By acting like a bank to medical marijuana companies, this cannabis upstart is positioned to multiply its assets… and gains. But the gains it will deliver are just a taste of the real marijuana wealth builders.
When we first told you about this company, we saw some things.
Good things. Things we rarely see in cannabis stocks.
It was profitable.
It trades on a major U.S. stock exchange.
Plus, it pays a dividend.
In fact, this income driver alone will double the value of your investment in fewer than five years.
And the gain from all that income doesn’t even include its surging stock price.
In the less than four months since we brought it to you, this stock has gained an average of 1% every two days since we first mentioned it. That may not sound like much, but – at that rate – the stock will be nearly four times today’s price in just one year.
For an investor, these two things – a rapidly rising stock and high income – compound nicely.
In fact, it’s so powerful that returns like this start to look a lot like the returns that The Cannabis IPO Insider members expect to earn on the top cannabis IPOs we bring to them every month.
But this high flying company is leaving money on the table.
And once it gets all its horses pulling – and it will – the gain-driving numbers this company produces will multiply in a way that you have to see to believe.
A Nice Start, And Plenty of Room to Run
When we first talked about Innovative Industrial Properties Inc. (NYSE: IIPR), the stock was trading around $40.
This “landlord of cannabis” proved to be a moneymaker right out of the gate.
And when cannabis stocks went for a bumpy ride during the final quarter of last year, it was a port in the storm.
It has since pressed higher to about $67, mostly because investors see that it can charge a huge premium for what it does simply because it’s willing to serve cannabis companies.
Innovative Industrial is a special type of company called a Real Estate Investment Trust, or REIT (pronounced REET).
A REIT buys commercial real estate buildings, sometimes spending a lot on improving them, leases out the space, and manages the property. It then collects rent, or lease payments, from its tenants and hopes to eventually sell the property for a lot more than it paid for it.
And when it comes to REITs, Innovative Industrial is a pioneer.
A Leader Among REITs
Now, Innovative Industrial isn’t nearly as unique as this Canadian marijuana powerhouse that we’ll be bringing to members of The Cannabis IPO Insider next week, but it is unique among REITs.
That’s because it buys properties only from licensed medical marijuana companies.
And just last week Innovative Industrial closed another real estate transaction. It bought a cannabis cultivation facility from a company that has been operating cannabis facilities in California for 10 years. The company paid $6.7 million up front for the building, which is located in Sacramento, and is leasing the property back to the operator. It also committed to investing an additional $4.8 million to improve the property.
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With this transaction, Innovative Industrial now owns 12 buildings across 10 states, including the high-growth markets of Massachusetts, New York, and now California.
This process of selling and leasing back the property (which are called sale/leaseback transactions) may seem unnecessary, but it provides a valuable service.
By doing so, Innovative Industrial effectively acts like a bank. It gives precious capital to a growing company that has money tied up in real estate. It then charges interest in the form of rent to continue to use the property. And since most banks, though not all, are still leery of working with cannabis companies, Innovative Industrial can charge much higher rents.
And, like I said, this higher rent compounds beautifully.
Two to Three Times More Rent…
Innovative Industrial earns a stunning 15% on the money it spends to buy the cannabis building. This is two-to-three times what most landlords can charge on commercial real estate, and a 15% return on your money means you earn your investment back in just under five years. That doubles your money.
And because it’s a REIT, at least 90% of this income makes its way to your pocket in the form of dividend checks.
It’s this outsized income that has drawn the eye of the investment community and helped drive the stock higher over the last few months.
And the company isn’t even fully invested.
It has about $130 million in cash sitting on its balance sheet, which is nearly half of its assets. Once the company deploys this cash, the income it can earn basically doubles.
And just two days ago the company announced that they are raising another $100 million through a convertible note. If this closes, Innovative Industrial will have more money to put to work.
But even after deploying the cash it already has, the company will still be underutilizing its assets.
Times Return-Boosting Leverage…
That’s because REITs borrow money to buy real estate just like you borrowed money to buy your home. For a typical REIT, one-half to two-thirds of its real estate is financed through debt.
And borrowing is a way to leverage assets and magnify profits. So, once IIPR invests all of its cash, it can triple its assets – and income-generating power – without having to offer more stock and further dilute shareholders in the process.
If we revisit some simple math, two times multiplied by three is six times more income.
And the final kicker comes when other commercial property buyers are willing to pay up for those outsized lease rates.
And Cannabis Normalization
Stated differently, paying more for higher lease rates means that lease rates on cannabis properties will come down to normal levels.
Falling rents may not sound like something you want to as a property owner. But what is really happening is that the price of the property rises to reflect the higher income. If you own the property – or the REIT – before that happens, it’s a powerful boost to the value of your real estate.
In fact, rental rates on cannabis-focused commercial real estate falling to half of current levels means the value of the property will rise by a factor of nearly 11. This means that IIPR has the potential to return 1,000% on the assets it already has simply through the normalization of cannabis in the United States. Plus, you get paid a great income while you wait for that to happen.
Opportunities like what we have with Innovative Industrial are one of the best hidden gems of the cannabis space. Stocks like this offer exactly the kind of wealth-building power we look for.
But it’s hardly the only lucrative sector I’m tracking.
In fact, I know of another niche cannabis market that’s capable of unleashing more wealth than you ever thought was possible…
Cannabis IPOs, the True Pioneers
That’s because cannabis legalization is an incredibly disruptive force.
Ending prohibition will ultimately legitimize hundreds of billions of black market marijuana sales. Bringing these sales into the legal light means revenues and massive profits for cannabis entrepreneurs, investors, and businesses.
These cannabis companies are not just pioneering from an established industry but are charging full steam into entirely new territory – territory that will generate $100 billion in revenue in the U.S. alone.
IPO, as you probably already know, stands for initial public offering. It’s when a company’s stock first goes on sale to the public.
And most of the time – for successful IPOs – it’s the cheapest price you’ll ever pay to own an up-and-coming landmark company.
So imagine if you could find a red-hot business.
It’s rapidly growing…
It has a five-million-person customer base and 70% profit margins.
It’s a dream investment.
And from what we’ve seen, cannabis IPOs can multiply well beyond the types of returns you can expect from Innovative Industrial Properties’ potential 1,000% returns.
We’re talking another three times… six times… or, for one incredible stock, another 10 times which resulted in a grand total return of 11,170%.
And next week we’ll be bringing yet another wealth-multiplying IPO to our Cannabis IPO Insider members – and we hope to see you there.
Thank you for being an important part of the National Institute of Cannabis Investors,
Executive Director, National Institute for Cannabis Investors
P.S. The prohibition of cannabis is quickly becoming a thing of the past in modern America. But within this million-dollar opportunity also lie nearly a million different hitters in the game – making it nearly impossible to identify the winners from the wannabes. That’s why we’ve done the heavy lifting for you – and narrowed it down to four pot stocks with MASSIVE upward potential. To check out these runaway pot stocks for yourself, just click here.
6 responses to “This Money Multiplying Marijuana Stock Is Just Getting Started”
February 15 2019