Here’s the intro (worth noting that they are essentially interviewing themselves)
We caught up with Christian Tremblay, vice president at Northmarq with a specialization in properties leased to cannabis tenants, and Sandy Kronenberg from Koach Capital, one of the largest cannabis private equity firms in the U.S., to discuss the recent proposal by the DEA to shift marijuana from a Schedule 1 to a Schedule 3 drug classification. This potential move will have far-reaching implications across the commercial real estate industry, impacting tenants, investors, and developers alike.
In the following conversation, Christian and Sandy outline the anticipated impacts including potential changes in property valuation, buyer interest shifts, zoning law considerations, and risk management strategies amidst the evolving federal policies and legal landscape surrounding cannabis investments.
How do you anticipate the DEA’s proposed move of marijuana from Schedule 1 to Schedule 3 to impact the commercial real estate market for cannabis properties?
Kronenberg: Overall, it should positively affect the cannabis retail real estate market. The rescheduling will likely happen in the late summer or fall, and as a result, cannabis operators will have lower tax liability which should open the door for more lenders to come into the space due to these companies’ balance sheets looking much better than they do today.
Tremblay: I agree. If investors are able to get more traditional lending terms, this should bring more buyers to the space due to the attractiveness of the lease structures and higher cap rates. But we expect this to take time. It’s not something that will not happen overnight.
With the potential for cannabis businesses to take federal tax deductions under the new classification, how might this affect the valuation of cannabis-related real estate assets?
Kronenberg: We believe more investors will feel more comfortable acquiring this new class of properties with the recent DEA and DOJ announcement. Therefore, it will make these assets trade more aggressively.
Have you observed any immediate changes in buyer interest or investment strategies following the DEA’s announcement?
Read the full article at
