Riding high: Inception, Subversive to launch publicly traded cannabis REIT

$183M transaction is a sign of cannabis industry becoming mainstream

National /
Oct.October 19, 2020 10:15 AM
Subversive CEO Richard Acosta (Photos via ICSC; iStock)

Subversive CEO Richard Acosta (Photos via ICSC; iStock)

Cannabis-focused Inception REIT will soon become a publicly traded real estate investment trust.

Subversive Real Estate’s merger with Inception REIT is part of a $183 million transaction to turn the special purpose investment vehicle into a real estate investment trust, allowing it tax benefits and the ability to receive more capital, Bloomberg News reported.

The transaction is expected to close at the end of this month, making Inception the second publicly traded cannabis REIT, following the success of Innovative Industrial Properties.

A REIT structure will help cannabis companies in need of cash, as well as investors who want to invest in the growing cannabis industry without having to manage property.

“We unlock capital for operators,” Subversive CEO Richard Acosta told Bloomberg.

Innovative Industrial Properties, which was founded in 2016, has fared better than other commercial real estate sectors since the onset of the pandemic, since dispensaries have been able to operate during lockdowns, whereas other facilities — like restaurants or movie theaters — have not.

But how the REIT structure can distribute risk remains to be seen. If marijuana becomes legal at the federal level, companies may not need to operate facilities in each state, as they are required to do now, and cultivation plots and processing facilities in some states may become unnecessary. [Bloomberg] — Akiko Matsuda


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