Sacramento Cannabis Market On The Rise Thanks To Rainbow Realty's $20M Loan, Here's What Happened

Rainbow Realty Group, LLC and its affiliates announced the closing of a loan cross-collateralized by 9 properties in Sacramento, CA.

“At the properties, there are 13 tenants, of which 12 are licensed, cannabis operators. License types include 3 operating dispensaries, 2 dispensaries in development, 2 cultivators, 2 manufacturers, 2 delivery businesses, and a micro business,” reads a press release.

Funds from this transaction will be used for improvements at the properties as the tenants continue to invest in their operations.

“Per the city of Sacramento, there was $820,400,000 of legal cannabis sales in 2021, an increase of 78.6% over 2020. The 5 dispensaries within the collateral represent 12.5% of the total 40 licenses awarded in Sacramento.”

"We are pleased to close this transaction and support the burgeoning Sacramento cannabis market," said Kyle Shenfeld, president of Rainbow Realty Group. "The properties within the portfolio – a blend of retail, industrial, and office – have inherent non-cannabis use cases. We have high regard for our borrower, who holds the lead market share in Sacramento."

Speaking Of Cannabis-Related REITs

Early this month, MJ REIT, a hybrid real estate investment trust focused on acquiring, owning, leasing, and providing mortgages to properties operating in state-legal cannabis markets in the U.S., partnered with Rainbow Realty Group and Arcview Capital for its market debut.

“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 Shenfeld at that time. 

Rainbow Realty Group acts as sub-manager to MJ REIT, responsible for selecting and underwriting investments, while REIT focuses on industrial and retail commercial real estate for cannabis-related businesses.

Image by Rainbow Realty Group LLC.