Innovative Industrial Properties Inc (NYSE:IIPR) has staged a decision to invest $300 million to cultivate cannabis for medical use. The company will generate the funds through the securities offering. IIPR is filing a prospectus for a mixed securities offering.
Innovative Industrial Properties Inc Purchases Massachusetts Based Property
IIPR has purchased an industrial space spanning an area of fifty five thousand sq. ft. located in Massachusetts for $12.75 million.
Consequent to this acquisition, the company has signed a lease accord with Holistic Industries, Inc. IIPR will use the acquired property for the cultivation of cannabis for medical use as permitted legally in Massachusetts.
The lease agreement is valid for a period of 20 years. The company has the right to extend the agreement for another 15 years. The annual rental for the property is fixed at $1,912,500 initially.
The annual rent is to be increased at a rate of 3.25% every year after the first year for the complete 20 years. In return, Holistic Industries will pay a fee of 1.5% of the rent for the property management to IIPR.
The population in Massachusetts is estimated at 6.9 million. It has approved cultivation of cannabis for medical use by a vote in the year 2012. The first sale of the cannabis was reported in the year 2014.
Around fifty one thousand active patients are taking the treatment using medical cannabis in thirty six medical dispensaries registered in Massachusetts. The medical conditions being treated using medical cannabis are the chronic back pain, depression, anxiety, multiple sclerosis, HIV/AIDS, and cancer.
Cannabis for Medical use in Massachusetts
The voters in Massachusetts have also given their nod for adult cannabis use in 2016. The first sale of adult use cannabis will take place in 2018 under a regulated program.
The spending of cannabis for adult use is expected to reach $380 million in the year 2018 and likely to grow to $1.2 billion by the year 2022.
CEO and President of IIPR, Paul Smithers is expressed happiness to close this deal with Holistic Industries. The company is supporting Holistic Industries as a long time partner.
Holistic Industries CEO, Josh Genderson commenting on this deal said it was smooth to work the team of IIPR during the entire transaction. The company will use the funds for its expansion program.