October 17, 2018 is a big day for many Canadians who have wanted to see the use of recreational marijuana made legal. But what will the impact be on your Muskoka home and its future resale value? Will you choose to legally grow cannabis plants in your home? Will a home you wish to purchase in the future have been used as a “home grow” that may have caused hidden issues? Will being close to a legal commercial “grow op” impact value? Is being close to a retail outlet a pro or a con? These are important questions to think about.
What the New Law Says
- 4 Cannabis plants may be grown in each residence-includes apartment/condominium units
- No growth height restrictions
- Could include outside garden, but may be determined by province but Ontario has made no specification at this time
- No regulation on safe growing.
Risks to Consider
- Mould and moisture damage
- High-voltage lights pose a potential fire hazard
In a CBC interview the Canadian Real Estate Association (CREA) said the government’s plan to allow so-called “home grow” could lead to the spread of mould and other fungi in residences across the country — which could result in some costly surprises for home buyers.
“There’s absolutely no question it impacts the value of the home,” Michael Bourque, chief executive officer of CREA, told senators, adding the physical effects of a grow op can often go undetected during a home inspection.
The new law will limit home marijuana growers to four plants per household. The government initially intended to limit plants to 100 centimeters in height, but the House of Commons approved an amendment that removed such a restriction.
“On the surface [four plants] sounds moderate, but the legislation doesn’t limit the number of crops or the size of each plant. Four plants could yield over five kilograms a year, which has the potential to cause structural damage to dwellings and comes with associated health consequences,” Bourque said, noting the use of fertilizers and pesticides in the growing process could exacerbate environmental health risks in a home or a multi-unit dwelling that shares air circulation.
The question of buying a home that has been used to grow cannabis or trying to sell one that has, may be of less significance that the proximity of home to retail and commercial grow facilities. In a recent Zoocasa story this was the data they discovered.
In the journal “Real Estate Economics,” James Conklin and co-authors studied the conversion of medical marijuana stores to recreational marijuana, and the subsequent effect on housing prices in Denver, Colorado after legalization in 2014.
Their research showed that homes located near converted stores experienced appreciation at 8% higher than homes further away.
Realtor.com also reported on American cities having undergone a year of experience with recreational marijuana sales. Their data showed a significant increase in home prices — well above the national median price.
The same data shows that while proximity to a pot shop tends to increase home value, Colorado homes close to grow-ops have lost value. Evidently, the pungent odor of pot is a sticking point for many American buyers.
There is no Canadian data available yet, but it is something for us to watch.
Will it be a “big deal” in the “big picture”? In a CBC interview Jonathan Page, a botanist who has studied cannabis extensively and serves as the CEO of Anandia Labs, said he doesn’t expect a new flood of grow ops to result from the bill and predicts most Canadians will simply opt to buy the product from a licensed provider.
“I think this is an exaggeration. Canadians can produce their own beer and wine at home, grow tobacco for personal use, and yet the vast majority buy these products from stores,” he said.
No matter what the future holds as a Muskoka home owner you need to be informed. Your choice to grow cannabis while legal may have more ramifications than you think. As a Muskoka Realtor you can rest assured I will be talking to my Sellers about stigmas, defects and disclosure; and ensuring my Buyers conduct independent research into properties they wish to purchase.
For more information about marijuana legalization in Ontario, please refer to the Ontario Governments web site.