In a fitting climax to a precedent-setting maneuver, Pelorus Capital Group, a leader in the specialty-use cannabis real estate lending market, visited the world’s preeminent financial center following the pricing of the first securitization for cannabis-linked real estate. Following the historic announcement, company officials embarked on a whirlwind mission to address investor inquiries, build rapport, and reinforce confidence in the deal’s benefits.
With the introduction of the first-ever commercial mortgage-backed securities (CMBS) securitized by cannabis assets, investors had a plethora of questions. While the mortgages themselves are underwritten and issued like any other, cannabis’ Schedule 1 narcotic classification introduce unique compliance and legal considerations that most mortgage-backed securities do not carry. However, backed by some of the top financial services lawyers such as Cadwalader, Wickersham & Taft LLP and quality loan book, Pelorus Capital Group was able to qualify for the issuance and meet all regulatory thresholds.
CMBS is a type of financial instrument that represents a pool of commercial real estate loans. It is a form of securitization, where multiple individual mortgage loans, often secured by income-producing properties, are bundled together and sold as a single investment product to investors. The loan pool is transferred to a special purpose vehicle (SPV), which is a separate legal entity established solely for the purpose of issuing the CMBS. The SPV issues bonds or notes to investors, and these bonds are collateralized by the cash flows from the underlying commercial mortgage loans.
Commenting on issuing the world’s first cannabis-backed CMBS, Pelorus Capital Group Managing Partner Travis Goad believes it will serve as a net positive for lending in the cannabis sector: “From a borrower perspective in cannabis, CMBS, which is one of the big forms of securitization—it’s a $500 billion dollar total outstanding issuance market. So, this is us tapping into a larger pool of capital that can ultimately go to fund more cannabis companies and continue to fund the growth of this industry.”
Meanwhile, Pelorus Equity Group Co-Founding President Rob Sechrist was interviewed on Fintech TV, a media organization covering an array of verticals broadcasts with studios on the floor of the New York Stock Exchange. He later attended a Green Market Report cannabis industry conference, which wrapped up events surrounding the securitization.
Upon meeting with various retail and institutional investors, it was off to meet with one of the biggest political influencers in the industry.
Pelorus Capital Group Meets With Senator Cory Booker To Discuss Cannabis Reform
While the announcement of the first securitization for cannabis-linked real estate was naturally foremost on the agenda, Pelorus Capital Group remains active on the political front. As part of the trip, Rob Sechirst disclosed that he was set to meet with New Jersey Senator Cory Booker—known to be a key influencer among Senate Democrats on cannabis.
And we’re also trying to push forward SAFE Banking and any legislation that is meaningful to enhance this industry.Pelorus Equity Group Co-Founding President, Rob Sechrist
Cory Booker has been an exceedingly vocal advocate for cannabis reform in the past. He believes that cannabis prohibition has disproportionately hard on poor people and people of color.
Previously, Senator Booker has introduced and supported several bills that aim to end the federal ban on cannabis, expunge the records of nonviolent cannabis offenders, and invest in the communities that have been most affected by the war on drugs. Some of the bills he has sponsored or co-sponsored include:
- The Marijuana Justice Act, which sought to remove cannabis from the Controlled Substances Act, create a process to expunge federal cannabis convictions, and establish a fund to support community reinvestment, job training, health education, and other programs
- The Cannabis Administration and Opportunity Act, which sought to deschedule cannabis, expunge federal cannabis crimes, and reinvest funds into impacted communities, as well as regulate and tax cannabis at the federal level, protect state-legal cannabis programs, and promote research and public health
- The Secure And Fair Enforcement (SAFE) Banking Act, which would allow banks and other financial institutions to serve cannabis businesses without fear of federal penalties
Click on the embedded interview to hear more about Pelorus Capital Group’s grand visit to The Big Apple.