Scythian Real Estate continues to make deals to acquire cannabis properties and partner with established dispensary operators during the COVID-19 pandemic. While many businesses find themselves slowing down as they wait for the coronavirus crisis to subside, Scythian Real Estate remains an active investor and a leading voice in the cannabis industry.
Cannabis Companies Look to Access Capital in COVID-19 Pandemic
The onset of the coronavirus pandemic presented cannabis retailers across the country with a unique opportunity to remain open while many other businesses were forced to temporarily close their doors due to mandatory shutdown orders. That’s because states declared that cannabis dispensaries are “essential businesses.” However, cannabis stores also face unique difficulties during the pandemic because businesses that sell marijuana have long been ineligible to receive any kind of federal aid, which means that congressional bailout packages and government financial assistance cannot be directed toward these small businesses.
The COVID-19 crisis has magnified a major problem for cannabis companies: it is often difficult to access capital because the federal government has not yet legalized marijuana and therefore banks do not offer financing for these types of businesses. This can also make it hard for marijuana retailers when it comes to securing and maintaining real estate for their operations because traditional mortgages are simply unavailable. The implications for cannabis operators can be devastating: a landlord might abruptly change the terms of the rental agreement or, in the worst cases, unexpectedly cancel the lease and put the cannabis company’s license in jeopardy.
Marijuana Businesses Raise Money Through Sale-Leaseback Deals
So, how do cannabis companies navigate these financial obstacles? One option available to these types of businesses is to use their own cash to purchase the land on which the stores will operate. However, this can leave a cannabis business with a lot of real estate on their balance sheets and severely diminished cashflow. This is why a lot of cannabis operators choose a different option: entering into sale-leaseback deals with privately held real estate funds.
Scythian Real Estate Provides Capital to Cannabis Operators
Scythian Real Estate is a Denver-based company that specializes in cannabis real estate. Scythian works with sophisticated cannabis operators in Colorado, Pennsylvania, North Dakota, and throughout the United States to ensure that retail dispensaries have access to capital and land on which to operate. Scythian Real Estate Fund LLC enters into sale-leaseback transactions in which Scythian purchases the property and then leases it back to the cannabis operator. These kinds of non-dilutive transactions are highly desirable for cannabis operators because they allow the companies to raise money without sacrificing equity. These deals also free up the cannabis retailer to focus on the day-to-day operations while Scythian manages the real estate portfolio and provides assistance with zoning and licensing matters, building renovations and improvements, and any other issues that might arise.
Scythian Real Estate Has Large Portfolio of Cannabis Properties in Colorado, Pennsylvania, and Across U.S.
Scythian Real Estate partners Ryan Arnold and Randy Roberts completed their first cannabis real estate deal in 2014 when they provided capital to a marijuana retail operator that needed property in order to secure a recreational marijuana license in Silver Plume, CO. Since then, the Scythian Real Estate Fund has grown considerably, with Scythian serving as the preferred real estate partner of The Green Solution. More recently, Scythian acquired properties operated by Grassroots Cannabis in North Dakota and Pennsylvania. These acquisitions bring Scythian’s asset portfolio up to 19 properties and a total value of around $40 million, and all asserts were purchased using equity as opposed to debt.
“We really like the idea of being one of a few doing these types of deals.”Randy Roberts, Scythian Real Estate partner
Contact Scythian Real Estate About Cannabis Property Sale-Leaseback Deals
PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.