In the dynamic landscape of the net lease industry, cannabis has emerged as a burgeoning sector that demands attention. Over the past decade, it has swiftly carved out its own place as a new occupant class, garnering significant momentum in the last three years, fueled by shifting dynamics in other net lease assets during the pandemic.

What sets cannabis net lease assets apart is their ability to deliver strong rent-to-sales ratios – a characteristic that is not easily found in more traditional retail assets. This impressive metric is a result of the exceptional performance of cannabis stores in terms of top-line revenue and sales per square foot. Unlike traditional retailers, cannabis dispensaries have demonstrated a remarkable ability to generate superior sales figures, providing tenants with a secure means to fulfill their rental obligations to landlords. This inherent strength in sales and revenue generation significantly enhances the stability and reliability of rental income, making cannabis net lease properties an attractive proposition for investors seeking a secure and lucrative addition to their portfolio.

In addition to the impressive rent-to-sales ratios, net lease cannabis properties benefit from formidable barriers to entry in many states. The cannabis industry operates under strict regulations, including the requirement of licenses to operate legally. Securing these licenses can be an arduous and complex process, creating significant hurdles for potential competitors. This, in turn, shields existing cannabis dispensaries from having their revenues diluted by the easy opening of competing locations. With limited competition and an established customer base, net lease cannabis properties enjoy a higher level of revenue security compared to traditional retail assets. The scarcity of licenses and the challenges associated with obtaining them fortify the value of cannabis net lease properties, making them a highly sought-after investment opportunity for astute investors looking for long-term stability and potential for growth.

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