As we reported last month, on October 17, 2016, Innovative Industrial Properties, Inc., a real estate investment trust (colloquially, a REIT) specializing in the acquisition, ownership and management of industrial properties leased to experienced, state-licensed operators of regulated medical use cannabis facilities, filed a registration statement with the United States Securities and Exchange Commission under which the company is offering up to 8.75 million shares at an initial public offering price of $20 per share. The Company simultaneously filed to list its shares on the New York Stock Exchange.
In a recent SEC filing dated November 7, 2016, the Company disclosed that it had been preliminarily approved to list its shares on the NYSE, subject to official notice of issuance, under the symbol "IIPR." If and when the official notice of issuance is issued, IIPR will be the first publicly-traded REIT focused on the marijuana industry, as well as the first marijuana-focused company listed on the NYSE.
This is big news for the cannabis industry, as listing on a major exchange lends a measure of mainstream credibility to the industry, as well as greater access to investor dollars. NYSE approval was not guaranteed. In May of 2016, MassRoots, Inc., a publicly-traded social networking platform for marijuana users, had its application to be listed on Nasdaq rejected by that exchange. According to MassRoots, Nasdaq rejected its application on the grounds that listing the company could have been seen as aiding the distribution of an illegal substance–potentially a de jure violation of federal law. It now appears that NYSE may be taking a different approach to the listing of cannabis-related companies than Nasdaq did earlier this year, possibly taking guidance from the so-called "Cole Memorandum" to all federal prosecutors regarding the enforcement of federal laws regarding marijuana. The memorandum states that enforcement should be focused on eight specific concerns, none of which would appear to be directly triggered by listing the shares of a REIT whose operations involve the leasing of real estate to state-licensed operators of regulated medical use cannabis facilities.
The results of the recent election also may also bode well for the prospects of cannabis-related companies. On November 8, 2016, four states legalized recreational marijuana and another three approved medical use. Prior to that date, four states had already legalized recreational marijuana and 25 states had permitted medical use.
It remains to be seen whether the listing of cannabis-related companies on the NYSE and other exchanges continues to gain momentum. It is likely, however, that if and when the state-level push for legalization of marijuana for recreational and medical use gains traction at the federal level, business interests will line up to service the potentially burgeoning industry. Stay tuned.
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