Month: July 2020

Grassroots Cannabis and Curaleaf Merger Almost Complete

Grassroots Cannabis, which recently entered into multiple sale-leaseback deals with Scythian Real Estate, is nearing the finish line of its merger with Curaleaf. The merger between Grassroots and Curaleaf is expected to create a major force in the U.S. cannabis industry.

Grassroots Cannabis Thrives in Retail Marijuana Space

Grassroots Cannabis is one of the largest multi-state cannabis operators in the country, with a focus on marijuana growing, cultivation, and retail. The story of Grassroots begins with Mitch Kahn, its CEO and co-founder. Kahn started the marijuana growing and processing company after spending decades in the real estate industry and recognizing just how promising the cannabis space could be for investors. Other important members of the Grassroots Cannabis team today include Matt Darin (Chief Operating Officer), Steve Weisman (Chief Strategy Officer), Perrine Knight (Chief Administrative Officer), and Talley Wettlaufer (Head of Retail).

When Kahn founded Grassroots Cannabis, the marijuana company was funded primarily by friends and family. Over the years, Grassroots has expanded and continued to raise funds through other investors and in a variety of deals. While Kahn is set to remain with the company as a board member after the Curaleaf merger is officially complete, he will no longer be involved in the day-to-day operations.

Integration of Grassroots and Curaleaf to Create Dominant Retail Cannabis Company

Now that the Grassroots-Curaleaf merger has been approved at the federal level, the two companies are in the process of receiving final approvals from state and local governments. In anticipation of getting state approval, Grassroots and Curaleaf are preparing to scale their integrated businesses and carve out a dominant spot in the retail cannabis industry.

Business has remained steady for Grassroots Cannabis during the COVID-19 pandemic. Many states declared marijuana dispensaries “essential businesses” that can remain open for order pick up, including all the states in which Grassroots operates. This has allowed the company to continue building its data infrastructure, utilizing automation, and strengthening operations in exciting markets like Maryland, Michigan, North Dakota, and Pennsylvania.

Grassroots Cannabis and Scythian Real Estate Close Sale-Leaseback Deals in North Dakota and Pennsylvania

Even before the expected merger, Grassroots Cannabis already has a strong presence in several important U.S. markets such as Arkansas, Illinois, Maryland, Michigan, Missouri, North Dakota, Ohio, Oklahoma, and Pennsylvania. Grassroots recently bolstered its presence in North Dakota and Pennsylvania with two sale-leaseback transactions with Colorado-based Scythian Real Estate.

In June 2020, Grassroots sold two North Dakota dispensaries to Scythian and subsequently entered into a lease agreement with Scythian for continued operation of the dispensaries under the store name Herbology. More recently, Scythian acquired a medical marijuana dispensary located at 109 Main Street in Bradford, PA and then leased the property back to Grassroots. The total size of all three properties acquired by Scythian is approximately 13,000 square feet.

Contact Scythian Cannabis Real Estate

These kinds of sale-leaseback deals are common in the retail cannabis industry and allow businesses like Grassroots Cannabis to expand their retail operations without diluting capital. Scythian Real Estate Fund LLC works with cannabis operators throughout the United States.

If you are a cannabis operator looking for a trusted real estate partner, email Scythian today.

PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.

Scythian Real Estate Acquiring Cannabis Properties During Pandemic

Scythian Real Estate continues to make deals to acquire cannabis properties and partner with established dispensary operators during the COVID-19 pandemic. While many businesses find themselves slowing down as they wait for the coronavirus crisis to subside, Scythian Real Estate remains an active investor and a leading voice in the cannabis industry.

Cannabis Companies Look to Access Capital in COVID-19 Pandemic

The onset of the coronavirus pandemic presented cannabis retailers across the country with a unique opportunity to remain open while many other businesses were forced to temporarily close their doors due to mandatory shutdown orders. That’s because states declared that cannabis dispensaries are “essential businesses.” However, cannabis stores also face unique difficulties during the pandemic because businesses that sell marijuana have long been ineligible to receive any kind of federal aid, which means that congressional bailout packages and government financial assistance cannot be directed toward these small businesses.

The COVID-19 crisis has magnified a major problem for cannabis companies: it is often difficult to access capital because the federal government has not yet legalized marijuana and therefore banks do not offer financing for these types of businesses. This can also make it hard for marijuana retailers when it comes to securing and maintaining real estate for their operations because traditional mortgages are simply unavailable. The implications for cannabis operators can be devastating: a landlord might abruptly change the terms of the rental agreement or, in the worst cases, unexpectedly cancel the lease and put the cannabis company’s license in jeopardy.

Marijuana Businesses Raise Money Through Sale-Leaseback Deals

So, how do cannabis companies navigate these financial obstacles? One option available to these types of businesses is to use their own cash to purchase the land on which the stores will operate. However, this can leave a cannabis business with a lot of real estate on their balance sheets and severely diminished cashflow. This is why a lot of cannabis operators choose a different option: entering into sale-leaseback deals with privately held real estate funds.

Scythian Real Estate Provides Capital to Cannabis Operators

Scythian Real Estate is a Denver-based company that specializes in cannabis real estate. Scythian works with sophisticated cannabis operators in Colorado, Pennsylvania, North Dakota, and throughout the United States to ensure that retail dispensaries have access to capital and land on which to operate. Scythian Real Estate Fund LLC enters into sale-leaseback transactions in which Scythian purchases the property and then leases it back to the cannabis operator. These kinds of non-dilutive transactions are highly desirable for cannabis operators because they allow the companies to raise money without sacrificing equity. These deals also free up the cannabis retailer to focus on the day-to-day operations while Scythian manages the real estate portfolio and provides assistance with zoning and licensing matters, building renovations and improvements, and any other issues that might arise.

Scythian Real Estate Has Large Portfolio of Cannabis Properties in Colorado, Pennsylvania, and Across U.S.

Scythian Real Estate partners Ryan Arnold and Randy Roberts completed their first cannabis real estate deal in 2014 when they provided capital to a marijuana retail operator that needed property in order to secure a recreational marijuana license in Silver Plume, CO. Since then, the Scythian Real Estate Fund has grown considerably, with Scythian serving as the preferred real estate partner of The Green Solution. More recently, Scythian acquired properties operated by Grassroots Cannabis in North Dakota and Pennsylvania. These acquisitions bring Scythian’s asset portfolio up to 19 properties and a total value of around $40 million, and all asserts were purchased using equity as opposed to debt.

“We really like the idea of being one of a few doing these types of deals.”
Randy Roberts, Scythian Real Estate partner

Contact Scythian Real Estate About Cannabis Property Sale-Leaseback Deals

Scythian Real Estate is a trusted partner of cannabis operators that are looking to access capital to expand their operations. For more information, email Scythian.

PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.

Navigating Local Cannabis Zoning Regulations

As more and more states legalize marijuana for recreational and/or medical use, there is a growing demand for cannabis dispensaries. However, most local municipalities in the U.S. strictly regulate dispensaries. As a result, marijuana businesses tend to be allowed to operate only in certain geographic areas – even when the state has legalized weed.

What Are Municipal Zoning Laws?

Zoning laws set forth the precise ways in which properties in specific geographic zones can be used. A municipality is divided into different zones, with each zone allowing properties to have certain types of land uses. This means that some types of land uses are either permitted or prohibited in specific areas.

Some of the different types of governmental land use restrictions include:

Purpose – Residential, Commercial, or Industrial
Size of Building
Height of Structure
Placement of Building
Number of Rooms

Land-use zoning typically involves regulating properties in a zone to be used for either residential or commercial purposes. This kind of zoning can get even more detailed and allow for very particular uses, such as a cannabis dispensary.

How Zoning Laws Impact Cannabis Businesses

For many entrepreneurs, zoning laws are major obstacles to opening and operating a business. This is particularly true for marijuana retail dispensaries because pot is already a highly regulated substance and is subject to greater scrutiny by state and local officials. Local zoning ordinances limit the options for properties to be used for commercial purposes generally, and state marijuana laws go even further by limiting the total number of cannabis dispensary licenses that are available in a state, municipality, or zoning area.

When it comes to cannabis businesses, there may be all kinds of restrictions on land use and building placement. In fact, it is not uncommon for a local municipality to stipulate that a dispensary must be located at least 1,000 feet away from any schools, daycare centers, public parks, or churches. Many municipalities also require cannabis stores to be situated a certain distance from any residences.

What Can Cannabis Operators Do to Avoid Zoning Obstacles?

How should a cannabis operator go about dealing with zoning regulations and restrictions? One step that local marijuana businesses can take is to contact their local officials and request information about zoning ordinances. It is best to do this early in the process because the process can be time consuming and may involve complex regulations.

Another important step that a marijuana business can take to deal with zoning restrictions is to find a business partner that has experience helping cannabis operators navigate local zoning regulations. This is especially important because pot dispensaries tend to be heavily regulated and local rules can vary greatly from state to state and city to city. For instance, some municipalities require cannabis stores to operate in industrial zones, while other municipalities allow more flexibility for medical marijuana dispensaries. Depending on the city or town, other cannabis property regulations might include the size of the store, square footage of the interior sales floor, lighting inside the building, space available for parking, package delivery times, and security personnel.

Scythian Real Estate is a real estate partner of some of the country’s largest cannabis retail companies. Scythian manages and develops marijuana properties and has a portfolio of single-tenant cannabis real estate assets that is spread across multiple limited-license states, which means that the company has extensive experience dealing with municipalities and navigating local zoning laws in legal cannabis markets.

Contact Scythian Real Estate About Cannabis Zoning Laws

If you are a cannabis operator and want to know more about the implications of local zoning laws for your business, Scythian Real Estate may be able to assist you. Email Scythian today.

PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.