Cannabis REITs: High On Growth
High Flyers: Cannabis REITs have been far-and-away the best-performing property sector for the second year in a row in 2020, soaring more than 150% despite the ongoing pandemic.
Marijuana has continued along the seemingly unceasing path towards legalization. After the 2020 election, medical usage is now legal in 35 states while recreational usage is legal in 15 states.
The ongoing federal prohibition - and the resulting limit on access to traditional banking - has forced cultivators and retailers to turn to alternative sources for capital, including cannabis REITs.
Federal legalization appears likely at some point during the Biden Administration. It's unclear whether the positive demand-effects of legalization will outweigh the negative supply-effects for cannabis REITs.
For growth-oriented investors seeking exposure to cannabis, cannabis REITs offer an attractive and differentiated option to play the space through real estate ownership.
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Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.