Marijuana-focused real estate investment trust Innovative Industrial Properties (IIPR) is set to debut on the New York Stock Exchange on November 22, opening up another avenue of investment exposure to the budding industry. The recent win of President-elect Donald Trump and his subsequent cabinet appointments, however, may complicate an issue that previously enjoyed continued legislative progress under Barack Obama.
INNOVATIVE INDUSTRIAL IPO: Innovative Industrial Properties, whose executive chairman Alan Gold co-founded BioMed Realty (BMR) and Alexandria Real Estate (ARE), describes itself as a newly formed REIT focused on leasing industrial properties to “state-licensed operators for their regulated medical-use cannabis facilities.” The company is offering 8.75M shares in its NYSE debut, which it expects to price at $20.00 per share. IIP currently owns no properties, but has identified a $30M New York industrial space as its initial investment. The company is also evaluating other facilities to purchase with its IPO funds, and has entered non-binding letters of intent for five properties valued at roughly $80M.
Explaining its near-term business opportunity in its IPO prospectus, IIP cites market researcher ArcView in forecasting legal marijuana sales jumping several hundred percent to roughly $22B by 2020, and says that “while we anticipate that future changes in federal and state laws may ultimately open up financing options that have not been available to date in this industry, we believe that such changes will take time, thereby creating an opportunity over the next few years to provide our sale-leaseback solutions to state-licensed industry participants that lack access to traditional financing.”
TRUMP MARIJUANA STANCE: The Innovative Industrial IPO will follow the recent election of Donald Trump to the U.S. presidency on November 8, a day which also saw California, Maine, Massachusetts and Nevada legalize recreational marijuana usage, and Florida, Arkansas, North Dakota, and Montana pass medical marijuana efforts. Though campaign-trail promises often fail to coalesce into concrete policies, Trump appears more lenient on the issue than not, saying at a rally in October 2015 that “the marijuana thing is such a big thing. I think medical should happen, right? Don’t we agree? I mean, I think so. And then I really believe you should leave it up to the states.
