Arizona Could Get Another Shot At Marijuana Legalization And It Could Help The Real Estate Market

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Arizona could get another chance at legalizing marijuana.

And that could help the real estate market, according to one economic and commercial real estate expert.

Medical marijuana is legal in Arizona but voters turned down a legalization measure in 2016 even as similar measures have been approved by California, Nevada, Oregon, Washington and Colorado.

Now, Republican state lawmaker Todd Clodfelter of Tuscon — has introduced a ballot referendum (HCR 2037) that would ask voters whether they want to legalize marijuana for recreational use.

The measure would go on the 2018 ballot.

Legalization advocates also have looked at bringing a marijuana ballot measure back to Arizona voters via a future ballot initiative.

Legalizing marijuana has had its fans and foes in states such as Colorado.

But one thing that did happen was marijuana-related businesses filled lots of commercial real estate space in Denver, according Spencer Levy, head of research for commercial real estate firm CBRE Group Inc. (NYSE: CBG).

Denver ended 2017 with a 14.4 percent office vacancy rate, according to commercial real estate firm JLL. That compares to a 19.5 percent vacancy rate in metro Phoenix.

Much of the vacant space in Phoenix is in older Class B and C buildings. They have 24.2 percent and 22.1 percent vacancy rates, respectively.

Industrial space in Phoenix ended last year with an 8 percent vacancy rate, according to Colliers International.

Denver has a 4.7 percent industrial vacancy rate, according to Colliers.

There was a surge in marijuana-related businesses in Denver after Colorado voters legalized pot for recreational use in 2012.

That market has been weeded out by competition.

And Trump administration pronouncements of potentially enforcing federal drug laws — which still bar cannabis — is discouraging investors and financing for marijuana businesses where it is legal.

But Clodfelter said it’s better if the Legislature crafts a marijuana measure rather than leaving it up to legalization groups.

“I believe that marijuana legalization is an eventuality in Arizona,” said Clodfelter. “As a Legislature, we need to decide if we want that effort imposed through a potentially poorly crafted initiative or if we want to help write a law where we can fully vet each measure, weigh feedback from stakeholders, and build flexibility into the system in case changes are needed. The voters will ultimately have the final say on our legislation and will be better served by legislative involvement on this issue.”

Clodfelter is a Tucson business owner.

His plan would legalize marijuana for those 21 or older, put an excise tax on marijuana sales with 40 percent going toward public safety grants, 40 percent for schools and 20 percent for drug treatment programs.

State Rep. Mark Cardenas, D-Phoenix, is co-sponsoring the ballot measure — which faces an uphill climb in the socially conservative Arizona Legislature.

“The voters sent us here to do our job. They have clearly indicated that they want society to move toward the acceptance of marijuana. In other states, it’s paying for the rule assessment of hospitals, schools, roads, and we need that funding here,” Cardenas said.