AP Investment Fund fully invested – exclusive

The AP Investment Fund has fully invested the $12.6 million in capital raised through its inaugural marijuana investment vehicle into California marijuana dispensaries and a greenhouse property, Agri Investor has learned.

The fund invested $4 million into the new Bud and Bloom marijuana dispensary in Santa Ana, roughly $6 million into a greenhouse in Santa Barbara and the remaining funds as operating loans to several nearby dispensaries.

The fund bought the underlying real estate at Bud and Bloom debt-free and and provided $1 million of the $4 million total as an operating loan to the tenant, all of which will help to finance additional tenant improvements and provide operating capital, Kyle Kazan, one of the fund’s managing members, told Agri Investor.

The fund also arranged for the option to buy in on 50 percent of the business, which Kazan said was a draw for investors in addition to the ability to charge rents that exceed those in other industries at this nascent stage.

At the four-acre Santa Barbara greenhouse where the $6 million chunk of the funds were invested, growers are currently cultivating strawberries but will be switching over marijuana to supply to neighboring dispensaries – and perhaps Bud and Bloom in the future.

The fund close came after several new US states, including California, Massachusetts and Nevada recently voted to legalise the recreational use of marijuana, adding to a list that already included Alaska, Colorado, Oregon and Washington, along with Washington, DC.

Under the new rules, dispensaries won’t be able to sell for recreational customers for another year, but the approvals are being viewed as a leap forward in giving marijuana further legitimacy and stimulating more investment into the industry.

Kazan, a former police officer and co-founder of real estate investment firm Beach Front Properties, didn’t feel comfortable putting a number on the returns the nearly 100 investors in his fund can expect, but expects it outperform previous investments.  

“The risks are high for this fund, but we feel the potential is higher than any other investment I’ve made in over 20 years, including high risk-high return real estate investments,” he said. 

The industry is on particularly high alert after President-elect Donald Trump chose Alabama Senator Jeff Sessions, a staunch marijuana opponent, as Attorney General.  

“This has put uncertainty back into this market,” Kazan said, “and investors don’t like uncertainty.”

While acknowledging the risks, Kazan expressed confidence in the fund. In fact, he and his three partners contributed more than 20 percent of the fund’s $12.6 million in capital raised.

“I believe it will be a home run or I wouldn’t have invested in this,” he said.