The Marijuana Industry is not at War with the Poor

Cannabis Zoning
Tim Hettler,

Jon Murray, a reporter for the Denver Post, had an article in Politico magazine salaciously titled The Marijuana Industry’s War on the Poor. Despite the title, the article contained relatively straight-forward reporting on the impacts marijuana businesses can have on certain communities. Denver has many marijuana facilities — 210 stores that sell medical or recreational marijuana, 63 that both grow it and sell it at retail, and 211 standalone grow operations. Many of the grow centers are located in poor and heavily minority sections of town. This density of demand and its location in only certain areas of the city has two major community impacts: odor impacts and higher rents. 

This is a far cry from the cannabis industry “declaring war” on the poor, and it isn’t fair to make marijuana a scapegoat for community problems that far outstrip marijuana businesses. Private liquor stores, payday lenders, and pawn shops contribute more to urban blight in poor neighborhoods than marijuana production facilities or retail facilities. Cannabis entrepreneurs are simply looking for affordable space where owners and employees can get to work easily and make cost-effective deliveries to retail shops. Even if there are negative community impacts, calling it a “war” connotes sinister motives that just aren’t there.

In general, the location of new marijuana businesses is influenced by a few key factors. First, there are state law limitations, which range from limiting proximity to schools and public parks to prohibitions on entire sectors of the industry, like outdoor cultivation. Next there are local law limitations and bans. Zoning ordinances may push marijuana businesses out of all commercially zoned sections of town and into areas zoned only for heavy industry, for example. Local bans can have wide-ranging impacts. It is easier to mitigate the community impact of marijuana producing and processing facilities when they are located in low-population areas. When those same low-population areas ban cannabis businesses, they push them to locate in the locations that do allow cannabis businesses, which are often population centers. This also partially explains the rent hikes cannabis businesses seem to cause in certain neighborhoods. If there’s only one part of town in which you can legally locate, you are going to bid up the price of available real estate. This can be detrimental to existing businesses whose margins relied on lower rents.

For Colorado, and Denver specifically, many of these issues will take a long time to fix. It wouldn’t be fair to cannabis businesses to change the rules only after they have made huge investments in the community, but the mayor and city council don’t want to ignore the legitimate complaints of working class community members that live and work in areas affected by cannabis businesses.

But for cities and states that are still developing their cannabis laws, Washington, Oregon, and Colorado do provide some key lessons. No matter what state and local leaders do, there will likely be some oversubscription to the industry when legalization hits. The market is just too exciting to too many entrepreneurs who want to benefit from first-mover advantage locally. Local residents need to understand this. There will likely be a big boom of cannabis activity early after legalization, but the rate of growth in the market will relax over time. It also helps either to disallow local cannabis bans or to make those bans extremely challenging for local governments to pull off. This will do wonders for decreasing the concentration of cannabis producer/processors in only those communities willing to accept them, spreading out the impact.

At the same time, there are broader concerns here. In Murray’s article, there are neighborhoods complaining about cannabis odor that look like they are already zoned for other industries. A city with a healthy economy cannot just zone out all industry with any odor impact. Businesses can do more to mitigate their impacts, but the real issue is that communities do not offer sufficient affordable housing in non-industrial areas of town, so certain residents feel they can only afford to live in industrial areas, where rents are significantly more affordable. And though housing shouldn’t be banned in smelly industrial areas, people who choose to live there are, to some extent, agreeing to bear that annoyance in exchange for cheaper rent.

So no, the marijuana industry is not at war with the poor. But the industry should not pretend that it doesn’t impact communities because it does. It is up to states and communities to engage in smart urban planning that works to improve communities in the long term. At the same time, they should encourage and incentivize marijuana businesses to be good neighbors. Only through cooperation, and not through tone-deaf attacks, will cannabis businesses and communities be able to coexist with minimal negative impacts.