Marijuana Business Magazine February 2020

February 2020 | mjbizdaily.com 75 For a company signing its first deal with IIP, it typically takes 45 to 90 days “from our first conversation to the closing” to consummate the transaction, said Paul Smithers, IIP’s president and CEO. For existing tenants, however, IIP can close a deal “in a significantly shorter time frame,” he added. And once the agreement is inked, IIP and other real estate investors can amend the lease by working out a deal in which the company will fund tenant improvements in exchange for higher rent payments. Typical tenant improvements, according to Smithers, include: • Heating, cooling and electrical upgrades. • Security systems. • Fertigation (automatic fertilizer) systems. • Lighting fixtures specific to growing cannabis. UNCOVERING INVESTORS Finding the right investor to arrange a sale-leaseback requires shopping around. It’s a good idea to get sale-leaseback proposals from different parties to compare them, according to Malcolm McNeil, a cannabis attorney and partner in the Los Angeles office of Arent Fox. He suggested the cannabis company should know ahead of time how it will use the proceeds from the sale-leaseback. “Carefully scrutinize the business plan, the growth potential, the use of capital and the expectation of return to avoid a crash crunch in the future,” McNeil said. In other words, make sure you can pay the monthly rent on the property. McNeil also said a marijuana business shouldn’t feel pressured into making a quick decision. “We find that clients are often in a hurry to close a transaction—or, worse, did not want to invest in the appropriate due diligence to ensure that the arrangement will not impact long-term viability of the business,” he said. Caltabiano of Cresco said it is import- ant for a company to do its research be- fore picking a buyer, because a sale-lease- back deal is a long-term relationship. Boxes that must be checked include the interest rate you will be charged and the number of years you will owe rent. Paul Smithers Courtesy Photo Sunday Goods has a sale-leaseback deal for its greenhouse facility in Wilcox, Arizona. Courtesy Photo