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Think marijuana grow sites negatively impact real estate values? Think again

December 30, 2018

To hear some tell it, legalized marijuana is all about real estate.

So much so that the National Association of Realtors in November published a 36-page report called “Marijuana and Real Estate: A Budding Issue.”

“I’ve attend national conferences. It’s been discussed,” said Donna Reynolds, government affairs director at the Santa Fe Association of Realtors.

Once considered taboo, pot growing — whether medical or recreational, whether in commercial or residential settings — has matured into a big ho-hum in the real estate world, according to a survey done by the national association and published in “A Budding Issue.”

In the survey of association members, 76 percent said they see no change in residential property values near pot dispensaries in states that have legalized recreational marijuana, and 73 percent in states with medical marijuana statutes said they had no problems selling a “grow house” — where patients grow marijuana at home.

The survey had 6,987 respondents from residential real estate members and 949 responses from commercial real estate members, all of them working in the 33 states with legal medicinal marijuana and the 10 states with legal medical and recreational marijuana.

“We certainly haven’t seen any problems here locally with dispensaries,” Reynolds said. “I would say [New Mexico real estate agents] would fall generally in line with the report.”

Similarly, on the commercial real estate front, the report cited 71 percent of members in medical marijuana states saw no change in commercial property values near dispensaries, and 73 percent said there was no change in commercial property values near land where marijuana is grown.

New Mexico has had legal medical marijuana since 2007.

As of Nov. 30, the New Mexico Department of Health reported 7,563 New Mexico residents with active personal production licenses to grow marijuana at their homes. That is more than the population in 73 of New Mexico’s 106 municipalities.

“It’s a huge number,” said Duke Rodriguez, chief executive at Ultra Health, the state’s largest commercial medical marijuana grower. The company is based in Bernalillo and has 21 dispensaries across the state. “New Mexico is far more liberal for personal production licenses.”

In all, the state’s Medical Cannabis Program has 66,725 active patients.

Rodriguez, a former New Mexico Department of Human Services secretary, notes the number of people with growing licenses has increased 16 percent in the past year.

Though Rodriguez said he believes the state has a “high probability” of legalizing marijuana in 2019, he has concerns about residential marijuana growing, especially because New Mexico has no restrictions on how close residential grow houses are to commercial dispensaries.

Arizona, where Ultra Health also has dispensaries, has a “25-mile rule” that says grow houses need to be at least 25 miles from a commercial dispensary.

Rodriquez said he believes legal marijuana should be grown in a commercial setting specifically designed for marijuana cultivation.

“Sheetrock and gypsum [used to build homes] are not intended for green houses,” Rodriguez said. “Heat and mold can damage those buildings.”

Ultra Health has its 12-acre cultivation campus in Bernalillo with 12 greenhouses ranging from 4,300 square feet to 22,000 square feet. A second marijuana farm is under construction in Tularosa.

“It will be much larger and is being built for future anticipated growth and will be approximately the equivalent of 151 football fields of hemp and cannabis cultivation and production operations,” Rodriguez said.

Rodriguez said Ultra Health’s real estate experiences match the the association’s conclusions.

“We have been able to absorb unused buildings, particularly in rural areas in New Mexico,” Rodriguez said. “It didn’t reduce the value of buildings. We’re increasing the value.”

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