'No Drugs in My Back Yard:' the Ambivalent Reception of Cannabis Retailers

Abstract

Can individuals' aversion to drug markets curb the benefits of decriminalization? We investigate the effect of two policies on housing demand in the Netherlands: the distance-to-school criterion, which closed some cannabis shops in a few cities; and the zero-tolerance policy, which banned shops within municipal jurisdictions. While a small increase in the distance to retailers raised house prices by 1-5%, a substantial increase reduced them by 1-6%. Both policies reduced property crime, but the zero-tolerance was also related to fewer jobs. Our findings reveal that cities benefit from having cannabis shops, but households' aversion to related nuisances depreciates surrounding areas.