Unintended consequences of marijuana legislation
By: J. David Chapman/October 11, 2018
I am sitting in a coffee shop in Red River, New Mexico. Red River is a small ski town that depends on families from Oklahoma and Texas to populate their slopes in the winter and mountainous forest in the summer.
We own a resort property here and I am always doing informal research anytime I am in town. New Mexico was the 12th state to legalize medical marijuana; however, legislation to legalize recreational marijuana has failed at the ballot. As the town prepares for another ski season, it seems the failure of this legislation might just be a competitive advantage.
On June 14, I wrote about the effects of marijuana on real estate. What I did not mention in the article are the unintended consequences of legalized medical and recreational marijuana. I have not personally taken a stand on either and don’t intend to now. What I am interested in as a real estate guy and investor is the effect legalization has on real estate.
New Mexico ski resorts have long been an alternative to those in Colorado. For many in Oklahoma and Texas, New Mexico resorts are a shorter drive and less expensive alternative to the slopes of Colorado. In my informal and non-scientific research of local shop and resort-property owners in Red River, I’ve discovered a common theme regarding this competition with the neighboring Colorado ski resorts. Locals in Red River claim that there has been an infusion of new guests to New Mexico ski slopes avoiding the smoke and smell of recreational marijuana on the slopes of Colorado. This is an example of an unintended consequence of recreational marijuana legislation among neighboring states.
It is still illegal in Colorado to consume marijuana in public places. It is also still illegal to use or sell marijuana on federal land, which is where many Colorado ski resorts are located. Even though it is still illegal to use marijuana on the slopes, just as before state legalization, there are reports of increased use by skiers since the passage of the recreational legislation. These reports, and the entrepreneurial-minded opportunists marketing the marijuana-friendly ski resorts in Colorado, have apparently been significant enough to persuade some families to reconsider their ski-vacation plans. Citizens vote at the polls and tourists vote with their vacation dollars.
J. David Chapman is an associate professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu).