Why Cannabis Real Estate Investors Are Making The Right Choice

As cannabis and hemp legislation expands and the “green wave” enthusiasm increases across the United States, investors are beginning to focus on cannabis-related assets. In fact, investing in cannabis real estate is the most rewarding investment you can make right now, as states seek ways to generate tax revenue by relaxing restrictions on the use of cannabis and hemp for medical or recreational purposes. With cannabis being illegal at the federal level, marijuana operators are unable to obtain traditional financing – such as a business loan or mortgage – to purchase, improve, or expand their business or real estate. As a result, they are forced to seek money in the private market.

Cannabis business lenders have found this industry an outstanding investment because of the following reasons.

High Demand and Scarce Supply

For investors, real estate, in particular, is becoming an increasingly tempting asset class. Because cannabis properties are in extremely high demand with limited supply, there has recently been a shift in attention away from shops and into real estate. With the current $6.7 billion legal cannabis market expected to grow at a 27 percent annual rate over the next five years, brick and mortar investments are outpacing retail since they don’t “touch the plant” and are seen as a safer way to profit from the explosive development.

Sale – Leaseback Financing Model

Few other markets have as much potential for development and diversity, as well as the same indication of momentum. As long as marijuana remains illegal at the federal level, the only choices for producers are sale-leaseback schemes from REITs like Rainbow, and private finance. Rainbow has developed a reliable process for providing cash to cannabis operators at a time when funding in the industry has dried up. The business operator sells their assets to a real estate investor, who subsequently leases them back to them in a sale-and-leaseback arrangement.

The Estimated Growth

Cannabis is anticipated to rise from a $10 billion market to well over $100 billion in the next few years, owing largely to the product’s growing popularity and increased legality. 11 states and the District of Columbia have legalized recreational cannabis usage, and even the most conservative lawmakers regard cannabis sales as a source of revenue for their state. Every state added to the list implies more tax income for the state and more potential for cannabis REITs to grow.

If you live in a place where legalization is being considered, be ready to buy real estate when the laws are passed, and you’ll be in a wonderful position to profit from the legal cannabis boom. There are many opportunities in this industry, and cannabis real estate appreciates at a far faster rate than comparable industrial investment property.

Cannabis REITs can provide consistent dividends. REITs must pay 90% of their taxable revenue in dividends in order to qualify for certain tax breaks, including paying no corporate tax. This translates into above-average dividend returns for cannabis mortgage investors and lenders.

To invest in cannabis real estate, get in touch with us at Rainbow Realty Group.