JF 4236: Private Credit, Cannabis Real Estate and Yield Investing ft. Chris Reece

In this episode of The Best Ever CRE Show, host Ash Patel welcomes back Chris Reece, founder of MJ REIT, a private credit fund focused on financing commercial real estate within the cannabis ecosystem. Chris shares his 30-year institutional finance background, including his time at Vanguard and launching the first private business development company (BDC), which inspired his current strategy. MJ REIT specializes in short-term, senior secured mortgages (2-4 years) on industrial properties retrofitted for cannabis cultivation, with a conservative underwriting approach that values properties at non-cannabis market rates—typically $2M instead of $8M—despite $6M in improvements. This de-risking strategy, combined with personal and corporate guarantees, has allowed the fund to avoid defaults and deliver consistent 10%+ annualized distributions to investors. Chris emphasizes that this opportunity is time-limited, with returns likely to decline as more capital enters the space or federal legalization occurs. He also discusses the fund’s structure, including monthly redemptions, REIT taxation benefits, and a 1.5% management fee plus 15% incentive fee above a 7% hurdle. Despite the risks of bad actors and regulatory uncertainty, Chris remains confident in the fund’s model, which leverages scarcity of capital and high demand in a federally restricted industry. The episode concludes with a discussion on the broader cannabis market, including state-level regulatory shifts, the impact of federal rescheduling, and the potential for large corporations to enter the space post-legalization.