The legalization of recreational marijuana in Denver, Colorado three years ago has brought economic growth in the area as cannabis industry raked in $700 million from last year's sale and $94 million from tax revenue in expected to be collected in 2016. However, as the cannabis industry flourishes, the local housing industry starts to perish.
According to housingwire.com, as more home owners and entrepreneurs who wants to enter the industry decide to move in Denver, the home pricing started to go up and becomes unaffordable by the locals. J.P. Speers, a real estate broker at Berkshire Hathaway Home Services, said "I do believe that there has been a huge amount of individuals who have moved out here specifically for the marijuana industry, and it has affected the housing market."
Due to the legalization, many millennials who want to have legal access to marijuana and entrepreneurs who wanted to venture into marijuana industry prefer Denver and purchase homes within the city. Also, due to bank's refusal of lending funds for cannabis industry, entrepreneurs are moving to Denver to start their own marijuana business, buy homes paid in cash and impose a higher price on the property.
According to newrepublic.com, on the first six months of this year, cannabis industry in Colorado has already earned more than $253 million. To prevent the fat- rising home prices in Denver, authorities have imposed new rules for home owners of affordable housing units.
Under their new regulations, home owners must give a one year notice whether they are planning to sell it or convert it into market rate rentals. With the notice duration, the city will have a chance to raise funds to buy properties or negotiate to keep the units as affordable housing rather than market- rate units.
The new rule is part of Mayor Hancock's efforts to raise funds from steady revenue of $15 million a year for them to subsidize the costs of building new affordable units.
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