Real Estate Archives - Green Market Report

Debra BorchardtOctober 3, 2022


It seems MedMen’s (OTC: MMNFF) recent pushback against Thor Equities is having a rippling effect across the real estate market. Last week, Green Market Report published a story about MedMen’s legal efforts with regard to the rental payments for a property in Chicago. MedMen had signed a lease on a property with Thor Equities, but then quit paying the rent. Thor Equities says MedMen owes them almost $1 million. The complaint notes that there isn’t any disagreement over the lease and the rent not being paid. MedMen would prefer not to have to pay the money that is owed.

The issue that is irritating some cannabis industry insiders is that MedMen doesn’t want Thor Equities to move the case from the New York Federal court where it was originally filed to a California state court. MedMen wants the case to stay in New York and is arguing that the lease contract isn’t enforceable because cannabis is federally illegal. Real estate companies were already leery of renting to cannabis businesses and this argument is another reason to stay away.

Kristin Jordan, the founder of Park Jordan is a commercial real estate broker and lawyer in New York and consults with cannabis companies. The first applicants for New York are called the Justice applicants because they, or their family members, have previously been arrested and convicted of an applicable cannabis offense. She said, “I recently spoke with a prominent NYC broker and was informed that his clients have received upwards of 12 LOI’s (letters of intent) from CBRE, the firm tapped by the Dormitory Authority of the State of New York to secure sites for the Justice applicants. He said the landlords do not understand the program and are not interested in this at all.” DASNY (Dormitory Authority of the State of New York) is the agency chosen to oversee the financing of the build-out construction of the retail sites.

Thor Equities was successful in the courts in California against High Times which took over a lease contract when it acquired a license from Harvest Health. The court ruled that the back rent had to be paid and that the contract was enforceable. High Times owes $5 million in back rent.

If MedMen is successful in its argument in New York, it would easily scare away most landlords if they think a cannabis tenant could just walk away or that they would get in trouble for renting to a company that is operating in a federally illegal industry. So far, the judge in the case has been critical of Thor Equities and has made the company reword its complaints. That has put the real estate community on edge. What if the case stays in New York & what if Medmen wins? What landlord would ever sign a contract with a cannabis company if the courts won’t enforce the contract?

In the early days of the cannabis industry, most companies raised money to outright buy the properties they wanted to occupy. Banks wouldn’t lend for a mortgage and landlords didn’t want to rent to them, so they paid cash. Cannabis businesses often ended up in depressed areas of real estate because prices were more affordable. As more states legalized cannabis, landlords had begun to gain some comfort with renting. 

If cannabis companies have to go back to the days of buying properties, it could further dampen efforts in new markets like New York. Commercial real estate is incredibly expensive even in the most undesirable neighborhoods.

StaffAugust 12, 2022


There is a new cannabis Real Estate Investment Trust or REIT in the market. MJ REIT was recently formed as a partnership between Rainbow Realty Group and Arcview Capital. Rainbow Realty Group will serve as sub-manager to MJ REIT, responsible for selecting and underwriting investments, while Arcview Capital will serve as the managing broker-dealer, tasked with distributing shares to the investing public and providing sales support.

“With heightened volatility in the public markets and investor concerns around rising rates and inflation, it’s exciting to create a strategy that provides investors an innovative solution to help meet their long-term goals,” said Christopher Reece, CEO of MJ REIT.

Hoya Capital recently wrote on Seeking Alpha that “Cannabis REITs have delivered the strongest dividend growth over the past five years, averaging more than 20% per year. Cannabis REITs pay out roughly 85% of their available FFO, however, higher than the REIT sector average.”  Two of the leading cannabis REITs are Innovative Industrial Properties (NYSE: IIPR) and New Lake Capital Partners (OTC: NLCP).

MJ REIT says it seeks to provide investors with solutions to three major investing challenges:

    • Income: Targeting approximately 10% annual distributions, paid in monthly 1099 Income

    • Diversification: Alternative investments like private commercial real estate can be complementary to a traditional stock & bond portfolio

    • Stability: Private commercial real estate has historically provided attractive risk-adjusted returns.


“By partnering with MJ REIT, we’ll help provide the capital needed for companies in this rapidly growing industry. With our multi-generational history of real estate investing, Rainbow employs a conservative underwriting approach and values properties using ‘non-cannabis’ valuations, unlike other cannabis REITs,” said Kyle Shenfeld, President of Rainbow Realty Group.

StaffJuly 22, 2022


Editors Note: This is republished with permission from Crain Chicago and written by John Pletz.

GRI Holdings wins zoning approval as Illinois gets ready to begin issuing long-awaited licenses this week.

GRI Holdings, one of the most controversial winners of new retail marijuana licenses in Illinois, is on its way to opening a downtown store.

The company, whose owners include restaurant owner Phil Stefani and former Chicago police commander Tom Wheeler, won approval Friday from the Zoning Board of Appeals to open a pot shop in the former Carson’s Ribs restaurant at 612 N. Wells St.

It’s the latest step in a long, strange journey that began more than two years ago, when the state of Illinois began accepting applications for new retail licenses, and has included lawsuits, lotteries, and, in GRI’s case, even a pandemic payroll protection loan.

The Illinois Department of Financial & Professional Regulation is expected to issue the first round of 185 new licenses to GRI and other lottery winners, starting with 119 licenses in the Chicago area. Because of litigation and other delays, the new retail licenses are more than two years behind schedule. With just 110 dispensaries statewide, the lack of stores has held back the growth of the industry in Illinois and hurt sales of existing cannabis companies, such as Cresco Labs, Green Thumb Industries (OTC: GTIBF) and Verano Holdings, which also sell marijuana to other retailers. Marijuana sales in Illinois have fallen over the past two months.

GRI hopes to open its first store, on Wells Street, this fall, Wheeler says. It would be one of the first new license holders to set up shop. Others who’ve received zoning approval include Mint Ventures, which will open at 201-15 N. Clinton St., and Green & Foster, which plans a store at 2114 S. Wabash Ave. Other new entrants, such as Blounts & Moore, have filed for zoning approvals.

GRI’s store will be the fourth in River North, joining Ascend, Cresco Labs, PharmaCann.

“After all that waiting, we’re really excited for it to come to fruition,” says Wheeler, noting that he worked in the neighborhood as a police officer.

The company told the city it expects to spend about $2 million turning the 6,400-square-foot former restaurant into a marijuana outlet, which will be called Green Rose Dispensary.

GRI was one of 21 applicants that received perfect marks in the initial scoring, setting off a round of complaints and scrutiny about a licensing process that was designed to favor “social-equity” applicants as a way to diversify ownership of the cannabis industry.

To achieve social-equity status, applicant groups had to be led by people who lived in neighborhoods disproportionately impacted by poverty, violence and enforcement of marijuana laws as part of the war on drugs—or those who had arrests or convictions for marijuana possession or their family members also could qualify.

A third way to achieve social-equity status involved companies employing at least 10 workers who met the requirements for residency or criminal records. The hiring approach proved controversial in minority communities, where it was quickly derided as the “slave-master” clause.

Although the hiring method was used by GRI, Wheeler defends the company’s social-equity qualifications. “I come from a disproportionately impacted area in Roseland,” says Wheeler, who also is a partner in a cannabis-consulting firm. “I still live here.”

The law required these companies to make the hires before they got the license and to keep them employed. The state had intended to issue licenses by May 2020, but COVID and other problems delayed lotteries for more than a year.

Marijuana is federally illegal, which prevents cannabis companies from getting traditional loans or banking services. Wheeler says when Hinsdale-based GRI applied for a PPP loan from the Small Business Administration, “we weren’t a cannabis company at that time. We had no license at that time.” Federal records show the $44,037 loan made in May 2020 was forgiven by the SBA.


Debra BorchardtJuly 18, 2022


Thor Equities must be seeing red whenever a cannabis company wants to rent one of its spaces. The real estate company has sued the High Times group in San Francisco for not paying rent on space and now it is going after MedMen  (OTC: MMNFF) for the same thing. In a complaint filed on July 15, 2022, Thor Equities claims MedMen owes the company $950,960.02 in unpaid rent for 942-944 West Fulton Street, Chicago, Illinois 60611. The lease was signed June 28, 2019, and Thor says MedMen hasn’t paid any rent since August 2021.

The complaint states, “For each month from August 2021 to the present, Tenant was required to pay Landlord base rent of $70,726.67, operating costs of $2,666.67, and insurance costs of $556.29. The monthly real estate charge of $4,429.26, in effect in August 2021 through March 2022, increased to $5,014.59 in April 2022.” The leaseholder is technically MM Enterprises USA LLC. In addition to that, MedMen’s guarantor is MedMen Enterprises Inc. which agreed to pay if MedMen didn’t have also ditched the landlords and not paid the rent.

According to Thor, MedMen owes the principal amount for the past 11 months of $864,509.11.and late fees of 10% of that amount, or $86,450.91.

Not So Fast

The judge in the case wasn’t so easily moved and basically went back to Thor and asked the company to tidy up its complaint. U.S. District Judge J. Paul Oetken wrote in his order that Thor Equities Group needs to do more than simply identify the “principal place of business” of MedMen. “The principal place of business and state of registration of a limited liability company are not relevant to the question of diversity of citizenship,” the judge said. “Rather, for purposes of diversity jurisdiction, an LLC has the citizenship of each of its members. Thus, in order to invoke this Court’s diversity jurisdiction, plaintiff must allege that the citizenship of each member of the LLC.”

The judge sent them back to the drawing board writing, “Plaintiff shall, on or before July 28, 2022, either (1) show cause as to why its complaint should not be dismissed for lack of subject matter jurisdiction, or (2) move to file an amended complaint that properly pleads jurisdiction.”

MedMen does have a dispensary in Chicago, but it’s not on Fulton St, instead, it’s at 1142 Lake St, located in Oak Park IL. The Chicago Tribune reported in 2020 that MedMen was considering a different location at  1001 W. North Ave.

Bad Tenants

Cannabis companies are learning they are on the hook for lease agreements. Thor won a case against High Times for not paying back rent in San Francisco. Harvest sold a dispensary license to High Times that came saddled with a super high rent payment in a tony retail section in San Francisco. The dispensary was never opened, but that didn’t matter. A contract is a contract.

Scaling Down

In this case, MedMen is likely pleased to have a little breathing room since the Judge bounced the complaint and asked Thor to Fix its language. MedMen has been scaling back on its big plans. the company has sold some Florida assets and recently settled its case with Ascend Wellness to sell its New York properties.

StaffJuly 8, 2022


Cannabis REIT NewLake Capital Partners, Inc. (OTCQX: NLCP) reported $50 million of investments across three properties, marking the full commitment of capital raised during the company’s initial public offering (IPO). NewLake acquired two properties from a leading publicly-traded U.S. multi-state cannabis operator (MSO) and amended its existing lease with another leading publicly-traded U.S. MSO to fund an already completed expansion. As of June 30, 2022, NewLake has approximately $28.7 million of unfunded commitments.

The two properties NewLake acquired include an approximately 38,000 square-foot operational cultivation facility in Pennsylvania for $14.5 million and an approximately 56,500 square-foot operational cultivation facility in Nevada, a new market for NewLake, for $13.6 million. NewLake is also providing an additional $750,000 for tenant improvements at the Pennsylvania property. NewLake’s $21.0 million investment in an existing operational cultivation facility funded an approximately 50,000 square foot expansion as well as other capital improvements at the site.

“We are excited to announce these transactions, where 98% of our capital commitment was funded at closing. Through these transactions, we have added a new publicly-traded MSO Tenant partner, a new market to NewLake’s portfolio, and taken advantage of built-in growth in our portfolio,” said David Weinstein, NewLake’s Chief Executive Officer. “With capital available from our credit facility, we continue to have runway to invest in the U.S. cannabis industry.”

First Quarter Earnings

In May, the company reported total revenue in the first quarter of 2022 as $10.2 million. Rental Income increased by approximately $4.8 million, to approximately $9.2 million, compared to approximately $4.4 million.

The company said the increase in Rental Income was primarily attributable to:

  • The nineteen properties acquired in March 2021 in connection with the merger generated an increase of approximately $2.7 million of Rental Income during the three months ended March 31, 2022.
  • The four properties acquired after the first quarter of 2021 generated approximately $2.0 million of Rental Income during the three months ended March 31, 2022.
  • Rental Income from the pre-merger portfolio properties generated an increase of approximately $0.1 million of rental income during the three months ended March 31, 2022.

Debra BorchardtJuly 6, 2022


Bank buildings are becoming attractive locations for cannabis dispensaries, but fortified vaults aren’t the reason. The banking industry has been closing bank branches by the thousands. According to the National Community Reinvestment Coalition, 9% of all branch locations in the U.S. closed between 2017 and 2021 or roughly 7,500 brick and mortar locations. This move really picked up steam during the pandemic when most people migrated to online banking. Bank consolidation and improvements in mobile banking have also contributed to the banks giving up their locations. 

The number of bank locations peaked in 2009 at 92,394 individual physical branches, but then the financial crisis of 2007 set off a spiral of bank failures and consolidation. Banks have closed more than 13,089 branches since 2009. That means a lot of real estate has opened up for new renters.

Travis Goad, Managing Partner of Pelorus Equity Group said, “While this isn’t a widespread trend that we are seeing emerge across the country just yet, we see how a bank’s attributes would be appealing to cannabis retailers. Brick-and-mortar banks tend to have built-in features that could benefit a cannabis retailer. In addition to security features, banks are typically located in high-traffic locations with an interior that is designed to move the flow of foot traffic — and many are currently unoccupied. While the cannabis industry has seen steady growth in the last several years, the banking industry has faced accelerated branch closure rates, which doubled during the pandemic.”

It would seem that the bank vault would be the big draw since cannabis dispensaries handle a lot of cash and often have to lock up inventory, but that isn’t the case. 

It’s Not The Vault

 Andy Poticha, Principal of Cannabis Facility Construction said, “People assume because a bank has a vault, that bank vault can be reused in a dispensary. In most cases this is not true as the vaults in banks are very small particularly because there are intentionally smaller amounts of cash on site. The smaller vaults are useless for dispensaries because they’re not big enough to house what the cannabis facilities need for dispensing product.”

 Virginia Maggiore from RDC Cannabis Facility Construction came to a similar conclusion, “We have a project in Fresno in an old bank building which worked the existing vault room into the design as storage for cannabis products during sales hours and also as secure vault storage overnight. We often have to build a new secure room in retail dispensary spaces, so when we can work with existing vault spaces we are often able to save on cost and time. In my experience, building a new secure room can cost anywhere between $8,000-$10,000, or even up to hundreds of thousands of dollars in areas where local regulatory bodies require a more intense security setup, such as requiring a cannabis company to meet UL Standards.”

Security expert Tony Gallo, Managing Partner of Sapphire Risk Advisory Group said, “An advantage of renovating an old bank is that they are well-constructed and the likelihood of a breach from the exterior through the walls or ceiling is low. Another appeal is that old bank buildings have a reputation for being safe and secure and are typically not targets of crime.”

Drive Through Lanes

One thing that does appeal to some of these banks to bud building redos is the drive-through lanes. Poticha said, “It’s my opinion that the reason why cannabis dispensary owners are looking into using bank buildings has absolutely nothing to do with security but is completely related to the fact that those structures already have built-in drive-throughs. Many cannabis companies today believe that drive-through use will be a future approval even though the local jurisdiction may not have approved adult-use or might not ever considered allowing the use of drive-throughs. The fact that bank building drive-throughs have pneumatic tube systems is most desirable particularly as it relates to the transaction/express nature of preorders. We have worked with cannabis companies in West Virginia and New Jersey who have been very proactive in buying, renovating, and opening dispensaries in former banks with drive-up lanes but leaving them unused with the anticipation and expectation that one day the conversation for this method of product delivery to clients will begin and be accepted.”

Gallo said, “The bank drive-through lines could definitely be a benefit for cannabis dispensaries seeking to operate curbside pickups. I’ve had a few clients successfully integrate pneumatic tube systems into their operations to transport cannabis to the sales floor from the vault, and this could also be adapted to facilitate curbside sales. The pneumatic tubes could easily be used to check IDs, exchange payment, and transport cannabis.”

Bank Building 

One successful bank renovation is the Jushi (OTC: JUSHF) Beyond Hello medical cannabis dispensary located in Pottsville PA. The former old Schuylkill Trust Co. building was built in 1923 and is a classic “small-town skyscraper” with six stories of offices above the large banking hall. BEYOND / HELLO Pottsville occupies the first-floor banking hall, and special care has been taken to blend the modern retail style seamlessly with the former bank’s turn-of-the-century elegance. Andreas “Dre” Neumann, Chief Creative Director of Jushi said, “It is important to understand that because of regulations, and security and safety standards, we rarely get to take advantage of existing interior architectural design. We had high hopes of initially incorporating the historic bank vault in some shape or form into the design of the dispensary, but unfortunately, we were not able to. However, the exterior of the historic building has been carefully preserved and remains an important landmark in the downtown area.”

On top of that, one of Jushi’s cannabis brands is called The Bank and plays on the idea of banking with flower categories like Gold Standard and Vault.


Of course, dispensaries will need to do some legwork when assessing a bank building as a potential location. Gallo said, “Prior to purchasing or leasing an old bank to be a cannabis dispensary, you should determine where the current safe or vault is located to ensure it can facilitate the operations of a dispensary. For example, in one old bank, the vault was located on the basement level, with was not compatible with the operation of the business, and another vault had to be installed on the main floor. At another location, the vault was constructed in the middle of the sales floor and did not comply with regulatory guidelines.”

He added, “There is a misconception that renovating an old bank building is cheaper than renovating an existing retail space, but in my experience, this is not always the case. I have seen secure storage construction cost twice as much in a bank than it would in other properties.”

StaffJune 21, 2022


Harvest Health or rather Trulieve since it bought Harvest Health must be heaving a sigh of relief that it’s High Times on the hook for the rent at Geary St. in San Francisco. Before it was acquired Harvest Health had tried to quickly jump into the San Francisco market by signing numerous agreements. One of them was with Alexis Bronson from the Have A Heart 2 CA LLC  as a social equity licensee for a dispensary at a prime shopping spot on the famous Geary Street.

Touted at the time as snagging a spot in the luxury shopping street, neighbor Chanel boutique protested. This was early 2020 and right before the pandemic struck. However, Harvest Health didn’t waste much time on some of the assets including 152 Geary and flipped some of its properties to High Times who was anxious to diversify into dispensaries. Soon thereafter, COVID took hold and San Francisco’s downtown has yet to recover. The problem with retail rental contracts is that many of them can’t be broken with covid blame. Something High Times has learned the hard way.

Cannabis Law Report wrote that on May 31, a judge found that Vijaya Properties (High Times) owes the building owner $4.9 million in back rent. The dispensary was never opened and to add insult to injury, the building is only worth $20 million. The landlord Thor Equities actually wanted $5.9 million, but the judge said that since the landlord basically took the $1 million in a credit facility that was somewhat like a deposit, that money would be subtracted. 

The judge noted that a tenant can get out of a lease if another tenant comes along. The landlord could ask the current tenant to leave and replace them and in effect take back possession. But 152 Geary hasn’t done so and so High Times is stuck. Geary St has experienced some scary smash and grab robberies this past year that were so frightening that police were blocking the street from car traffic as closing hours came near. So it’s no surprise that with crime and a depleted downtown along with a moribund retail scene the landlord probably couldn’t find a tenant willing to pay that much. 

There was also nothing in the rental contract that gave High Times an “out” in case it never opened the dispensary.

The trial had no jury and was handled remotely. High Times or Vijaya Properties as it’s listed in the case did not dispute the money owed. Side note – Vijaya is a botanica plant with medicinal properties and shares a lineage with cannabis.

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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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