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Tuesday, December 17, 2013

Reflections on Denver’s Robust Recovery

by Amy Erixon, Toronto


In November 2013, I had the occasion to visit Charlotte, NC and Denver in the same week and, despite a hectic schedule, managed to “weed out” some intriguing facts.

Charlotte, home of many of the “too large to fail” banks, works hard to appear conspicuously prosperous with a downtown of new gleaming skyscrapers; whereas Denver, the second-fastest-growing city in the U.S. and home to the “real economy,” is seeing a renaissance in redeveloped industrial buildings turned into mixed-use creative space, high-tech business incubators, and farmers’ markets housing young and middle-aged entrepreneurs.   Industrial neighborhoods ringing the downtown core are rapidly filling in with modern, industrial-style lofts and condominiums.  Over the last several decades, the urban renaissance, triggered in both cities by the construction of a baseball stadium and other sports venues downtown, has especially changed the face of Denver, which is younger, grittier and more ecologically oriented than both Charlotte and Calgary, the Colorado city’s cousin to the north.  Denver developers are shunning open parking lots in the downtown core for the hipper urban fringes where X, Y and boomer generations can co-exist more casually in modern and repurposed mid-density, mixed-use and transit served urban neighborhoods. 

I was in Denver for its annual Real Estate Expo, this year co-sponsored by Avison Young and the University of Denver.  Times are good in Denver.   A shallow housing recession, combined with an energy boom and high-tech surge, are fuelling growth – thanks in large part to Denver being home to the nation’s youngest, and one of its best educated, workforces.   What a surprise it was to learn that, with all of that going on, the fastest-growing industry in Colorado is, in fact, marijuana cultivation.   This industry has leased 3 million square feet of previously functionally obsolete space in the last nine months in the Greater Denver Area.   Colorado, like North Carolina, passed from a red state to a blue state in 2012.   At the same time, Colorado and Washington became the first states to legalize recreational use of the drug – possession of which is still a criminal offense under federal law.   In a deal between the federal and state governments, growing and distribution in states where it is legal is done under state supervision and licensing – hence the mini-real estate boom.

After researching the topic since returning to Canada, I have learned that Colorado has plenty of company.  Twenty U.S. states and the District of Columbia have either decriminalized possession of small quantities, or legalized medical use, or both.  As a result, marijuana is now the fastest-growing industry in America (eclipsing even smartphone technology applications) – and forecasted to grow 68% from $1.4 to $2.3 billion in 2014.  

According to recent Gallop and ABC polls, more than half of Americans now favor decriminalizing marijuana.   http://news.yahoo.com/first-time-most-americans-favor-legalizing-marijuana-poll-222023157--sector.html.    

According to the Globe and Mail, a majority of Canadians feel the same way.    http://www.theglobeandmail.com/news/politics/majority-of-canadians-want-to-loosen-marijuana-laws-polls/article14010389/. 

Uruguay may soon become the first country to officially legalize the drug.  http://www.theglobeandmail.com/news/world/uruguay-one-step-closer-to-national-marijuana-market/article15860115/

Which states have legalized medical use and/or decriminalized possession of small quantities might surprise you.    Some are obvious, like California, New York and Massachusetts, but some surprisingly conservative places like Nebraska, Arizona, Alaska, Montana, Mississippi, and, yes, even North Carolina have changed their laws in recent years.   To see the status by state, go to http://en.wikipedia.org/wiki/Cannabis_in_the_United_States.    Experts believe that marijuana could be legal in more than 20 states by 2018, fueling growth in sales to an estimated $10.4 billion in that time frame.  

In Colorado and Washington, the voters also elected to tax marijuana at the 25% level.  (Denver is putting another 5% surcharge on top of that.)  If the forecasted sales growth unfolds as anticipated, and local and state governments succeed in garnering such significant levels of taxation, we may well find increasingly favorable reception for such previously controversial initiatives.  Imagine the prospect of additional billions of dollars to invest in schools, municipal services and infrastructure, perhaps ensuring these locations stay at the top of the economic growth trajectory.

Now, that’s a Rocky Mountain high. 

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