WSO,
I couldn't find a thread on this topic and RE, not sure if one exists, but I wanted to hear what everyone thinks of the Medical Cannabis industry - more specifically related to the real estate.
This sector is gaining steam, but due to political/legislative issues it is still shaky for Institutional investors. I have read stories of landlords charging a hefty premium on the real estate that some of these businesses and growers occupy.
Obviously, there are a few key issues. Its a cash business, tenants are typically new start-ups, legal risk etc. I believe the main issue is with the properties that have debt, due to the loan covenants that may be violated if a owner allows cannabis to be grown or distributed on its property( since cannabis is still "federally" illegal and banks are federal institutions they must follow federal laws).
I think as the laws and political issues subside this particular RE sector will become more efficient, eliminating some of the alpha that may exist in the market currently. I still believe there will be a lot of potential for savvy investors.
Has anyone heard of any firms or investors that have had success focusing on the real estate in this industry? Could this create a new trend in CRE?
I've always wondered if BioMed has MMJ tenants. All their tenants are in life sciences.
I remember seeing a SelectLeaders posting for an Analyst out West for one of those type of firms.
One of my buddies considered investing in a group that was trying to buy warehouse space in Colorado for production. The thesis was that due to MMJ being federally illegal, it is a violation of loan covenants to have a tenant growing it. Therefore, the warehouses can't add debt - so there is limited space for production and the guys who own warehouses all equity can charge way above market rates rents. The play was to buy up warehouse space all equity and then IPO into a REIT.
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