JAZZ - Cannabis REITs: When They Go Low We Get High

• High on Growth: Cannabis REITs are far-and-away the best-performing REIT sector of the past half-decade as the budding industry thrives in the murky and often contradictory regulatory framework of legalized marijuana.
• Joining Innovative Industrial, Power REIT, and AFC Gamma, a pair of newcomers will soon enter the pot party - Chicago Atlantic Real Estate Finance and Freehold Properties - both operating as mortgage REITs.
• The ongoing federal prohibition - and the resulting limit on access to traditional banking - has forced cultivators and distributors to turn to alternative sources for capital, particularly cannabis REITs.
• Critically, states have adopted tax and regulatory frameworks in which marijuana cultivation licenses are "attached" to the real estate asset - and limited in quantity - an ideal structure for these REITs.
• Legalized marijuana production is set to grow 25% annually this decade. Risks are plentiful and valuations are persistently sky-high, but these REITs have established a genuine competitive moat and a track record that can't be ignored, and we see opportunity in the recent pullback.

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