Rainbow Realty Group recently announced plans to provide a solution to the limited availability of traditional financing options for cannabis businesses by underwriting their real estate property as collateral for loans. The company underwrites non-cannabis or “traditional” real estate values for retail, industrial and agricultural properties and can purchase or mortgage real property, depending on the proprietor’s needs.
Rainbow is one of only a few cannabis commercial real estate financing companies created to bridge the financial gap for cannabis companies in the United States. Due to federal illegality, it is extremely difficult for cannabis companies to obtain traditional means of financing.
Currently, 37 states have legalized the use of medical cannabis, out of which 19 states allow adult use of cannabis. As more states legalize medical cannabis or abrogate their prohibition on recreational use, the demand for capital to finance new businesses or expand existing ones increases. This is the market opportunity that Rainbow aims to fill with its cannabis real estate services.
Rainbow has built a process for providing capital to businesses operating in the industrial cannabis marketplace of New York. The cannabis funding company in the USA provides capital to cannabis businesses that are tied to the real estate property, and it offers two financing options to cannabis proprietors who own real estate or have a path to real estate ownership: sale-leasebacks and mortgage.
Their sale-leaseback financing allows cannabis proprietors to utilize cash invested in their property without incurring debt. The lease term of the property can range from 10 - 15 years, with multiple 5 to 10-year extension options. It has 11% -13% capitalization rates based on the purchase price.
Their mortgages allow proprietors to retain an ownership interest in their property or finance a purchase option in their lease. The mortgages have interest rates ranging from 12% - 15% and require no amortization. Terms range from 2 - 4 years with provisions for extension and prepayment options.
For more information:
Rainbow Realty Group