are being credited for a boost to home sales and prices in some local economies

Local housing markets see "economic renaissance" thanks to cannabis

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 one of the markets that has been transformed by Canopy Growth, the largest cannabis producer in the world. After taking over the abandoned Hershey factory, the Ottawa-area production facility now employs 1,300 people and has a market value of more than $11 billion.

“The impact of Canopy Growth on Smiths Falls cannot be understated, and it’s growing,” Christopher Alexander, executive vice president and regional director, RE/MAX of Ontario-Atlantic Canada, said in a statement. “The economy in the Rideau-St. Lawrence area is experiencing a boom, which is triggering home sales, which rose by 27.1% year-over-year, and average prices increased 10.5%. Demand is up and there’s a housing shortage in the region. We expect to see similar cannabis industry-related growth in other regions as well.”

Some markets to watch include Windsor-Essex, where Aphria has set up shop in nearby Leamington, Ontario and employs 1,000 people. The region saw September 2019 home sales increase 7.82% and average prices rose 9.10% year-over-year. In Atlantic Canada, the area surrounding Wentworth, Nova Scotia will be of interest, where Breathing Green Solutions is in operation. Similarly, Atholville, New Brunswick is also experiencing a renaissance thanks to Zenabis Global Inc., employing more than 420 people from the town and neighbouring communities.

“The legal cannabis industry is already being credited with invigorating some lagging economies and as a result, those housing markets could soon see a flurry of activity,” Alexander adds.

While Eastern Canada appears to be a hot spot for cannabis producers, and Western Canada has some large-scale facilities, the west is seeing a much heavier influx of cannabis retailers compared to Ontario and Atlantic Canada. Calgary alone has more than 50 retail locations and Greater Vancouver has 23, whereas Toronto has only six. 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.

“It appears that there were a lot of anticipated reservations surrounding cannabis retail and the negative impacts on local property values that did not come to pass. We have not seen a decrease in home sales or prices that can be attributed to legal cannabis,” Alexander said.

In fact, he added that the opposite may be true.

“As the retail footprint grows and diversifies into edibles and other formats, buyers and sellers may start to feel less resigned.”

A RE/MAX consumer survey found that 21% of Canadians already live in proximity to legal cannabis retail and 72% of those respondents said that living near one is not a factor in their decision to move.

“The increasing number of retail cannabis stores in Calgary shows no signs of stopping, with city officials having approved more than 200 since legalization,” Elton Ash, regional executive vice president, RE/MAX of Western Canada said in a statement. “The presence of more stores may influence how home buyers approach certain neighbourhoods.”

There are still some markets where home buyers and sellers are wary of cannabis producers and retail alike, and Ash added that even in areas where people have changed their attitudes, “NIMBYism still looms in the background.

“But for the time being, acceptance and adoption seems to have been pretty positive.

“The market is expected to expand even further with the legalization of topicals and edibles in December of this year, which could pave the avenue for even greater growth of the industries associated with legal cannabis. There’s clearly an appetite for it.”