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Marijuana’s Hot Investing Opportunity? It’s Real Estate

November has been a game-changing month for the cannabis industry, in both political and financial circles.

On Election Day, four states approved recreational marijuana for adult consumption and four other states voted yes on medical marijuana programs. It was a clear, historic mandate for marijuana enthusiasts and patients from Maine to Florida to California.

History was also made in the financial markets this month when the New York Stock Exchange approved the first publicly traded cannabis REIT: Innovative Industrial Properties.

A First For The Country

A REIT, or real estate investment trust, is a company that owns income-producing real estate. Typically, REITs are commercial real estate entities that own office buildings, apartments, shopping centers, hotels, timberlands, etc.

Innovative Industrial Properties, based in San Diego but incorporated in Maryland, will become the first of these cannabis-related companies to be traded on the NYSE. It’s listing will be IIPR.

The move represents a milestone for the nascent industry and opens the door to institutional investors looking to participate in the fast-growing category.

“The marijuana sector is in the early innings and investors are looking for opportunities to invest in the industry. This will be the first ever marijuana-related IPO to be listed on NYSE,” said Carter Mansbach, president of Jupiter Wealth Strategies. “It’s a big step forward.”

Because marijuana is still considered federally illegal, banks are reluctant to participate in the industry. Investing in businesses have been fairly risky, making capital difficult to come by for budding companies. Real estate investing could be a game-changer.

“Our real estate investments will consist of primarily properties suitable for cultivation and production of medical-use cannabis,” company executives wrote in the prospectus filed in October with the Securities and Exchange Commission.

Innovative Industrial Properties will be purchasing large-scale industrial grow operations in various states to build its business — and provide much-needed seed money for the farmers.

Innovative Industrial Properties On The Forefront

The company has already made its first major investment with its purchase of PharmaCann’s New York cultivation facility. It also has non-binding letters of intent to purchase a cultivation facility in Illinois and four in California.

Other REITS exist,  but this will be the first on the NYSE.

For more, read Diana Olick’s story on CNBC.

 

Highway is an essential source for cannabis science, how-to stories and demystifying marijuana. Want to read more? Try these posts: 71% Of NFL Players Want Marijuana Legal, Why Your Marijuana Smells Skunky and A Drag Queen’s Visit To The Cannabis Store.

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