How real estate ventures are driving the cannabis sector’s growth

  • Owning an industrial hemp farm and manufacturing facility is very important in the cannabis industry, and Veritas Farms Inc is one of the companies that focuses on producing its own high quality products.

The global cannabis boom is driving demand for facilities where cannabis can be grown and processed. Through the Real Estate Investment Trust (REIT) Innovative Industrial Properties, investors can benefit from the growing demand for cannabis cultivation facilities. The company is rapidly expanding its real estate portfolio, leasing it to licensed producers of medical cannabis and passing the profits to its shareholders.

On October 22, 2019, IIP announced that it had acquired two properties in Joliet and Kankakee, Illinois, with a total cultivation area of around 8,360 square metres. The purchase cost the company $32.8 million. The properties will be leased to Cresco Labs on a triple net basis (the tenant will pay the property taxes, building insurance and maintenance, which would normally be the lessor’s responsibility, in addition to the rent), which will then use the properties as cannabis cultivation and processing facilities. IIP will pay Cresco up to $13.8 million in modernization and conversions.

“Cresco has established a valuable market position in the countries in which it operates,” said IIP CEO Paul Smithers in a press release. “We look forward to the long-term partnership and will support the company in its strategic growth over the next few years”.

IIP not only helps investors to participate in the cannabis boom, but also gives medical cannabis producers the opportunity to grow faster. By buying and renting back the properties, IIP also ensures that companies can release capital and invest their funds in promising projects. IIP takes care of everything that has to do with real estate and tenants focus on what they do best: growing cannabis.

Cresco co-founder and chairman Joe Caltabiano said: “The continued expansion of the medical cannabis program in Illinois and the upcoming legalization for leisure next year are playing into our hands. With our state-of-the-art cultivation and processing facilities and the support of IIP, we are well positioned to increase our production capacity and play a key role in the legalized cannabis market in Illinois.”

On October 23, IIP also announced that it purchased a $17 million net property in Quincy, Florida, over 11,100 square meters in size, previously owned by Trulieve Cannabis. Like Cresco, Trulieve signed a triple net lease with IIP and will use the facility to grow medical cannabis.

A similar deal was concluded with Trulieve in July of this year, in Holyoke, Massachusetts.

“It’s great to be working with IIP again on this transaction. This frees up capital and gives us the opportunity to expand our capacity in one of the largest and most dynamic medical cannabis markets in the US,” said Kim Rivers, CEO of Trulieve, commenting on the deal. “These newly developed cultivation facilities offer optimal conditions to ensure that our patients in Florida continue to benefit from high quality”.

With cannabis legalization still in its infancy in many US states, investors can expect Innovative Industrial Properties to conclude further property deals with companies such as Cresco Labs and Trulieve in the coming weeks and months.

Veritas Farms Inc. (OTC:VFRM) is another cannabis company that owns hemp production facilities. The company’s 140-acre industrial hemp farm and manufacturing facility is based in Pueblo, Colorado, where the company’s eight product categories with over 60 SKUs come from.

Veritas is focused on transparency and delivering high quality products. The company has released a QR code packaging that customers can use to check the products’ quality on their smartphones.

Veritas Farms controls its own supply chain and has built its brand around transparency, honesty, and most importantly one of the highest quality full-spectrum hemp products available on the market today.

Since 2015, the company has experienced impressive growth. In Q2 2019 Veritas generated more than $2.9 million in total revenue. That is a 500% increase since Q2 2018. The company’s gross profits reached $1,523,413 and thanks to great results, managed to reduce the liabilities by over $1.3 million.