NEW CANNABIS REIT
Freehold Properties, a mortgage REIT focused on cannabis properties, filed with the SEC to raise up to $115 million in an initial public offering. Freehold is an internally managed real estate investment trust focused on financing specialized industrial cultivation/processing and retail/dispensary cannabis properties. The company's portfolio comprises six mortgage loans and one-note receivable with an aggregate principal amount of $38.7 million. The Franklin, TN-based company was founded in 2019 and booked $4 million in revenue for the 12 months ended September 30, 2021. It plans to list on the Nasdaq under the symbol FHP. Freehold Properties filed confidentially on October 27, 2020. Stifel and Cowen are the joint bookrunners on the deal.
Florida Tracker
In the past six months, sales in Florida have remained relatively flat while patient growth has shown consistent growth. Patient growth has been an average of .5% WoW for the past six months. Verano, Trulieve, and Surterra have grown the most in market share, while Curaleaf and Ayr continue to lose market share. This past week, Trulieve and Sunnyside (owned by Cresco) opened one and two dispensary locations, respectively. Trulieve's footprint is now up to 107 dispensaries in the state, while Sunnyside's is 11.
CA Struggling
According to Politico, the illicit volume of sales in California is around $8 billion annually, about twice the volume of legal sales. Companies are faced with a tough choice: compete with these unlicensed organizations or flee the state. Local governments are also hindering the possibilities of a thriving market since municipalities can opt-out of having sales in their district, causing a very fragmented market. This frequently leads consumers to have no choice but to go to an illicit dealer when there are no legal dispensaries in the area. We will see similar issues in the New York and New Jersey markets as municipalities have the same rights as California. High taxes are another obstacle these licensed companies must face when operating in the state. It isn't easy to compete when an unlicensed business can offer a steep discount compared to legal ones. California has just 823 licensed brick-and-mortar cannabis shops. Still, close to 3,000 retailers and delivery services operate in the state without a permit, a February 2020 market analysis by Marijuana Business Daily found. California lowered its penalties on illegal marijuana businesses as a response to the disproportionate number of arrests targeting minorities. But with a simple penalty of a $500 fine, many say it is too low to dissuade illegal activity.
