Six months into legalization, cannabis is breathing new life into small, struggling markets.
According to Altus Group, once-depressed tertiary markets are enjoying resurgence, thanks to the arrival of marijuana production facilities that are priced out of urban markets. One such example is Leamington, Ontario, where Aphria Inc. set up shop upon the closure of its Heinz Ketchup processing plant. Elsewhere in the province, Smith Falls welcomed Canopy Growth Corp., which moved into an old Hershey’s plant.
According to an Altus Market Update report, both communities previously struggled with prolonged periods of abnormally high unemployment.
“Now, cannabis companies have sparked economic growth in these regions due to the rise in cannabis tourism and workers relocating to these communities,” read the report. “Other markets such as Kelowna, British Columbia, are also expanding this cannabis footprint. The Kelowna council recently approved the expansion of Flowr Corporation’s campus on the Okanagan Rail Trail across from the Agricultural Land Reserve (ALR) and approved a recommendation to rezone the land from heavily industrial to general industrial in order to facilitate the construction of new residential buildings.”
It isn’t just employment that’s benefited from the legalization of pot. In Leamington, land valuations have surged—the average price of unimproved farmland between 25 and 200 acres was $8,000 in 2013, however, by 2018 it rose to $30,000. Moreover, the average price per acre for improved greenhouse operations increased to $250,000 from $150,000 during that same span.
“This is not happening in all tertiary markets,” continued the report, “only the ones like Leamington and Smith Falls, where you have access to labour and low land prices.”
According to Altus Group’s Ray Wong, vice president of data operations and data solutions, certain fundamentals already existed in Leamington and Smith Falls, and the prosperity has carried over into other segments of those real estate markets.
“You have this workforce already in place and the land is a lot cheaper there compared to prime markets, so we’ve seen some good increase in agricultural land prices because of that demand,” said Wong. “It’s having a positive impact on the housing sector, based on employees working in those industries.”
Cannabis has also buoyed once struggling retail outfits, as well. However, there’s still residual stigma.
“It’s reviving some neighbourhoods where retail hasn’t been that strong,” said Kruti Desai, Altus Group’s manager of national research insights and data solutions. “The other thing to look at is not just the bylaws that are in place, but the investors too. Some landlords may not want that type of use based on the existing draw of customers in their existing retail spaces.”