As cannabis and hemp legislation expands and the “green wave” momentum continues throughout the U.S., investors are beginning to set their sights on cannabis-related assets. Real estate in particular is becoming a popular asset class for investors as states begin seeking ways to increase tax income through lifting restrictions on cannabis and hemp for medical or recreational purposes.
What initially caught the eye of many commercial real estate (CRE) investors and opened the market for the cannabis industry was its performance during the pandemic. Cannabis dispensaries were deemed essential in many states and allowed to continue operating, as opposed to traditional retailers, which took a major hit when they were forced to close. During that same time, multiple states reported legal marijuana sales from dispensaries reaching all-time highs, according to the International Journal of Drug Policy.
As marijuana is still classified as a Schedule I narcotic at the federal level, cannabis-related businesses continue to face restrictions in accessing the commercial financing they need to grow. Because of this, leaseback real estate transactions have become a popular choice of business owners looking to leverage their own assets to acquire capital from private investors.
As the nation appears to be beginning to come out of the pandemic, many states are continuing to look at the cannabis industry as new way to generate tax revenue and promote local business growth. According to the Marijuana Policy Project, as of December 2021, states have reported a total of $10.4 billion in legal cannabis sales. As this trend continues, real estate investors will keep a close eye on the industry and where they can find returns.