e finances are changing, but the drug’s status on the federal level remains too daunting for some traditional investors.
“The institutional guys, most won’t touch legal or medical marijuana,” Tecu said. “If I’m head of leasing, I’m not putting my neck on the line to lease to someone making a Schedule 1 narcotic. There’s just too much risk.”
When helping her medical marijuana industry clients find either industrial or retail space, Zimmerman said landlords refuse about 90 percent of the time. She said they are deterred by the all-cash nature of the business. They are also concerned about skeptical neighbors and local politicians who might not approve.
“There is that stigma that we’re going to see for a bit,” she said.
But if traditional lenders won’t get in the game, there are others who will.
Real estate investment trusts have become an increasingly big player in the marijuana-related business. And in 2017, the country’s lone publicly-traded marijuana REIT, Innovative Industrial Properties, was the top-performing REIT. It earned a 117-percent return over that time.
In late December, Innovative Industrial acquired its first property in Illinois, paying $19 million for Revolution Enterprises’ facility in Barry. The REIT will invest $6 million into the facility as Revolution eyes an expansion.
California’s massive marijuana industry is drawing a number of new and institutional players to get in the game. In August, Beverly Hills-based Inception Companies announced the launch of a $50 million REIT aimed at the marijuana industry. Pelorus Equity Group, a Newport Beach-based investment firm, in September launched a $100 million fund targeting marijuana-related real estate ventures.
With Illinois apparently on the cusp of legalizing recreational marijuana, landlords and real estate investors should start thinking about their game plan, Zimmerman said.
“I think owners should get on board, because space is going to be at a premium,” she said. “You can really make a premium on this, because that’s what it’s going to cost.”
Tags: Commercial Real Estate, industrial real estate, Marijuana, warehouse
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