About IIPR
The number of inbound questions about IIPR is growing.
In the cannabis space, it's no secret that Parallel Cannabis has some debt problems, as highlighted in a lawsuit with the investors of its subsidiary Surterra Wellness. The lawsuit outlined the Company's defaults on its debt obligations. CURLF also said that Parallel was no longer buying its Illinois properties, saying it had "received correspondence from Parallel's attorneys indicating that it will not be in a position to complete the acquisition of the Illinois Assets due to lack of financing and seeking to terminate its agreement to purchase the Illinois Assets. Are Parallel issues a one-off problem, or is it a symptom of more systematic problems in the cannabis space with slowing growth and pricing pressures in crucial states?
IIPR owned 107 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia, and Washington, representing a total of approximately 8.0M rentable square feet (including approximately 2.4M rentable square feet under development/redevelopment), with a weighted-average remaining lease term of approximately 16.4 years. As of April 7, 2022, IIPR had invested approximately $1.9B across its portfolio and had committed an additional $227.1M to reimburse certain tenants and sellers for the completion of construction and improvements at IIP's properties. These statistics do not include an $18.5M loan from IIP to a developer for the construction of a regulated cannabis cultivation and processing facility in California and up to $55.0M that may be funded under IIP's lease with a tenant at one of IIP's Pennsylvania properties, as the tenant at that property may not elect to have IIP disburse those funds and pay IIP the corresponding base rent on those funds.
In early April, IIPR announced the pricing of 1.578 million shares of its common stock at $190.00 for approximately $300.0 million. The Company intends to use the net proceeds from this offering to invest in specialized industrial real estate assets used in the regulated cannabis industry that are consistent with its investment strategy and general corporate purposes.
Since the beginning of 2022, IIPR made four acquisitions for properties located in California, Massachusetts, New Jersey and Pennsylvania, and executed four lease amendments to provide additional improvement allowances at properties located in Massachusetts and Michigan. In these transactions, IIP established a new tenant relationship with Verano Holdings Corp., while expanding existing relationships with 4Front Ventures Corp., Ascend Wellness Holdings, Inc., Green Peak Industries, Inc. (Skymint), Holistic Industries Inc. and Kings Garden, Inc.
Most IIPR clients are robust and healthy cannabis operators, with Parallel being a concern. Does IIPR have an issue with Parallel, and does it extend past that one operator? The current profitability trends for the industry suggest there might be more, but that is not immediately apparent. The Company now has $300 million in capital to deploy into an industry needing capital. Still, as we move closer toward legalization, the Company's once-dominant position as a way to play the industry's growth will be diminished, and its premium valuation could be eroded.
One Step Closer
As noted above, news like this is not good for IIPR.
On Wednesday, Janet Yellen says it is "extremely frustrating" that Congress has yet to enact marijuana banking reform legislation, adding that the department is "supportive" of the bipartisan Secure and Fair Enforcement (SAFE) Banking Act. She also said, "As you know, there is a conflict between state and national law. Banks are trapped in the middle of that. And some legislative solution, I think, is necessary to move this forward; I share your frustration that we haven't been able to make progress. I think it does require congressional action." The SAFE Banking Act has passed the House six times in some form, but it's persistently stalled in the Senate under both Democratic and Republican control.
Will the DOJ notice how vocal the treasury is and cone to its senses? Hope is not an investment process!
Illinois is a MESS
With license delays persisting and Illinois legislative session ending, a situation called 'dire' for some marijuana entrepreneurs cbsnews.com.
