Using a Cannabis Real Estate Investment Trust to Capitalize a Marijuana Business

The cannabis industry is growing rapidly, with a majority of states having passed legislation allowing the use of marijuana in some capacity. Significant challenges exist for those seeking to invest in this industry. An alternative source of financing could be a real estate investment trust (REIT)....

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Bibliographic Details
Published in:The journal of real estate portfolio management 2018-01, Vol.24 (2), p.201-206
Main Authors: Guttery, Randall S., Poe, Stephen L.
Format: Article
Language:English
Subjects:
Cannabis industry
Corporate profits
Financing
Interest rates
Investments
Legislation
Loans
Marijuana
Medical marijuana
Real estate
REITs
Sales
Stock exchanges
Stockholders
Taxable income
Trusts
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Summary:The cannabis industry is growing rapidly, with a majority of states having passed legislation allowing the use of marijuana in some capacity. Significant challenges exist for those seeking to invest in this industry. An alternative source of financing could be a real estate investment trust (REIT). The investment risk can be spread among many investors, who can offer longer-term and lower interest rate loans than traditional financing. The major downsides to REIT investing are risks related to the fact that marijuana is still illegal under federal law. As REITs must distribute at least 90% of taxable income as shareholder dividends, this leaves minimal capital for expansion and growth.
ISSN:1083-5547
2691-1205
DOI:10.1080/10835547.2018.12090018