Zoning For Pot Favors Low-Income Neighborhoods
NEW YORK ( MainStreet) In low-income and racially diverse areas of Denver, 46% of the land is available for marijuana dispensaries compared to 29%in wealthier areas, according to a new study.
"It indicates that communities with a louder public voice and stronger political ties can affect governmental policy and zoning decisions," said Adam Laufer, co-CEO of MJ Holdings (MJNE) , a real estate financing company in Miami.
A University of Colorado Denver study found that there are 87 marijuana activities in the 19 lowest income tracts compared to 150 marijuana activities in the 124 upper income tracts.
"In other words, the poorest tracts/neighborhoods have a much higher per-capita density of dispensaries than the upper-income tracts," said Jeremy Németh, co-author of the study and chair of the Department of Planning and Design at the College of Architecture and Planning.
Historically, marijuana businesses have been required to adopt the same zoning restrictions as businesses that sell alcohol, pornography and firearms.
"Zoning is significant due to the high costs associated with applying for a change," Laufer told MainStreet.
Stores that handle marijuana grapple not only with zoning laws but also leary landlords.
"Not all landlords are amenable to renting to medicinal marijuana businesses," said Ron Smalley, president of Vista Green, a marijuana consulting company. "It's common to find these businesses in adult entertainment districts, industrial parks and low income areas."
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Another factor that contributes to marijuana businesses being located in socio-economic disadvantaged neighborhoods is that grow facilities require more electrical power.
"These requirements are easier to find in lower-income areas where rents are lower and buildings in industrial areas are larger," Nemeth told MainStreet.
Locating dispensaries and grow facilities in economically disadvantage neighborhoods is not necessarily a bad thing.
"Many towns, namely the wealthier ones, have outlawed dispensaries outright while the poorer ones see dispensaries as economic opportunities," said Darrin C. Duber-Smith, senior lecturer with Metropolitan State University Denver.
In effect, marijuana dispensaries bring another set of eyes to the neighborhood.
"Early evidence suggests marijuana-related businesses can bring down crime rates," said Nemeth. "And they might actually bring more cops and investment to the neighborhood, which is better than a vacant, boarded up building. They also bring eyes on the street and a sense of natural surveillance as well as security guards and cameras."
Lease rates for pot businesses are generally 50% higher or more than traditional businesses because landlords know that they can charge more.
"The primary driver of where a dispensary or, more importantly, a larger grow facility is located is the price of real estate," Smith told MainStreet. "There are many lower rent, lower priced buildings in poor areas. That's why the facilities are concentrating there."