Innovative Industrial Properties, Inc. IIPR

The business

IIPR owns about 108 industrial and greenhouse properties across roughly 19 states, leased on long-dated triple-net contracts (15 to 20 years initial term, contractual escalators) to state-licensed cannabis cultivators and processors. The tenants pay rent, taxes, insurance, and maintenance; IIPR collects the check, depreciates the building, and distributes the cash. The engine is the rent roll: about $266M of TTM revenue against a $2.1B gross real-estate book, with the top five tenants historically generating roughly 50% to 60% of base rent. Concentration is the whole story here, and the names that matter (PharmaCann, Ascend, Curaleaf, Cresco, Trulieve) are the same names whose stress shows up in every quarterly default disclosure.

What the financials do not show but the math needs: cannabis remains federally illegal (Schedule I), which is why these tenants cannot access bank financing on normal terms and why IIPR exists as their landlord-of-last-resort at high cap rates. The same federal status caps the tenant pool, blocks interstate commerce, and leaves operators exposed to state-by-state price collapses (California, Michigan, Massachusetts wholesale prices are down 40% to 60% from 2022 peaks). Rescheduling to Schedule III, which the DEA has been formally considering since 2024, would remove 280E tax penalties and free operator cash flow, but the timing is political and unreliable. Over the last 18 months IIPR has worked through defaults at PharmaCann, 4Front, and Gold Flora; the dividend was cut from $7.60 to $5.40 annualized in mid-2025 (the $7.60 in FMP's data is stale; the live rate is $5.40 quarterly $1.35), and the FY25 revenue decline to $266M from $309M reflects that rent reset, not a structural fee compression.