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

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.