💸 The Tape

Innovative Industrial Properties (IIP), the NYSE’s first real estate company dedicated to regulated U.S. cannabis, just issued its 2024 results—and there’s a lot to unpack. Despite some leasing hiccups, the REIT managed to ring up $308.5 million in total revenues this year and expanded its diverse property portfolio to 109 assets across 19 states. For some perspective, that’s roughly 9 million rentable square feet, with 98.3% already leased.

Sure, there was a slight drop in the bottom line: IIP’s annual net income hit $5.52 per share, down 4% year-over-year, while AFFO dipped 1% to $8.98 per share. CEO Paul Smithers doesn’t appear shaken, noting the company’s total dividend payout for the year reached $7.52 per share—maintaining a track record of annual dividend hikes since 2016. Given the AFFO payout ratio of 86%, management believes there’s still some wiggle room.

One of the more intriguing developments was IIP’s resolution with tenant PharmaCann. After December and January rent defaults, the two struck a deal: a slight trim to monthly base rent (from $2.8 million to $2.6 million) for nine properties, and a full rent abatement for two sites slated for new tenants. PharmaCann also issued a secured note to IIP. If PharmaCann can’t refinance its senior credit facility by mid-2025, those lease modifications vanish, returning terms to their pre-2025 state.

Meanwhile, IIP also navigated some smaller bumps: applying $5.7 million in security deposits to cover overdue rent from five tenants in Q4, for instance. The REIT sees these issues as short-term noise, emphasizing the ever-present need for cannabis operators to solidify capital amid regulatory uncertainty. That said, IIP’s 2024 revenue was nearly flat compared to last year—down just under 1%. The marginal dip is attributed to partial tenant payments, two “sales-type” leases, and some property repossessions. On the bright side, the company invests in improvements, collects rent escalations, and closed two new property acquisitions worth over $70 million.

Despite the mild turbulence, IIP’s balance sheet reflects a healthy capital structure: 11% debt-to-total gross assets, $238.7 million in total liquidity, and no significant debt maturing until 2026. With an expanded $87.5 million revolving credit facility, IIP has dry powder for future investments. So, while a few cannabis tenants are retooling their operations, IIP remains keen on bridging that financing gap with shrewd lease amendments and property expansions—making it a pivotal go-to landlord for the country’s top multi-state operators. For cannabis REIT aficionados, IIP’s strategy underscores both the volatility of the sector and the upside in being the industry’s leading rent collector.

📈 Dog Walkers.

Ohioans Won’t Be Bamboozled

During Tuesday’s Ohio Senate General Government Committee meeting, over a dozen people voiced opposition to Senate Bill 56, which proposes significant changes to Ohio’s marijuana law. Introduced by Sen. Steve Huffman, the bill initially aimed to increase the tax on adult-use marijuana from 10% to 15%, but a substitute version removed tax-related provisions. Key changes still included reducing home grow limits from 12 to six plants, capping dispensaries at 350, and lowering THC levels in extracts from 90% to 70%. Critics argue the bill undermines the voter-approved legalization of recreational marijuana, restricts competition, and limits consumer access. Many also called for automatic expungements for past marijuana convictions. A planned committee vote was canceled Wednesday morning.

Reducing The Denominator

C21 Investments Inc. (CSE: CXXI) (OTCQX: CXXIF) has repurchased and canceled 2,051,000 common shares, representing 1.7% of outstanding shares, in a private transaction at a discount to market price. CEO Sonny Newman emphasized this aligns with C21’s strategy of maximizing shareholder value amid strong cash flow. Post-transaction, the company now has 117,996,814 shares outstanding.

High Tide = High Ranks

High Tide (Nasdaq: HITI) has earned its second consecutive spot on the TSX Venture 50, ranking 21st and standing as one of only two cannabis companies on the list. CEO Raj Grover credits its operational focus and rapid Canna Cabana expansion—now boasting over 1.7 million loyal members. With sights set on Germany, High Tide aims for a truly global cannabis presence.

🗞️ The News

Supreme Court Asked To Settle Differing Interpretations Of Federal Medical Marijuana Protections Amid Lower Court Discrepancy

State Cracks Down on Bad Behavior in Legal Cannabis Trade

Iowa lawmakers consider allowing medical cannabis buds

Verano Opening 80th Florida Dispensary in North Miami Beach

📺 YouTube

Could Trump's HHS Pick Mike Stuart Threaten Cannabis Reform? | Trade to Black

What we covered:

✅ On our latest episode of Trade To Black, hosts Shadd Dales and Anthony Varrell will be joined by David Culver, Senior Vice President of the United States Cannabis Roundtable, to break down some of the biggest developments in the cannabis industry this week, including a major shakeup in the Trump administration that could impact cannabis reform.

Earlier this week, former President Donald Trump nominated Mike Stuart as lead attorney for the Department of Health and Human Services. Stuart, a vocal opponent of cannabis legalization, has repeatedly called marijuana a gateway drug and has aligned himself with Jeff Sessions's hardline stance against state-level cannabis policies.

We'll discuss his confirmation and whether it could significantly influence the DEA's upcoming decision on cannabis rescheduling, potentially slowing down reform efforts at the federal level.

Meanwhile, we'll cover the legislative battles in Ohio, where SB 56 aims to roll back key provisions of the voter-approved marijuana legalization law, sparking criticism from civil rights groups and cannabis advocates.

In Florida, new polling shows strong public support for cannabis reform, with 67% of voters backing legalization. However, Governor Ron DeSantis remains opposed, raising questions about whether the measure will survive legal challenges.