Sale/Lease Buyback Model – Why It's the Hottest Funding Method for Cannabis Properties Now and Why It May Soon Not Be So Hot…

The cannabis is faced with two main objectives: Finding the right product to competitively grow and then finding the right place to actually set up operations. Sale-leaseback options are a financing tool cannabis companies are increasingly using in their pursuit of non-traditional financing. These transactions are becoming a welcome solution for cannabis operators who don’t want to turn to financing to continue to fund their operations. 

“Cannabis operators have restricted financing options, which leads many to struggle with liquidity issues. In a sale-and-leaseback, commonly known as just a sale-leaseback or even just a leaseback, a cannabis operator sells their property (greenhouse, warehouse, dispensary, etc.) to a REIT (or investor) and then leases it back. This allows an operator the chance to get some fast cash without reducing their stock ownership interest” – 420Property.com

As an additional benefit, the purchaser is buying the property with a long-term tenant already in place, providing the buyer with the opportunity to generate cash flow immediately. The seller-tenant no longer has an ownership interest and forfeits the right to receive any appreciation of property value. The new property owner is protected because of its ability to …

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