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Will Marijuana Solve the Denver Housing Crunch?

Corporate Housing Solution | Apr. 15, 2018

It doesn’t take a genius to understand what is driving the housing crisis in Denver, marijuana.

“…researchers compared Colorado’s population growth from 2005 to 2015. They found that compared to increases between 2005 and 2009, “marijuana legalization increased in-migration by between 11.4 to 19.7 percent in each year since 2011.” As of 2015, Colorado’s population is estimated to have increased 3.2 percent thanks to the legalization of marijuana. That year Colorado was the second fastest growing state in the country.” (Herb)


While this isn’t the only issue, it is a significant factor, and Denver county knows this to be true. It has become increasingly obvious the state underestimated the need for housing, especially so in the Denver Metro area. The population explosion created a housing shortage, increase in homelessness, and also a burden on the transportation infrastructure that will take years of planning and implementation to render a long-term solution.

City officials are now suggesting to raise the marijuana tax in an effort to subsidize the affordable housing funds. Is the solution found in the very thing that generated the problem?

“The uptick in marijuana taxes is estimated to generate about $8 million a year, officials said. The city also would devote another $7 million a year from its operating budget.

Together, those would double the $15 million in proceeds expected annually from a property tax and development impact fees that were imposed by the council in 2016, when it approved the affordable housing fund’s creation. City leaders’ goal then was to supplement declining housing grants from the federal government with more stable local funding sources amid the housing affordability crunch.

To repay the $105 million or so in DHA-issued bonds over the next 20 years, the city would transfer the annual proceeds from a small property tax rate approved by the council two years ago.

That money, which had been going toward the affordable housing program, would in turn be replaced by the marijuana tax hike’s proceeds.” (Denver Post)


Will this be a solution? More taxes?

The problem with increasing taxes on Marijuna is you end up facing what California is facing right now, a new underground market, essentially killing the golden goose.

“A February report from the California Growers Association concluded that “current cannabis tax policy is propping up the illicit market, preventing compliance from good-faith operations, and contributing to price increases for patients and consumers.” (OC Register)

All a raise on taxes will do is decrease spending done in legal pot shops, and thus reduce the taxable base. It really is a non-solution to the crisis.

The solution is really to wait. States all over the nation are also looking to legalize marijuana will shortly be decreasing the burden on metro areas with legalized marijuana.The thought is that this problem will in years work itself out, but in the meantime what do homebuyers do in such a tough housing market?

I guess they also wait or take advantage of out-of-the-box solutions.

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