As cannabis-focused real estate blossoms, two real estate firms focused on the sector will now be rolled into one.
The REITs, NewLake Capital Partners Inc. and GreenAcreage Real Estate Corp., will merge to form a joint venture with $325 million in assets and 24 properties across nine states, Bloomberg News reported.
“This deal creates a leading player in cannabis real estate to provide capital for real estate build-out,” David Weinstein, CEO of GreenAcreage, who will be CEO of the new entity, told the publication.
The two firms hope to pack the bowl in an industry that has seen increased demand. Their holdings include both growing sites and stores where products are sold, with tenants that include Curaleaf Holdings, Cresco Labs, Columbia Care and Trulieve Cannabis. They typically buy properties and lease them back to those companies.
NewLake CEO Anthony Coniglio, who will be president and CIO of the combined company, said the industry will need over $15 billion of real estate in the next five years.
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Cannabis remains illegal at the federal level and cannot be transported across state lines. The rule means companies must grow, process and sell the product in the same state, rather than cultivating it in places — like New Mexico — where the climate is more conducive to growing the plant. If those limitations were to be lifted, local growing capabilities could suddenly become much less important.
The companies are also closely eyeing regulatory changes in states like New Jersey and New York. In November, Arizona, New Jersey, Montana and South Dakota approved recreational cannabis use in their states.
[Bloomberg News] — Georgia Kromrei