Cannabis Industry & Real Estate Industry Remain Strong

August 26, 2020

Scythian Real Estate partners Ryan Arnold and Randy Roberts recently wrote an article, “A Budding Relationship Between Cannabis and Real Estate,” that was published in Colorado Business Magazine (or ColoradoBiz). Scythian Real Estate is a full-service real estate partner of the country’s largest and most successful cannabis operators, including Curaleaf and The Green Solution.

In addition to providing sophisticated cannabis operators with access to additional capital, resources, and expertise, Scythian also manages a cannabis real estate fund.

Scythian Real Estate Founders: Cannabis Industry Offers Exciting Investment Opportunities

You can read the entire ColoradoBiz article here. In the article, Ryan Arnold and Randy Roberts provide a great introduction to how the cannabis industry and the real estate industry work in tandem. They also discuss the effects of the COVID-19 pandemic on both industries, explain why the cannabis market has remained strong and resilient in the face of overall economic uncertainty, and explore how cannabis real estate could emerge as a winner for savvy investors.

Here are a few excerpts from the article:

One emerging practice…is rising to the fore in Colorado, offering cannabis companies the chance to swap their assets for operating capital while allowing savvy real estate investors the opportunity to invest in the high-growth cannabis industry without ever having to touch the plant.

In today’s market, many investors see cannabis real estate as an opportunity to broaden their portfolios beyond traditional sectors. Others see cannabis real estate investing as a steady source of fixed income. Regardless of your camp, the cannabis industry is strong, with even more exciting growth prospects for the future.

One such concept that’s gaining traction nationally is the sale-and-leaseback agreement. As the name indicates, a sale and leaseback occurs when an asset owner agrees to sell a property to an investor and, following the sale, leases the asset back from the new owner. Typically, these are competitive, long-term leases with favorable terms for both the operator and owner.

. . . .

This approach also adds a trusted landlord and real estate partner to a cannabis operator’s network. As a result of the relationship, operators can make more informed real estate decisions that support business growth by partnering with a firm knowledgeable about site selection, acquisition, development, leasing and asset management.

For opportunistic investors, acquiring cannabis real estate–primarily stand-alone retail properties–through the sale-and-leaseback model is an increasingly effective strategy for generating above-market, risk-adjusted returns.