Why Innovative Industrial Properties May Not Be the Best Cannabis Stock of 2021

Cannabis-focused real estate investment trust Innovative Industrial Properties (NYSE:IIPR) has been on a tear in 2020, up a stunning 153.5% year to date, including dividends.

IIPR Year to Date Total Returns (Daily) Chart

IIPR Year to Date Total Returns (Daily) data by YCharts

As one of the few U.S.-based cannabis-related stocks that is actually able to trade on major U.S. stock exchanges, Innovative Industrial has benefited from a renewed surge of interest in U.S. cannabis. The industry is in hyper-growth mode, and Innovative’s healthy 2.6% dividend looks pretty good in a world of super-low interest rates and bond yields. The dividend per share also surged 50% last quarter relative to the year-ago period, and investors have bid up Innovative’s shares higher in 2020.

Still, while the company has been executing extremely well and capitalizing on the fertile U.S. cannabis opportunity, there could be some headwinds for the stock next year.

A cannabis greenhouse facility.

Image source: Getty Images.

Riding high cap rates to huge returns in 2020

Right now, Innovative Industrial is earning some pretty good returns on its real estate. U.S. cannabis operators, still operating under the shadow of being illegal at the federal level, don’t have access to national banks, and they are taxed at much higher levels than typical companies. As such, cannabis operators are willing to sell their real estate to Innovative Industrial at pretty good prices in…

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Cannabis-focused real estate investment trust Innovative Industrial Properties (NYSE:IIPR) has been on a tear in 2020, up a stunning 153.5% year to date, including dividends.

IIPR Year to Date Total Returns (Daily) Chart

IIPR Year to Date Total Returns (Daily) data by YCharts

As one of the few U.S.-based cannabis-related stocks that is actually able to trade on major U.S. stock exchanges, Innovative Industrial has benefited from a renewed surge of interest in U.S. cannabis. The industry is in hyper-growth mode, and Innovative’s healthy 2.6% dividend looks pretty good in a world of super-low interest rates and bond yields. The dividend per share also surged 50% last quarter relative to the year-ago period, and investors have bid up Innovative’s shares higher in 2020.

Still, while the company has been executing extremely well and capitalizing on the fertile U.S. cannabis opportunity, there could be some headwinds for the stock next year.

A cannabis greenhouse facility.

Image source: Getty Images.

Riding high cap rates to huge returns in 2020

Right now, Innovative Industrial is earning some pretty good returns on its real estate. U.S. cannabis operators, still operating under the shadow of being illegal at the federal level, don’t have access to national banks, and they are taxed at much higher levels than typical companies. As such, cannabis operators are willing to sell their real estate to Innovative Industrial at pretty good prices in…

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