Capital-hungry cannabis companies are increasingly selling off their real estate as other sources of financing dry up.
With cannabis stocks down nearly 60 per cent since their highs in March, producers that previously relied on issuing shares to raise money have been left with few alternatives, particularly in the U.S. where the drug remains federally illegal. Sale-leaseback transactions have stepped in to fill the void, becoming a key financial lifeline for an industry that needs capital to fund expansion.
Innovative Industrial Properties Inc., the largest cannabis-focused real estate investment trust and the only publicly traded one, has done US$375.6 million worth of deals in 2019 and the pace has picked up over the course of the year, according to its chief executive officer.
“It’s becoming more and more attractive for operators because of the scarcity of alternatives out there,” said Paul Smithers, CEO of San Diego-based Innovative, which is more commonly known by its stock symbol IIPR. “Our pipeline has never been more vigorous than it is today.”
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