Marijuana News Today: Marijuana REITs Grow & Dominate Pot Stock Market

Marijuana News Today
iStock.com/Nuthawut Somsuk

Marijuana News Today

The marijuana news today is focused on one of the most profitable subsectors in the marijuana industry: marijuana real estate investment trusts (REITs).

Marijuana REITs are a type of company that I’ve been covering for a while now, ever since they began dominating the pot stock market.

I’ll quickly reiterate what makes these REITs so valuable: they combine all the best parts of marijuana stocks with the stability of older, more stable companies.

What I mean by that is, marijuana REITs have exposure to all the excitement surrounding pot stocks, in that that share prices are exposed to rapid surges. Meanwhile, unlike most cannabis stocks, which are volatile and often see gains wiped out just as fast as they’re acquired, REITs tend to weather downturns far better than traditional pot stocks.

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A lot of that has to do with how REITs are structured: they are mandated to pay out 90% of their profits back to shareholders via dividends. So even if you’re not seeing massive price growth in a quarter, you’re still going to get a nice payout at the end of the period.

All these factors combine to make marijuana REITs some of the best investments available.

And now we have another one making waves: GreenAcreage Real Estate Corp. While not yet public, GreenAcreage is a marijuana REIT that just raised about $141.0 million when it finished a private placement of approximately seven million shares. (Source: “New York-based marijuana REIT raises $141 million,” Marijuana Business Daily, August 26, 2019.)

GreenAcreage is an independently managed REIT operating out of New York,  working in land leasing for the cannabis industry.

The company is poised to be a major player. It has a partnership with Acreage Holdings Inc (OTCMKTS:ACRGF, CNSX:ACRG.U), potentially giving it access to both the U.S. and Canadian markets in the future. That’s because Acreage Holdings is set to be acquired by Canopy Growth Corp (NYSE:CGC) when the U.S. federally legalizes pot.

“Our objective is to allow companies in the medical and recreational industry to release capital tied up in their fixed assets and redeploy it into their core business,” said GreenAcreage CEO Katie Barthmaier. (Source: Ibid.)

But seeing as how the company is still private, what does this mean for marijuana investors? Two things.

From a macro perspective, marijuana REITs are a booming subsector for  investors to watch. While the cannabis sector more broadly is very exciting, the volatility can be a little much for some investors to handle. But nobody wants to miss out on possible exponential gains.

REITs offer stability, a high growth ceiling, and dividends. That sort of package doesn’t come along very often.

On a micro scale, watching GreenAcreage in particular is worthwhile. The company, if it ever decides to go public, would garner a lot of interest from investors and it could end up having one of the brighter marijuana initial public offerings (IPOs).

While there’s no timeline on the company going public, it’s worth checking back now and again to ensure you don’t miss out on what could be a very strong new marijuana stock.

IIPR Stock

Seeing as how marijuana REITs are dominating the marijuana news today, why not take a look at one of them that has rewarded investors with big gains: Innovative Industrial Properties Inc (NYSE:IIPR)?

Innovative Industrial Properties stock has been among the best performers in the marijuana industry, even during the current market correction. Since I featured IIPR stock in my paid-subscription newsletter Marijuana Millionaire in March, it has surged by over 30%.

And it will likely continue to rise.

Innovative Industrial Properties stock is one of the few pot stocks up today, gaining one percent in early-morning trading. The stock has lost about eight percent over the past five days, however.

Still, IIPR stock is very likely going to reach and exceed its former heights, meaning a 30% gain in the next year is very likely. And that’s my low-end prediction; I could see this stock gain 50% to 100% over the next 12 months.

Of course, a lot of this is contingent on the broader market. If a hard recession sets in, then we’ll have to mitigate our expectations, but Innovative Industrial Properties stock is among the best stocks on the market right now.

The company logged rental revenues of about $8.3 million in its most recent quarter, up 155% from the same quarter a year prior. (Source: “Innovative Industrial Properties Reports Second Quarter 2019 Results,” Innovative Industrial Properties Inc, August 7, 2019.)

Net income available to common stockholders jumped to $3.1 million ($0.30 per diluted share). The company also reported adjusted funds from operations (AFFO) of about $5.8 million ($0.59 per diluted share), another big gain (176% from a year ago).

CTST Stock

From my favorite pot stock to one of my least favorites, we come to CannTrust Holdings Inc (NYSE:CTST). CannTrust stock is down about 2.5% in early-morning trading  today, and it has fallen 12% over the past five days.

CannTrust, you may remember, has been a beleaguered stock ever since the company ran into trouble with a Health Canada audit, resulting in CannTrust’s license being put into question and much of its inventory being put on hold.

The effect, as you’d imagine, has been calamitous for CTST stock, and there doesn’t seem to be much relief in sight.

The most recent update by the company revealed that it’s going to be delayed in releasing its next quarterly report. If CannTrust falls too far behind, it risks being kicked off the New York Stock Exchange.

In any case, I can’t imagine that the next quarterly report will be positive for CannTrust. As such, investors might want to steer clear.

CannTrust stock has collapsed from above $10.00 a share to under $2.00 a share in 2019. I simply don’t see a viable path toward recovery for CTST stock in the near future.

IIPR and CTST Stock Performances

The performances of IIPR stock (black line) and CTST stock (blue line) over the past week are seen in the chart below:

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today has us excited about the future of marijuana REITs, even if the current state of the pot stock market isn’t all that bright.

These REITs are golden for investors who are looking for a wonderful blend of potential and stability.