Innovative Industrial Properties Expands Real Estate Partnership with Green Thumb Industries at Pennsylvania Property

IIP Funds Additional $55.0 Million for a New 152,000-Square-Foot Industrial Facility

Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today that it entered into an amendment of the lease with Green Thumb Industries Inc. (Green Thumb) (CSE: GTII; OTCQX: GTBIF), a leading national cannabis consumer packaged goods company and owner of RISE dispensaries . The lease amendment in Danville, Pennsylvania, provided $55.0 million in reimbursement to Green Thumb for the recently completed development of a 152,000-square-foot industrial building for cultivation and processing, in addition to a new electric substation on the property to enhance electrical load capacity. The lease amendment also adjusted the base rent under the lease to take into account the additional available funding for the development. IIP funded in full the reimbursement, making IIP's total investment in the 300,000-square-foot property $94.6 million. This lease amendment was made pursuant to the exercise of an option by Green Thumb for IIP to provide reimbursement of these improvements, with this option originally included in a lease amendment executed in 2021.

"We are grateful for the continued partnership with IIP at our Danville facility," said Green Thumb Founder and Chief Executive Officer Ben Kovler. "Having negotiated the lease and terms last year, we are pleased to have waited to draw the remaining funds until now when the facility is complete. We are excited about the future of cannabis in Pennsylvania."

Details of the IIP Pennsylvania property are as follows:

  • IIP originally acquired the property for $20.3 million and entered into a long-term lease with Green Thumb in 2019 and under the lease made available $19.3 million for qualifying improvements to the property. At the time, the facility consisted of approximately 148,000-square-feet of industrial space, about half of which was operational.
  • Improvements included build-out of the remainder of the facility, consisting of new grow rooms, production rooms, processing rooms and the construction of additional mezzanine space to house new mechanical, plumbing and electrical infrastructure.
  • IIP's $55.0 million additional capital commitment was utilized as reimbursement to Green Thumb for costs incurred in the ground-up development of an additional approximately 152,000-square-foot indoor cultivation and processing facility.
  • Eligible direct costs for the project for which IIP reimbursed Green Thumb included site planning and preparation, base building construction and the enhanced HVAC, electrical, mechanical, fertigation and other building systems required for indoor cannabis cultivation and processing, in addition to the construction of the new electrical substation located on the property.
  • The new facility contains flower rooms, veg rooms, mother rooms, dry rooms, processing, storage, office and supporting spaces.

In addition to this facility in Pennsylvania, IIP owns and leases two regulated cannabis cultivation and processing facilities in Illinois and Ohio to Green Thumb, comprising a total of approximately 606,000 square feet. IIP's total investment in properties leased to Green Thumb is approximately $176.8 million. Green Thumb is IIP's fourth largest tenant partner in terms of capital investment.

As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, IIP partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.

"We are proud to have supported Green Thumb as their long-term real estate partner since 2019," said Paul Smithers, IIP's President and Chief Executive Officer. "Since that time, Green Thumb has grown from $216 million in revenues in 2019 to nearly $900 million in revenues in 2021, demonstrating the strength of Green Thumb's operational footprint and their ability to execute and produce high quality products for patients and customers at scale throughout the United States."

Medical-use cannabis dispensaries in Pennsylvania made their first sales in 2018; as of March 2022, the Pennsylvania Department of Health reported that over 740,000 patients and caregivers had been registered for the state's medical cannabis program. Marijuana Business Daily projects regulated medical-use cannabis sales to reach $1.6 - $2.0 billion for 2022. The current program provides for the issuance of up to 25 cultivation and processing licenses and 150 dispensary licenses, in addition to nine clinical registrant licenses, each of which may have a cultivation and processing facility and a dispensary. In March 2022, Pennsylvania's Senate Law and Justice Committee concluded the last of three hearings examining issues regarding potential adult-use legalization, marking the first hearings by a legislative panel on the issue of adult-use cannabis in the Republican-controlled Pennsylvania General Assembly. The neighboring states of New York and New Jersey recently legalized cannabis for adult-use.

As of June 30, 2022, IIP owned 111 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia and Washington, representing a total of approximately 8.6 million rentable square feet (including approximately 2.5 million rentable square feet under development / redevelopment). As of June 30, 2022, IIP had committed approximately $2.4 billion across its portfolio, including capital invested to date (excluding transaction costs) and additional capital commitments to fund future construction and improvements at IIP's properties. These statistics do not include an $18.5 million loan from IIP to a developer for construction of a regulated cannabis cultivation and processing facility in California.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com .

About Green Thumb Industries

Green Thumb Industries Inc. ("Green Thumb"), a national cannabis consumer packaged goods company and retailer, promotes well-being through the power of cannabis while giving back to the communities in which it serves. Green Thumb manufactures and distributes a portfolio of branded cannabis products including Beboe, Dogwalkers, Doctor Solomon's, Good Green, incredibles and RYTHM. The company also owns and operates rapidly growing national retail cannabis stores called RISE. Headquartered in Chicago, Illinois, Green Thumb has 17 manufacturing facilities, 77 open retail locations and operations across 15 U.S. markets. Established in 2014, Green Thumb employs approximately 4,000 people and serves millions of patients and customers each year. The company was named to Crain's Chicago Business, Fast 50 list in 2021 and 2022 and a Best Workplace by MG Retailer magazine in 2018, 2019 and 2021. More information is available at www.GTIgrows.com .

Innovative Industrial Properties Forward-Looking Statements

This press release contains statements that IIP believes to be "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than historical facts, including, without limitation, statements regarding the lease and development of the Pennsylvania property, Green Thumb and the Pennsylvania regulated cannabis market, are forward-looking statements. When used in this press release, words such as we "expect," "intend," "plan," "estimate," "anticipate," "believe" or "should" or the negative thereof or similar terminology are generally intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Investors should not place undue reliance upon forward-looking statements. IIP disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Catherine Hastings
Chief Financial Officer
Innovative Industrial Properties, Inc.
(858) 997-3332

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Consumption methods evolving post-legalization

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Craft beer production declined by 4 percent year-on-year in 2024, according to data collected by the Brewers Association. This marked the largest drop in the industry's history, excluding the pandemic. For small, independent craft breweries, 2024 marked the third consecutive year of declining production. A drop in the number of operating small breweries last year provides further evidence of this trend, with 501 closures in 2024 versus 434 openings.

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The burgeoning hemp industry is another segment of the expanding cannabis market.

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However, after an initial boom, a lack of infrastructure and clearly defined regulations for CBD, as well as state-level variations and market oversupply, ultimately contributed to a quick retraction.

2024 was a pivotal year for the US hemp industry, as the hemp-related provisions of the 2018 Farm Bill — originally set to expire in September 2023, but extended to December 31, 2024 — created an urgent need to address critical issues like THC limits and the regulation of novel hemp-derived cannabinoids. A major point of contention was the proposed shift from defining hemp based on Delta-9 THC concentration (0.3 percent or less) to “total THC,” which includes THCA.

This change had the potential to significantly impact farmers and processors, as many hemp varieties that are compliant under the Delta-9 THC rule could exceed the 0.3 percent limit when THCA is included.

Various bills and amendments were proposed in 2024 as part of the Farm Bill discussions, each with different approaches to regulating hemp. Separate regulatory frameworks for industrial hemp and hemp grown for cannabinoids were suggested, and many states took their own action, leading to a patchwork of regulations and even outright bans.

Despite challenges, data from the US Department of Agriculture suggests signs of recovery.

The department's annual National Hemp Report from 2024 points to an 18 percent increase in industrial hemp production value between 2022 and 2023, with output growth seen in specific sectors like floral (18 percent), fiber (133 percent) and seed hemp (414 percent). The 2025 report from the Department of Agriculture indicates further expansion, with notable increases observed in both acreage (up 64 percent from 2023) and value (46 percent).

The 2024 Farm Bill ultimately did not pass, and right now the hemp industry is operating under a temporary extension of the 2018 Farm Bill under the American Relief Act of 2025, signed into law on December 21, 2024.

The 2018 Farm Bill is now set to expire on September 30, 2025.

While analysts for Markets and Markets project that the North American hemp industry will grow at a CAGR of 22.4 percent and ultimately reach a valuation of US$30.24 billion by 2029, the future of the industry will be heavily influenced by the outcome of the ongoing Farm Bill discussions.

US cannabis legalization remains stalled

Although there is clear demand for cannabis products, the now-defunct rescheduling process in the US is likely to continue casting a shadow of uncertainty over the industry's long-term trajectory.

Legal and procedural delays, including allegations of improper conduct and bias within the US Drug Enforcement Administration (DEA), led to hearing cancellations, and the new administration of US President Donald Trump has brought leadership changes to key agencies like the DEA and the Department of Justice.

Terry Cole, who Trump nominated to be DEA administrator on February 11, has a history of opposing cannabis legalization in the country. Similarly, Pam Bondi, Trump’s pick to lead the justice department, staunchly opposed a movement to legalize medical cannabis during her tenure as Florida’s attorney general.

While there have been bipartisan efforts in Congress to end federal cannabis prohibition and establish regulations for eventual legalization, the DEA’s actions and statements indicate a potential stall or reversal of progress.

In addition to that, new research is adding complexity to the debate.

A study published in the American Journal of Psychiatry this past March highlights an association between the use of high-potency cannabis strains and increased risks of psychosis, a factor that may not have been fully considered by the Department of Health and Human Services. As stronger cannabis strains become more widely available, a reassessment of their potential health risks may be required.

Investor takeaway

While the cannabis industry holds promise for growth and innovation, investors must remain acutely aware of the regulatory uncertainties and market volatility that will undoubtedly shape its trajectory in the years to come.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.

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