Cannabis REITs: Still Flying High
Flying High: The emerging Cannabis REIT sector has been far-and-away the best-performing property sector since the start of 2019, soaring more than 150% in 2020 following 70% gains the prior year.
The momentum has continued this year after New York became the 15th state to fully legalize recreational marijuana. An additional 20 states allow medical usage, collectively covering 70% of the population.
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.
Despite the Democrat sweep of the 2020 Elections, the outlook for full Federal legalization remains murky. Industry participants see a higher likelihood of decriminalization - keeping the issue in legal limbo - which benefits cannabis REITs.
Valuations are sky-high and the business model remains unproven, but for growth-oriented investors willing to speculate on the emerging industry, cannabis REITs offer unique exposure and have delivered relentless performance.
Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.
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.