Legal marijuana is on the brink of explosive growth. But there are two key hurdles to overcome… and marijuana REITs like Innovative Industrial Properties (NYSE:IIPR) are solving them both.
For growers, it’s not easy to produce high-grade marijuana. Nor is it cheap — and getting that funding is tricky. Until the U.S. government removes marijuana from its list of Schedule I drugs — the ones considered most dangerous, like heroin — most banks want no part of it. (No matter how bright the future looks.)
For investors, the options have been limited, as that Schedule I label prohibits most U.S. companies from listing on the NYSE or NASDAQ.
Notice I said “most.”
IIPR stock is one of the few. Why can it list on those major stock exchanges? Because it never actually touches the plant. This is one of the smartest ways to invest in the exploding marijuana industry while it is still technically illegal federally.
Like all marijuana REITs, Innovative Industrial Properties simply plays landlord to the growers. Here’s how it works: IIPR buys freestanding properties from medical marijuana growers licensed by their respective states. It then leases the properties back to the growers. This gives those growers an infusion of capital to expand their operations and increase production. In return, the REIT receives regular rent payments under a long-term lease.
Pretty slick, huh? Wall Street is certainly taking notice:
Institutional investors now hold 59% of IIPR stock. Big players like Vanguard, Blackrock, and Wellington were largely the ones to cash in when shares hit a new 52-week high on the company’s March earnings report.
But marijuana REITs are also popular among investors like you and me — because of their unique business model, as well as their dividends.
Take a look at Innovative Industrial Properties’ earnings and you’ll see its rental income is growing exponentially. Then, because of the REIT structure, at least 90% of that gets passed along to shareholders. Innovative Industrial Properties paid a $0.35 dividend in Q4 — 40% higher than the previous year — and it’s already announced another dividend hike in Q1, to $0.45. That makes for a nice forward yield of over 2%. (This is even after the price of the stock nearly doubled since December.)
IIPR is a great stock, and now everybody is finding that out.
But I like to invest way BEFORE everyone jumps on board. Getting in before the crowd is how you make the big money. And that stock is up over 160% since I recommended it to my Investment Opportunities readers last August.
Back in college, I bought a brand-new apparel stock called True Religion for $0.20 — then it popped up above $20.
That’s actually what set me on my journey to New York City… my career with Charles Schwab, then my own firm, Penn Financial Group… and nowadays my newsletters, including Investment Opportunities.
I got people into Intuitive Surgical (NASDAQ:ISRG) at $10. Now it’s over $550. We saw GrubHub (NYSE:GRUB) go from $35 to $140.
I like to wait a couple of months after the IPO before investing, to avoid early volatility. That’s what I advised for Facebook (NASDAQ:FB), which did in fact make an early stumble before it went into the stratosphere. (I’m still waiting for Twitter (NYSE:TWTR) to “show us the money.”)
And now, I’ve got my eye on a company called Treehouse.
The Next IIPR?
Treehouse is one of the marijuana REITs I think you should put on your radar. It’s an up-and-comer, and this one focuses on retail, in addition to cultivation facilities.
On Monday, Treehouse announced that it had raised $45.5 million in a private deal. (And that was from a “federally-insured commercial bank” — a great example of how marijuana REITs can break that funding barrier.) That’s after the REIT raised $133 million in its spinoff from MedMen Enterprises (OTCMKTS:MMNFF) in January.
Treehouse is looking to expand its lineup of cannabis retail and industrial facilities…
… and I also think it’s headed toward an IPO.
That’s right. Treehouse is still privately held, but maybe not for long.
Large amounts of private fundraising tend to indicate a company is building toward its “exit” in the form of a public offering. One study from PitchBook found that venture capital-backed companies were raising an average of $108 million before an IPO.
If the rumors start flying and you hear about Treehouse on TV, well… you heard it here first. I’ll definitely be keeping an eye on this REIT — and so should you.
Now, don’t get me wrong:
If Treehouse goes public, it wouldn’t necessarily be an automatic buy. There’s some homework to do first: make sure the fundamentals back up the hype. And the timing has to be right.
That’s all part of my Cannabis Cash Calendar system, which I designed specifically for marijuana IPOs. The early results are impressive, if I do say so myself, including an 80% gainer in less than four months.
I already have the date circled for my next recommendation — just two weeks away, on April 4.
You can get exclusive access to it as soon as it’s released to my Investment Opportunities readers. Click here to learn more about this opportunity and how to get on the list to be notified.
Even if you don’t know a thing about the marijuana markets… even if you’ve never bought a stock before. You could take just a small stake, and potentially multiply that over the next 12 months. Click here for more on this incredible trend.
Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.
