MJBizMag February 2023 - 43

104,000-square-foot cultivation and
manufacturing facility in Taunton,
Massachusetts. The first deal closed
in May 2022, and the multistate
operator expects to close a second
sale-leaseback on a cultivationmanufacturing
property in White
Haven, Pennsylvania, this quarter.
" We had done this calculus leading
up to the transaction that we did
in May of last year. One option that
we explored pretty closely was to
finance the property specifically
with a mortgage, which can be pretty
attractive in some ways, because you
can get bank-level interest rates and
retain ownership of the property, "
Arvidson said.
" The challenge that we found with
bank financing is that banks are
somewhat limited in how they can
value cannabis cultivation properties,
given the federal status of cannabis.
They don't have the ability to value the
property at quite the same level as a
sale-leaseback.
" Given that, for us, the purpose of
the (funding) was ultimately to retire
long-term debt, it made the most sense
for us to enter into a sale-leaseback, "
he said.
The Massachusetts sale-leaseback
agreement netted Tilt $27 million in
proceeds. In exchange, Tilt will lease
the facility back from IIPR for 20 years,
with the possibility of two, five-year
extensions.
TRANSACTIONS SLOWING
In early January, Goad said Pelorus
was offering construction loans with
interest rates in the " mid-teens " and
rates for " stabilized loans, " or facilities
that are already operational, starting in
the low teens.
Paul Smithers, CEO of IIPR, told
MJBizMagazine via email that, " We continue
to see 15-20-year lease terms and
low- to mid- double-digit initial yields,
with fixed-rate annual escalations. "
According to New York City-based
Viridian Capital Advisors, cannabis
Pot at the Pump
Late-night talk show hosts looking for joke fodder rejoiced in 2015, when Native Roots, a vertically
integrated marijuana company, opened the first of two medical cannabis dispensaries that
sell gasoline.
But for Denver-based Native Roots, the gas stations represented a good real estate opportunity,
as they were already built and zoned for multiple uses.
" I don't want to say they fell into our lap, but the spaces were already available, and they were
already gas stations, " Buck Dutton, vice president of marketing for Native Roots, said of the
properties located in Colorado Springs, Colorado.
Colorado was the first market to launch regulated recreational marijuana sales in January 2014,
but an ordinance in the state's second-largest city prohibits adult-use marijuana sales. So, the
two locations are medical-only dispensaries.
And while Native Roots owns both the filling station and dispensary sides of the business, it
works with a partner to manage the gas. " We are not gasoline experts, " Dutton said.
In addition to the gas station-dispensary locations, Native Roots operates an adult-use retail
outlet in a former car wash located in Littleton, Colorado.
The company's employees refer to another MJ outlet in Longmont, Colorado, as " Grandma's
House, " because it resembles a cottage set in the middle of a field.
- Kate Lavin
mjbizdaily.com | February 2023 43

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