With election day less than 24 hours away, we are writing to summarize how things are going and where we are headed. In September, interest rates came down for the first time since March 2020, which is positive news for real estate markets. 2024 was a mixed bag for the cannabis industry, filled with exciting discussion but ultimately limited action on the legislative front. Of import, both presidential candidates have made cannabis reform a focus of their campaigns. Additionally, recreational legalization is on the ballot in Florida, South Dakota, and North Dakota. Over $1.5 billion in debt financing is coming due across the cannabis industry over the next 18 months. We are already seeing a breadth of compelling real estate-backed opportunities nationwide and are excited for what’s to come.
Industry Update:
- President Trump came out in support of federal legalization, rescheduling, and banking reform for the cannabis industry. Read More
- Vice President Harris announced a few initiatives she will focus on as part of her administration, including federal legalization for cannabis and rescheduling. Read More
- Florida, North Dakota, and South Dakota residents will be voting on recreational cannabis legalization in November, and Nebraska residents will be voting on the legalization of medical marijuana use. Read More
- Denver officials highlighted that over the past ten years, marijuana tax revenue has generated hundreds of millions of dollars, funding critical public services such as homelessness assistance, affordable housing, education, and regulatory enforcement. Read More
- Cannabis beverage consumption continues to be on the rise as more people view it as an alternative to alcohol. Sales are still a tiny portion of the total cannabis market, but it has seen a significant increase in the last few years, and analysts expect this to continue. Read More
- California Gov. Gavin Newsom signed a law bill allowing Amsterdam-style cannabis cafes to open in 2025. This is a new asset class for Rainbow, and our team will monitor its rollout in California and other states in the coming years. Read More
- Rainbow published an article summarizing President Trump and Vice President Harris policy on Cannabis. Read More
Firm Highlights:
- Rainbow Realty Group IV (“Fund IV”) had its third closing on September 19th, 2024: a $2.3M acquisition of a 9,800 SF industrial property in Ewing, NJ. First-year rent on the property is 14% of the total purchase price. Fund IV projects to earn a leveraged IRR of 23%: Read More
- Fund II received two payoffs in Q3 on loans originating in 2021 and 2022. The first payoff was on an industrial property in West Virginia, which netted Fund II an IRR of 16.11%. The second payoff was on a retail property in Ohio, which netted Fund II an IRR of 31%.
- For more on Rainbow’s track record and completed transactions, click here.
- Fund IV is currently earning over 17% cash on cash and distributing 10% (quarterly to LPs). Fund IV remains open to new investors as we prepare for additional transactions to be funded through Q1 and Q2 of 2025.
By investing in underlying real property rather than cannabis businesses themselves, Rainbow has excelled in the industry’s toughest times. With capital still constrained and tailwinds for the first time in years, Rainbow is excited about the future.
If you are seeking funding for your cannabis-related real estate or would like to learn more about investing in Fund IV, please reply to this email, and our team will be happy to speak with you.
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