While there is a learning curve as the medical-marijuana net leased asset niche continues to evolve, there are some investors looking to get in on the ground floor of ownership. Leases on these assets are attractive as they usually present minimal landlord expense responsibilities and feature 10 or more years of term with annual increases.
What can’t be ignored is the fact that the legal cannabis market grew about 45 percent in 2020 and US cannabinoid sales are expected to top $24 billion in 2021 according to BDSA, a top cannabis market research firm. Over the last year, our SRS team has sold several properties occupied by medical marijuana tenants—examples include Curaleaf, Trulieve, Fluent (Cansortium), etc—and we have three others currently in escrow. When marketing these assets, what many of the potential buyers are surprised to learn is that for the most part, retail operators in the cannabis industry are sophisticated companies with in excess of 100 retail locations—and some are publicly traded on the Canadian stock exchange.
When it comes to laws and legislation, they vary state-by-state regarding the sale of cannabis for medical use, recreational use, or not at all. However, one thing we know for sure is that COVID has had a positive effect on this industry, with a lot of states deeming medical marijuana an essential business. The pandemic also accelerated the adoption of telehealth services, online ordering and delivery/curbside pickup.
With the addition of a few in the recent election, 36 states have now approved measures to regulate cannabis for medical and/or recreational use. Some states that have legalized marijuana for recreational (adult-use) purposes are California, Colorado, Nevada, and Massachusetts, among others. Other states like Florida, Pennsylvania, and New York are still medical-only, but are likely to see some measures put forward for recreational use