Commercial Investment Real Estate March/April 2019 | Page 17

“...Smart, sophisticated local banks that understand compliance see financing projects in the industry as an incredible opportunity to beat their competition.” — Dominic Sergi, Co-founder of Cresco Labs Financing Growth Banks are hesitant to offer traditional financing to such opera- tions due to the federal prohibition. A financial institution that provides services to a cannabis operation could, by the letter of the law, be charged under federal law for aiding and abetting a federal crime in addition to money laundering, according to the U.S. Department of Justice, even if enforcement remained a low priority. “Conflicting laws at the federal and state levels portend a thicket of regulatory compliance issues for participants in this industry,” McGraw says. “Commercial real estate brokers are affected by these issues — be it location and siting or capital and credit — as they work to serve the market.” In addition to private funding sources, cannabis growers and retailers are receiving some attention from smaller, state- level banks. “Traditional bank financing from the major national institu- tions doesn’t yet exist, but smart, sophisticated local banks that understand compliance see financing projects in the industry as an incredible opportunity to beat their competition,” Sergi says. Even if the federal government overturned its prohibition of cannabis tomorrow, the industry would face challenges specific to its production, cultivation, distribution, and sale. The reuse of a cannabis growing facility, for example, might negatively impact the value of the real estate because of the specialized nature of the crop. But such obstacles, when factored into the cost-benefit analysis of entering the emerging cannabis industry, are not enough to diminish what appears to be a promising market. “We are bullish on the market overall. The landscape for capital over the past 36 months has become increasingly more interested in the space and sees this as a long-term opportunity that should not be passed up,” Sergi says. “Over the next two or three years, we see the capital markets normalizing to a level where institutional capital will be playing. We’re already seeing them poking around asking questions.” Nicholas Leider is senior content editor for Commercial Investment Real Estate. Contact him at [email protected]. CRE Analytical Methods and Models New Designee-Only Courses Refresh Your Skills and Earn CE Credit The Robert L. Ward Center for Real Estate Studies is pleased to offer four new designee-only, online self-paced courses covering core CCIM concepts. Designees can register to earn real estate CE credit or take the courses at a reduced rate without CE credit. Earn your CE credit by taking the following Ward courses. Comprehensive review of CCIM designation core concepts including fi nancial, market, investment and user decision analyses. CRE Market Analysis Decision Models Comprehensive review of how ow o w to perform market research, assess market d demand, and forecast m a future demand and op opportunities for commercial p real estate investment. ent. en e n t nt CRE User Decision Decision Models Comprehensive review of the space acquisition process, comparative lease analysis, valuing leasehold interests, and lease exit strategies. CRE Investment Decision Models To learn more, visit www.ccim.com/education or call [phone], opt. 2 CIREMAGAZINE.COM Comprehensive review of applying key investor decision-making analyses to optimize ROI, fi nance CRE investments, and effectively forecast investment performance. March | April 2019 15