We wonder if this development will at least give us a break from all these endless companies telling us about vertical integration and we also wonder if this is the start of the larger cannabis producers working increasingly on an outsourcing model rather than the mantra of the last few years which has been to try and centrally control all aspects of production.
Look at all the names below.. we’d suggest this is just the beginning of the avalanche of re-financing which will, we suggest, create more flexible companies, with we’d hope, more realistic share prices
MJ Biz report
Large cannabis companies increasingly are selling their own cultivation, processing and storage facilities and immediately leasing them back as a way to instantly raise tens of millions of dollars at a time when outside financing is scarce.
Unlocking the value of real estate with a sale provides money that can be used to grow a marijuana firm’s core business, without diluting the value of its stock, the way issuing more shares would.
In real estate parlance, these deals are known as sale-leaseback transactions, since the property is sold and leased back.
In other words, the marijuana company becomes a tenant and the real estate investor becomes a landlord.
Recent examples of sale-leaseback deals include:
- In December, Chicago-based Cresco Labs closed a $50 million sale-leaseback deal in Lincoln, Illinois, with GreenAcreage Real Estate, a real estate investment trust (REIT).
- Also in December, New York-based multistate operator (MSO) Columbia Care raised $35 million by selling and leasing back six properties in California, Illinois and Massachusetts. New Lake Capital Partners, based in Maryland, bought the properties.
- In November, Green Thumb Industries, a Chicago-based MSO, completed a $39.6 million sale-leaseback deal for a cultivation facility in Pennsylvania with San Diego-based Innovative Industrial Properties (IIPR), the nation’s largest REIT to focus exclusively on the cannabis industry.
- In October, New York-based Acreage Holdings, another MSO, signed a $72 million sale-leaseback deal for properties in Florida, Massachusetts and Pennsylvania. The buyer was GreenAcreage, created in May to buy properties from Acreage Holdings and other cannabis companies.