Investors who are a bit wary of the cannabis sector need not take the plunge. They can put a toe into the other side of the industry with a new cannabis-related real estate investment organization, or REIT.
A deal expected to close by the end of this month will merge the Subversive Real Estate Acquisition REIT with Inception REIT, creating the second publicly traded cannabis REIT. The first cannabis REIT, Innovative Industrial Properties (NYSE :), based in San Diego, California, was founded in 2016.
The latest REIT is being welcomed by the industry, especially operators who find it difficult to access capital. The new REIT will allow operators who cannot obtain bank loans the option to sell and lease back real estate, a process that can inject liquidity into their operations. It is an option to help growers with shortages of money to increase their production.
According to BNN Bloomberg, Canadian cannabis grower Flower One Holdings (OTC :), (CSE 🙂 has secured a $ 39 million loan over seven years in exchange for Subversive REIT's option to purchase the 455,000 square foot marijuana. from the company. cultivation facility in Las Vegas.
Other cannabis growers, including Curaleaf Holdings (OTC :), (CSE :), Jushi (CSE :), and Cresco Labs (OTC :), (CSE :), have reportedly entered into sale-leaseback agreements.
This trend is not limited to the cannabis sector. In fact, a recent survey by E&Y found that 78% of corporate executives in large companies across all industries expect to dispose of assets in the next two years as a result of the COVID-19 pandemic
.
According to Subversive Real Estate, it is estimated that US cannabis real estate will be estimated at $ 30 billion by 2030.
The emergence of this new REIT sends a signal that the cannabis industry is maturing.
New York close to pot legalization
New York State will "soon" legalize cannabis. State Governor Andrew Cuomo said that is the latest in the time frame to legalize marijuana. And the push that will drive it forward is the need to kickstart economic development in the wake of the ongoing COVID-19 pandemic.
"We need income and we are going to look in the closets for income," Cuomo was quoted in a media interview.
One hurdle that has slowed legalization of the substance in New York is the disputes between the governor and state lawmakers over the use of the tax revenue generated from the move.
In the meantime, the state is expected to pass regulations for the sale of CBD products, including infused beverages and food products.
Rules for consumer CBD products are expected in early 2021, according to news reports.
