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On the other hand, cannabis remains federally illegal, making it much harder for businesses to operate and muddying the waters for investors.
Green Thumb Industries is a company that cultivates, processes, and sells medical and adult-use cannabis products in 15 states.
If Pennsylvania were to legalize adult use, Green Thumb would have a nice foothold in the state to help take advantage of the surge in sales.
As Green Thumb has grown its business, it’s been able to keep costs under control, reducing expenses as a percentage of revenue from 36% in 2020 to 31% in 2021.
These agreements signed by IIP are triple-net leases, meaning the cannabis companies bear the responsibility for all costs related to the property, thus reducing the risk and expenses for IIP.
To help with this, and as an additional revenue stream, IIP provides expansion capital to the companies to which it is leasing its properties.
To that end, the company increased its dividend 28% over 2020, and the dividend yield is currently 3.2%, easily beating the S&P 500’s 1.3%.
IIP is more expensive with a P/S of 23, but it’s also more established and a little less risky being that it’s an ancillary play on the cannabis space.