Navigating the Green Rush and Bridging the Capital Gap

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Navigating the Green Rush and Bridging the Capital Gap

Navigating the Dissonance Between State and Federal Laws

With the increasing legalization of cannabis at the state level, real estate investment trusts (REITs) are emerging as a crucial source of capital for the industry. These funds navigate the complex landscape of conflicting state and federal laws, providing much-needed financial support to cannabis businesses.

This REIT has experienced remarkable growth, expanding its property count from 11 to 108 between 2018 and 2023. It specializes in long-term, triple-net lease agreements, and its committed capital has increased from $167.4 million to $2.4 billion during this period. Despite strong financial performance and significant growth in Funds From Operations (FFO), IIPR's P/FFO ratio is currently lower than the industrial average, suggesting potential undervaluation.

Established in 2019, NLCP has quickly become a key player in the cannabis real estate sector. With a market capitalization of $390.7 million, it manages a fully leased portfolio of 31 properties, boasting a long lease term and high yield. However, its P/FFO ratio is significantly lower than the industry average, highlighting a potential investment opportunity.

This mortgage REIT specializes in senior secured loans, addressing the capital needs of cannabis operators restricted by federal banking regulations. Since its inception, REFI has closed over $2.1 billion in loans, with an outstanding principal balance of $377.6 million and a high gross portfolio yield. Its P/E ratio is lower than its competitors and the industry average, suggesting potential undervaluation and a more attractive yield.

These cannabis REITs offer investors the opportunity to participate in the growing cannabis industry while mitigating risks associated with direct involvement. Their strong financial performance and potential undervaluation make them attractive investment options for those seeking exposure to this dynamic market.