Using a Cannabis Real Estate Investment Trust to Capitalize a Marijuana Business

Abstract

Executive Summary The cannabis industry is growing rapidly, with a majority of states having passed legislation allowing the use of marijuana in some capacity. Significant challenges exist for those seeking to invest in this industry. An alternative source of financing could be a real estate investment trust (REIT). The investment risk can be spread among many investors, who can offer longer-term and lower interest rate loans than traditional financing. The major downsides to REIT investing are risks related to the fact that marijuana is still illegal under federal law. As REITs must distribute at least 90% of taxable income as shareholder dividends, this leaves minimal capital for expansion and growth.