As used herein, the terms “we”, “us”, “our” or the “Company” refer to Innovative Industrial Properties, Inc., a Maryland corporation, and any of our subsidiaries, including IIP Operating Partnership, LP, a Delaware limited partnership (our “Operating Partnership”).
−Removed: We are an internally-managed REIT focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated cannabis facilities.
+Added: We are an internally-managed REIT focused on the acquisition, ownership and management of specialized industrial properties in the United States.
+Added: Our properties are leased to experienced, state-licensed operators for their regulated cannabis facilities.
We have acquired and intend to continue to acquire our properties through sale-leaseback transactions and third-party purchases.
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During 2024, we acquired two new properties and made additional investments into existing properties under development or redevelopment.
−Removed: As of December 31, 2023, we owned 108 properties comprising an aggregate of approximately 8.9 million rentable square feet (including approximately 1.4 million rentable square feet under development/redevelopment) in 19 states.
−Removed: As of December 31, 2023, we had invested an aggregate of approximately $2.4 billion across our property portfolio (consisting of purchase price and funding of draws for improvements submitted by tenants, if any, but excluding transaction costs) and had committed an additional approximately $40.1 million to fund draws to certain tenants and vendors for improvements at our properties.
−Removed: Of the approximately $40.1 million committed to fund draws to certain tenants and vendors for improvements at our properties, approximately $9.6 million was incurred but not funded as of December 31, 2023.
−Removed: These statistics do not include a $23.0 million loan commitment from us to a developer for construction of a regulated cannabis cultivation and processing facility in California, of which we have funded approximately $22.0 million as of December 31, 2023.
−Removed: Of these 108 properties, we include 103 properties in our operating portfolio, which were 95.8% leased as of December 31, 2023, with a weighted-average remaining lease term of approximately 14.6 years.
−Removed: We do not include in our operating portfolio the following properties (all of which were under development/redevelopment as of December 31, 2023, and together are expected to comprise approximately 715,000 rentable square feet upon completion of development/redevelopment):
+Added: As of December 31, 2024, we owned 109 properties comprising an aggregate of 9.0 million rentable square feet (including 666,000 rentable square feet under development/redevelopment) in 19 states.
+Added: As of December 31, 2024, we had invested an aggregate of $2.4 billion across our property portfolio (consisting of purchase price and funding of draws for improvements submitted by tenants, if any, but excluding transaction costs) and had committed an additional $38.3 million to fund draws to certain tenants and vendors for improvements at our properties.
+Added: Of the $38.3 million committed to fund draws to certain tenants and vendors for improvements at our properties, $11.4 million was incurred but not funded as of December 31, 2024.
+Added: Of these 109 properties, we include 106 properties in our operating portfolio, which were 98.3% leased as of December 31, 2024, with a weighted-average remaining lease term of 13.7 years.
+Added: We do not include in our operating portfolio the following properties (all of which were under development/redevelopment as of December 31, 2024, and together are expected to comprise 491,000 rentable square feet upon completion of development/redevelopment):
+Added: ● 63795 19 th Avenue in Palm Springs, California (pre-leased);
● Inland Center Drive in San Bernardino, California;
−Removed: ● Perez Road in Cathedral City, California (pre-leased);
−Removed: ● 63795 19 th Avenue in Palm Springs, California;
● Leah Avenue in San Marcos, Texas.
−Removed: ● Davis Highway in Dimondale, Michigan (pre-leased).
For more information regarding our properties and tenants, see the sections entitled “— Tenant Concentration” and “— Geographic Concentration” below.
Property Sale
+Added: In May 2024, we sold a property in Los Angeles, California for $9.1 million (excluding closing costs) to a third-party buyer.
+Added: Concurrently with the sale, pursuant to a separate agreement previously executed between us and the tenant, the tenant paid us a lease termination fee of $3.9 million and paid for the closing and other costs incurred by us in connection with the sale of the property.
+Added: In connection with this sale, we recognized a disposition-contingent lease termination fee of $3.9 million, which is included in rental revenue (including tenant reimbursements) on our consolidated statements of income, and a loss on sale of real estate of $3.4 million.
In March 2023, we sold the portfolio of four properties in California previously leased to affiliates of Medical Investor Holdings, LLC (“Vertical”) for $16.2 million (excluding transaction costs) with a secured loan for $16.1 million with the buyer of the properties.
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Accordingly, we have not derecognized the assets transferred.
−Removed: All consideration received, as well as any future payments, from the buyer is recognized as a deposit liability and is included in other liabilities on our consolidated balance sheet until such time the criteria for recognition as a sale have been met.
−Removed: In addition, as we have not met all of the held-for-sale criteria, land and building and improvements with gross carrying values of approximately $3.4 million and approximately $13.9 million, respectively, and accumulated depreciation of approximately $1.6 million as of December 31, 2023, remain on the consolidated balance sheet, and the buildings and improvements continue to be depreciated.
−Removed: During the year ended December 31, 2023, we received cash interest payments of approximately $1.3 million, which have been recorded as a liability as of December 31, 2023.
+Added: All consideration received, as well as any future payments, from the buyer is recognized as a deposit liability and is included in other liabilities on our consolidated balance sheets until such time the criteria for recognition as a sale have been met.
+Added: In addition, as we have not met all of the held-for-sale criteria, land and building and improvements with gross carrying values of $3.4 million and $13.9 million, respectively, and accumulated depreciation of $2.0 million as of December 31, 2024, remain on the consolidated balance sheets, and the buildings and improvements continue to be depreciated.
+Added: During the year ended December 31, 2024, we received cash interest payments of $1.1 million, which have been recorded as a liability as of December 31, 2024.
Financial Results
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Capital Activities
−Removed: In January 2023, we terminated the previously existing “at-the-market” offering program and entered into new equity distribution agreements with four sales agents, pursuant to which we may offer and sell from time to time through an “at-the-market” offering program (the “ATM Program”) up to $500.0 million in shares of our common stock.
−Removed: During the year ended December 31, 2023, we sold 101,061 shares of our common stock under the ATM Program for net proceeds of approximately $9.6 million.
−Removed: In October 2023, our Operating Partnership entered into a loan and security agreement (the “Loan Agreement”) with a federally regulated commercial bank, as lender and as agent for lenders that become party thereto from time to time.
−Removed: The Loan Agreement matures on October 23, 2026, and provides $30.0 million in aggregate commitments for secured revolving loans (the “Revolving Credit Facility”).
−Removed: The Loan Agreement also allows the Operating Partnership, subject to the satisfaction of certain conditions, to request additional revolving loan commitments up to a specified amount.
+Added: In May 2024, we terminated the previously existing “at-the-market” offering program (the “Prior ATM Program”) and entered into new equity distribution agreements with four sales agents , pursuant to which we may offer and sell from time to time through an “at-the-market” offering program (the “ATM Program”), including on a forward basis, shares of our common stock and 9.00% Series A Cumulative Redeemable Preferred Stock, $0.001 par value per share (the “Series A Preferred Stock”) , up to an aggregate offering price of $500.0 million .
+Added: During the year ended December 31, 2024, we sold 123,224 shares of our common stock pursuant to the Prior ATM Program for net proceeds of $11.8 million.
+Added: During the year ended December 31, 2024, we sold 402,673 shares of our Series A Preferred Stock pursuant to the ATM Program for net proceeds of $9.6 million.
+Added: In October 2023, our Operating Partnership entered into a loan and security agreement (the “Loan Agreement”) with a federally regulated commercial bank, as lender and as agent for lenders that become party thereto from time to time, which matures on October 23, 2026.
+Added: The Loan Agreement provides $50.0 million in aggregate commitments for secured revolving loans (the “Revolving Credit Facility”), the availability of which is based on a borrowing base consisting of real properties owned by subsidiaries (the “Subsidiary Guarantors”) of the Operating Partnership that satisfy eligibility
+Added: criteria set forth in the Loan Agreement.
+Added: The obligations of the Operating Partnership under the Loan Agreement are guaranteed by the Company and the Subsidiary Guarantors, and are secured by (i) operating accounts of the Operating Partnership into which lease payments under the real property included in the borrowing base are paid, (ii) the equity interest of the Subsidiary Guarantors, (iii) the real estate included in the borrowing base and the leases and rents thereunder, and (iv) all personal property of the Subsidiary Guarantors.
+Added: Borrowings under the Revolving Credit Facility bear interest at a variable rate based on the greater of the prime rate and an applicable margin based on deposits with the participating bank(s) and a stipulated interest rate.
+Added: The Revolving Credit Facility is subject to an unused line of credit fee, calculated in accordance with the Loan Agreement.
The Loan Agreement is subject to certain liquidity and operating covenants and includes customary representations and warranties, affirmative and negative covenants and events of default.
−Removed: There were no amounts outstanding under the Loan Agreement as of December 31, 2023.
−Removed: During the year ended December 31, 2023, we issued 32,200 shares of our common stock upon exchange by holders of $2.0 million of outstanding principal amount of our 3.75% Exchangeable Senior Notes due 2024 (the “Exchangeable Senior Notes”).
−Removed: Subsequent to year-end, we issued 28,408 shares of our common stock and paid approximately $4.3 million in cash upon exchange by holders of the remaining approximately $4.3 million principal amount of
−Removed: Exchangeable Senior Notes and paid off the remaining $100,000 principal amount at maturity, in accordance with the terms of the indenture for the Exchangeable Senior Notes.
+Added: The Loan Agreement also allows the Operating Partnership, subject to the satisfaction of certain conditions, to request additional revolving loan commitments up to a specified amount.
+Added: In November 2024, our Operating Partnership entered into an amendment to the Loan Agreement, pursuant to which the aggregate commitments under the Revolving Credit Facility were increased from $50.0 million to $87.5 million.
+Added: There were no amounts outstanding under the Revolving Credit Facility as of December 31, 2024.
+Added: During the year ended December 31, 2024, we issued 28,408 shares of our common stock and paid $4.3 million in cash upon exchange by holders of $4.3 million principal amount of our 3.75% Exchangeable Senior Notes due 2024 (the “Exchangeable Senior Notes”) and paid off the remaining $0.1 million principal amount at maturity in February 2024, in accordance with the terms of the indenture for the Exchangeable Senior Notes.
Our Properties
−Removed: We have acquired and intend to continue to acquire specialized industrial real estate assets operated by state-licensed cannabis operators through sale-leaseback transactions and third-party purchases.
+Added: We have acquired and intend to continue to acquire specialized industrial real estate assets in the United States, operated by state-licensed cannabis operators, through sale-leaseback transactions and third-party purchases.
In sale-leaseback transactions, concurrently upon closing of the acquisition, we lease the properties back to the sellers under long-term, triple-net lease agreements.
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These improvements can include enhanced HVAC systems for climate and humidity control, high capacity electrical and plumbing systems, specialized lighting systems, and sophisticated building management, cultivation monitoring and security systems.
−Removed: Through our sale-leaseback strategy, we serve as a source of capital to these licensed regulated cannabis operators, allowing them to redeploy their sale proceeds into their core operations to grow their business and achieve higher returns.
+Added: Through our sale-leaseback strategy, we serve as a source of capital to our tenants, allowing them to redeploy their sale proceeds into their core operations to grow their business and achieve higher returns.
We may also purchase properties from third parties and fund the necessary improvements through a long-term lease with an identified tenant, which provides those tenants with increased cash flow to deploy in their operating businesses.
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Industrial/Retail (3)
−Removed: (1) Contractual rent collected includes base rent and property management fees, including amounts collected for one property and portions of two properties that did not satisfy the requirements for sale-leaseback accounting and therefore are primarily recognized as other revenue on our consolidated statements of income.
+Added: (1) Contractual rent collected includes base rent and property management fees, including amounts collected for one property and portions of two other properties that did not satisfy the requirements for sale-leaseback accounting and therefore are primarily recognized as other revenue on our consolidated statements of income, and amounts collected for two leases related to two properties that are classified as sale-type leases, which is
+Added: recognized as a deposit liability and included in other liabilities on our consolidated balance sheets.
Contractual rent collected excludes tenant reimbursements.
−Removed: (2) Number of properties and rentable square feet include one property acquired in January 2022 which did not satisfy the requirements for sale-leaseback accounting and therefore, the investment is recognized as a note receivable and is included in other assets, net on our consolidated balance sheet.
+Added: (2) Number of properties and rentable square feet include one property acquired in January 2022 which did not satisfy the requirements for sale-leaseback accounting and therefore, the investment is recognized as a note receivable and is included in other assets, net on our consolidated balance sheets.
(3) “Industrial” reflects facilities utilized or expected to be utilized for regulated cannabis cultivation, processing and/or distribution activities, which can consist of industrial and/or greenhouse space.
−Removed: Also includes three properties (one located in San Bernardino, California and two located in Palm Springs, California), where we are evaluating alternative non-cannabis uses for the properties, due in part to changes in the zoning that no longer allow for regulated cannabis cultivation and processing.
+Added: Also includes two properties (one located in San Bernardino, California and one located in Palm Springs, California), where we are evaluating alternative non-cannabis uses for the properties, due in part to changes in the zoning that no longer allow for regulated cannabis cultivation and processing.
As of December 31, 2024, the tenants at our leased properties are generally responsible for paying (or reimbursing us) for all structural repairs, maintenance expenses, insurance and real estate taxes related to the property during the term of the applicable lease.
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As of December 31, 2024, we owned 109 properties.
−Removed: Of these 108 properties, we include 103 properties in our operating portfolio, which were 95.8% leased as of December 31, 2023, with a weighted-average remaining lease term of approximately 14.6 years, and which are subject to contractual rental rate increases.
+Added: Of these 109 properties, we include 106 properties in our operating portfolio, which were 98.3% leased as of December 31, 2024, with a weighted-average remaining lease term of 13.7 years, and which are subject to contractual rental rate increases.
Along with our existing portfolio, we expect to continue to enter into additional similar transactions structured to provide recurring revenue with contractual escalations.
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● Regulated Cannabis Industry Growth Trends.
−Removed: Based on the strong historical and projected growth for the regulated cannabis industry, we expect to see significant spending by state-licensed cannabis operators on their existing and new state-licensed cannabis facilities, presenting an opportunity for us to be a key capital provider in their expansion initiatives.
+Added: Based on the strong historical and projected growth in sales for the regulated cannabis industry, we expect to see continued spending by state-licensed cannabis operators on their existing and new state-licensed cannabis facilities, presenting an opportunity for us to be a key capital provider in their expansion initiatives.
Our Business Objectives and Growth Strategies
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Our primary strategy to achieve our business objective is to acquire and own a portfolio of specialized industrial properties, including regulated cannabis facilities leased to tenants holding the requisite state licenses to operate in the regulated cannabis industry.
−Removed: This strategy includes the following components:
+Added: We may diversify our portfolio, however, by also investing in properties that are not related to the cannabis industry if they provide return characteristics consistent with our investment objective.
+Added: Our strategy includes primarily the following components:
● Owning Specialized Industrial Properties and Related Real Estate Assets for Income.
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● Providing Expansion Capital to Existing Tenants as an Additional Source of Income.
−Removed: We have provided expansion capital for many of our existing tenant operators as they expand operations in additional states and
−Removed: locations within a state, as well as capital for continued enhancements of production capacity at existing facilities that these operators lease from us, which correspond to adjustments in rent under the applicable leases and other provisions in certain cases.
+Added: We have provided expansion capital for many of our existing tenant operators as they expand operations in additional states and locations within a state, as well as capital for continued enhancements of production capacity at existing facilities that these operators lease from us, which correspond to adjustments in rent under the applicable leases and other provisions in certain cases.
We expect to continue to focus on executing on these expansion initiatives with our tenant operators.
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We are focused on maintaining a flexible capital structure for financing our growth initiatives.
−Removed: As of December 31, 2023, we had debt comprised of approximately $4.4 million principal amount of Exchangeable Senior Notes and $300.0 million principal amount of our 5.50% Senior Notes due 2026 (the “Notes due 2026”), representing a total quarterly fixed cash interest obligation of approximately $ 4.1 million and approximately 12 % of our total gross assets of approximately $2.
−Removed: 6 billion , with no debt maturing until May 2026 (holders exchanged the remaining principal amount of the Exchangeable Senior Notes for a combination of shares of common stock and cash subsequent to year-end).
+Added: As of December 31, 2024, our only debt comprised of $300.0 million principal amount of our 5.50% Senior Notes due May 2026 (the “Notes due 2026”), equating to low leverage of 11 % of our total gross assets of $2.
+Added: In order to capitalize on the appropriate acquisition opportunities, we may modify or expand our growth strategy from time to time.
+Added: For example, we may invest in any type of real estate investment that we believe to be in the best interests of our stockholders, including other real estate funds or REITs.
+Added: We may acquire additional properties through joint venture investments in the future or sell a percentage of our existing properties to a joint venture partner, which may result in the deconsolidation of properties we already own.
+Added: From time to time, we may invest in debt, mezzanine loans, preferred equity or other forms of joint venture equity.
Our Target Markets
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As of December 31, 2024, we owned 109 properties located in 19 states.
−Removed: According to the Marijuana Business Daily, as of November 13, 2023, 40 states and the District of Columbia have legalized cannabis for medical use, and 24 states and the District of Columbia have legalized cannabis for adult-use.
+Added: According to the Marijuana Business Daily, as of December 31, 2024, 41 states and the District of Columbia have legalized cannabis for medical use, and 24 states and the District of Columbia have legalized cannabis for adult-use.
Although these states have approved the regulated use of cannabis, the applicable state and local laws and regulations vary widely.
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As the industry continues to evolve, new ways to consume regulated cannabis products are being developed in order for patients to have the treatment needed for their condition and provide consumers safe, consistent and appealing options.
−Removed: In addition to smoking and vaporizing of dried leaves, cannabis can be incorporated into a variety of edibles, pills, spray products, transdermal patches and topicals, including salves, ointments, lotions and sprays with low or high levels of delta-9-tetrahydrocannabinol (“THC”), the principal psychoactive constituent of the cannabis plant.
+Added: In addition to smoking and vaporizing of dried leaves, cannabis can be incorporated into a variety of edibles, pills, spray products, transdermal patches, beverages, and topicals, including salves, ointments, lotions and sprays with low or high levels of delta-9-tetrahydrocannabinol (“THC”), the principal psychoactive constituent of the cannabis plant.
As with any nascent but growing industry, operational and business practices evolve and become more sophisticated over time.
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We believe that the growth of the regulated cannabis industry has been fueled, in part, by the rapidly changing public attitudes in the United States.
−Removed: In a Gallup poll released in November 2023, a record 70% of U.S.
−Removed: adults supported federal legalization of cannabis, with majority support found across demographic and political subgroups.
−Removed: As of November 13, 2023, 40 states, plus the District of Columbia, have passed laws allowing their citizens to use medical cannabis.
+Added: In a Pew Research Survey released in January 2024, 88% of Americans support legal adult-use and/or medical cannabis.
+Added: As of December 31, 2024, 41 states, plus the District of Columbia, have passed laws allowing their citizens to use medical cannabis.
The first state to permit the use of cannabis for medicinal purposes was California in 1996, upon adoption of the Compassionate Care Act.
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Several other states adopted medical-use cannabis laws in 1998 and 1999, and the remaining medical-use cannabis states adopted their laws on various dates through 2024.
−Removed: In addition, as of November 13, 2023, 24 states, plus the District of Columbia, have legalized cannabis for adult-use.
+Added: In addition, as of December 31, 2024, 24 states, plus the District of Columbia, have legalized cannabis for adult-use.
Following the approval of state-regulated cannabis, state programs must be developed and businesses must be licensed before commencing cannabis sales.
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restrict the ability of alternative health care providers to recommend medical cannabis for treatment;
−Removed: limit the medical conditions that are eligible for cannabis treatment;
+Added: limit the medical conditions that are eligible for cannabis
or require registration of doctors and/or patients, each of which can limit growth of the regulated cannabis industry in those states.
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States vary significantly in their market dynamics, driven by many factors, including, but not limited to, regulatory frameworks, enforcement policies with respect to illicit, unlicensed cannabis operations, taxation and licensing structures.
+Added: Ineffective enforcement policies with respect to illicit cannabis sales in a particular state may significantly limit the growth and profitability of operators in that state’s regulated cannabis market.
Unit Pricing for Regulated Cannabis Products
−Removed: Many states continue to experience significant declines in unit pricing for regulated cannabis products, with that decline more pronounced in certain states than in others, which compresses operating margins for operators.
−Removed: As a result, certain regulated cannabis operators have recently announced that they are consolidating operations or shuttering certain operations to reduce costs, which if prolonged, could have a material negative impact on operators’ demand for regulated cannabis facilities, including our existing tenants.
+Added: Many states have experienced declines in unit pricing for regulated cannabis products, with that decline more pronounced in certain states than in others, which compresses operating margins for operators.
+Added: As a result, certain regulated cannabis operators have consolidated operations or shuttered certain operations to reduce costs, which could have a negative impact on operators’ demand for regulated cannabis facilities, including our existing tenants.
Inflation and Supply Chain Constraints
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Labor shortages and global supply chain issues also continue to adversely impact costs and timing for completion of these development and redevelopment projects, which are resulting in cost overruns and delays in commencing operations on certain of our tenants’ projects.
−Removed: Reduced Capital Availability for Tenants
+Added: Capital Availability for Tenants
Recently, financial markets have been volatile, reflecting heightened geopolitical risks and material tightening of financial conditions since the U.S.
Federal Reserve began increasing interest rates in spring of 2022 and continued uncertainty regarding monetary policy.
−Removed: Driven in part by overall macroeconomic conditions, capital availability has significantly declined for regulated cannabis operators.
−Removed: According to Viridian Capital Advisors (“Viridian”), worldwide cannabis capital raises in 2023 constituted a multi-year low, with less than $2 billion in total capital raises, versus over $4.3 billion in 2022 and over $12 billion in 2021.
−Removed: Total equity and debt capital raising for public and private cannabis cultivation and retail companies in the United States decreased 74% from 2022 and were lower than any previous year since before 2018, with debt accounting for over 80% of all capital raised for cannabis cultivation operations.
−Removed: According to Viridian, as of December 31, 2023, cannabis stock prices (as measured by the MSOS ETF) had declined more than 87% since their February 2021 peak.
−Removed: Also according to Viridian, mergers and acquisitions activity in the North American regulated cannabis industry declined significantly in 2023 to $1.75 billion, down from $4.95 billion in 2022.
+Added: Driven in part by overall macroeconomic conditions, capital availability has declined for regulated cannabis operators over the last several years.
+Added: According to Viridian Capital Advisors (“Viridian”), worldwide cannabis capital raises in 2024 increased over 2023, with less than $2.3 billion in total capital raises, versus over $1.9 billion in 2023, $4.3 billion in 2022 and over $12.0 billion in 2021.
+Added: Also according to Viridian, mergers and acquisitions activity in the North American regulated cannabis industry declined in 2024 to $1.2 billion, down from $1.8 billion in 2023.
+Added: Capital raising activities by U.S.
+Added: REITs continued to increase in 2024 with $85 billion of capital raised compared to $62 billion in 2023.
+Added: According to the National Association of Real Estate Investment Trusts, Inc.
+Added: (“NAREIT”), U.S.
+Added: REIT 2024 capital raising was higher than 2022 and 2023, but remained lower than 2019-2021 levels.
Tenant Concentration
−Removed: As of December 31, 2023, all of our revenues were derived from 108 properties.
+Added: As of December 31, 2024, all of our rental revenues were derived from 109 properties.
The following table sets forth certain information regarding the top ten tenants in our property portfolio that represented the largest total invested and committed capital as of and for the year ended December 31, 2024 (dollars in thousands):
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Curaleaf Holdings, Inc.
−Removed: The Cannabist Company (f/k/a Columbia Care Inc.)
+Added: The Cannabist Company
Trulieve Cannabis Corp.
−Removed: Holistic Industries Inc.
Cresco Labs Inc.
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("4Front") (4)
+Added: Gold Flora, LLC ("Gold Flora")
SH Parent, Inc.
−Removed: ("Parallel") (5)
(1) Includes leases with affiliates of each entity, for which the entity has provided a corporate guaranty.
(2) Total invested and committed capital includes development and improvements allowance not funded as of December 31, 2024.
−Removed: (3) Contractual rent collected includes base rent and property management fees, including amounts collected for one property and a portion of one property that did not satisfy the requirements for sale-leaseback accounting and therefore are primarily recognized as other revenue on our consolidated statements of income.
+Added: (3) Contractual rent collected includes base rent and property management fees, including amounts collected for one property and portions of two other properties that did not satisfy the requirements for sale-leaseback accounting and therefore are primarily recognized as other revenue on our consolidated statements of income, and amounts collected for two leases related to two properties that are classified as sale-type leases, which is recognized as a deposit liability and included in other liabilities on our consolidated balance sheet.
Contractual rent collected excludes tenant reimbursements.
(4) Number of properties and total invested and committed capital include one property acquired in January 2022 which did not satisfy the requirements for sale-leaseback accounting and therefore, the investment is recognized as a note receivable and is included in other assets, net on our consolidated balance sheet.
−Removed: (5) Includes contractual rent collected from two properties previously leased to Parallel in Texas and Pennsylvania.
−Removed: Parallel defaulted on its obligations to pay rent at the two properties, and we regained possession of the Texas property in March 2023 and the Pennsylvania property in October 2023.
−Removed: See Note 11 “Commitments and Contingencies — Litigation” to our consolidated financial statements for more information.
Many of our tenants have limited histories of operations, and have not yet been profitable, or have been profitable only for a short period of time.
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As such, our tenant may conduct adult-use cannabis operations at the property it leases from us, which in turn could expose that tenant, us and our property to different and greater risks, including heightened risks of enforcement of federal laws.
−Removed: For example, Arizona, California, Colorado, Illinois, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Virginia and Washington permit licensed adult-use cannabis operations, and our leases with tenants in those states allow for adult-use cannabis operations to be conducted at the properties in compliance with state and local laws.
+Added: For example, Arizona, California, Colorado, Illinois, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Virginia and Washington permit licensed adult-use cannabis operations, and our leases with tenants in those states allow for adult-use cannabis operations to be conducted at the properties in compliance with state and local laws.
In July 2022, Kings Garden, Inc.
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(“Green Peak”) defaulted on its obligations to pay rent at one of our properties in Michigan.
−Removed: In March 2023, a receiver was appointed over substantially all of Green Peak’s assets, and we subsequently regained possession of one property that was under redevelopment as a regulated cannabis cultivation and processing facility and three retail properties in Michigan.
−Removed: We also expect to regain possession of the remaining regulated cannabis cultivation and processing facility still occupied by the receiver on March 1, 2024.
−Removed: See Note 11 “Commitments and Contingencies — Litigation” to our consolidated financial statements included in this report for more information regarding Kings Garden, Parallel and Green Peak.
+Added: During 2023, a receiver was appointed over substantially all of Green Peak’s assets and we regained possession of one property that was under redevelopment as a regulated cannabis cultivation and processing facility and three retail properties in Michigan.
+Added: In February 2024, we regained possession of the remaining regulated cannabis cultivation and processing facility that was leased to Green Peak.
+Added: At December 31, 2024, Green Peak leases three of our retail properties in Michigan.
In 2023, as previously reported in our periodic filings, we also executed limited rent deferrals for Holistic (at two properties in California and Michigan), Calyx Peak, Inc.
−Removed: (one property in Missouri), Temescal Wellness of Massachusetts, LLC (one property in Massachusetts) and 4Front (one property in Illinois) (see Note 6 “Investments in Real Estate” to our consolidated financial statements included in this report for more information).
−Removed: In January 2024, we further amended the 4Front Illinois lease to provide a temporary rent reduction (see Note 12 “Subsequent Events” to our consolidated financial statements included in this report for more information).
−Removed: See each of the discussions under Item 1A, “Risk Factors,” under the captions “Many of our existing tenants are, and we expect that many of our future tenants will be, companies with limited histories of operations and may be unable to pay rent with funds from operations or at all, which could adversely affect our cash available to make distributions to our stockholders or otherwise impair the value of our common stock,” and “Because we lease our properties to a limited number of tenants, and to the extent we depend on a limited number of tenants in the future, the inability of any single tenant to make its lease payments could adversely affect our business and our ability to make distributions to our stockholders.”
+Added: at one property in Missouri, Temescal Wellness of Massachusetts, LLC (“Temescal Wellness”) at one property in Massachusetts and 4Front at one property in Illinois.
+Added: In January 2024, we entered into lease amendments with subsidiaries of 4Front at the four properties we lease to them in Illinois, Massachusetts and Washington, extending the term of each lease.
+Added: We amended the Illinois lease to reduce base rent owing for the nine months ending September 30, 2024, defer the payback of the security deposit applicable to the lease (with the security deposit being subject to future pro-rata monthly payback), and increase the base rent for the remainder of the term commencing November 1, 2024.
+Added: In May 2024, Temescal Wellness defaulted on its obligations to pay rent at one of our properties in Massachusetts and we regained possession of that property in September 2024.
+Added: In December 2024, PharmaCann defaulted on its obligations to pay rent for the month of December under six of its eleven leases for properties located in Illinois, Massachusetts, Michigan, New York, Ohio and Pennsylvania.
+Added: December rent, including base rent, property management fees and estimated tax and insurance payments, totaled $4.3 million for these six properties.
+Added: In January 2025, we entered into lease amendments with PharmaCann with respect to nine of its leases for properties located in New York, Illinois, Pennsylvania, Ohio, and Colorado.
+Added: Those amendments reduced cumulative total base rent from $2.8 million per month to $2.6 million per month, with cash rent payments commencing February 1, 2025, and provided for pro-rata replenishment of security deposits over thirty-six months commencing February 1, 2027.
+Added: We also entered into amendments with PharmaCann with respect to two of its leases for cultivation properties in Michigan and Massachusetts.
+Added: Those amendments provide that monthly base rent of $1.3 million for these two properties will be abated in full effective February 1, 2025 and, if the properties have not been transitioned to new tenant(s) by August 1, 2025, we will regain full control over the properties.
+Added: We applied security deposits held by us pursuant to all of the PharmaCann leases for the payment in full of all defaulted rent for December 2024 and January 2025 and certain penalties.
+Added: If PharmaCann is not able to refinance its existing senior secured credit facility maturing June 30, 2025, all modifications to our leases with PharmaCann described above will immediately be null and void and the leases will revert to the terms in effect as of January 1, 2025.
+Added: See each of the discussions under Item 1A, “Risk Factors,” under the captions “Many of our existing tenants are, and we expect that many of our future tenants will be, companies with limited histories of operations and may be unable to pay rent with funds from operations or at all, which could adversely affect our cash available to make distributions to our stockholders or otherwise impair the value of our common stock,” “Continuing unfavorable market dynamics affecting the regulated cannabis industry could adversely affect our business, liquidity and financial condition, and overall results of operations, ” and “Because we lease our properties to a limited number of tenants, and to the extent we
+Added: depend on a limited number of tenants in the future, the inability of any single tenant to make its lease payments could adversely affect our business and our ability to make distributions to our stockholders.”
Geographic Concentration
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Massachusetts (4)
−Removed: (1) Includes approximately 1.4 million square feet under development/redevelopment.
+Added: (1) Includes 666,000 square feet under development/redevelopment.
(2) Total invested and committed capital includes development and improvements allowances not funded as of December 31, 2024.
−Removed: (3) Contractual rent collected includes base rent and property management fees, including amounts collected for one property and portions of two properties that did not satisfy the requirements for sale-leaseback accounting and therefore are primarily recognized as other revenue on our consolidated statements of income.
+Added: (3) Contractual rent collected includes base rent and property management fees, including amounts collected for one property and portions of two other properties that did not satisfy the requirements for sale-leaseback accounting and therefore are primarily recognized as other revenue on our consolidated statements of income, and amounts collected for two leases related to two properties that are classified as sale-type leases, which is recognized as a deposit liability and included in other liabilities on our consolidated balance sheet.
Contractual rent collected excludes tenant reimbursements.
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We expect to issue equity and debt securities at times when we believe that we can reinvest the proceeds of such an offering in accretive property acquisitions.
−Removed: We may also issue
−Removed: common stock to permanently finance properties that were previously financed by debt securities or draws from our Revolving Credit Facility.
+Added: We may also issue common stock to permanently finance properties that were previously financed by debt securities or draws from our Revolving Credit Facility.
However, we cannot assure you that we will have access to the capital markets at times and on terms that are acceptable to us.
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Our investment guidelines provide that our aggregate borrowings (secured and unsecured) will not exceed 50% of the cost of our tangible assets at the time of any new borrowing, subject to our board of directors’ discretion.
−Removed: We have filed an automatic shelf registration statement, which may permit us, from time-to-time, to offer and sell common stock, preferred stock, warrants, debt securities and other securities to the extent necessary or advisable to meet our liquidity needs.
+Added: We intend to file an automatic shelf registration statement, which may permit us, from time-to-time, to offer and sell common stock, preferred stock, warrants, debt securities and other securities to the extent necessary or advisable to meet our liquidity needs.
Capital raising activities by U.S.
−Removed: REITs continued to be subdued in 2023, after experiencing a significant decline in the latter part of 2022.
+Added: REITs continued to increase in 2024 with $85 billion of capital raised compared to $62 billion in 2023.
According to the National Association of Real Estate Investment Trusts, Inc.
(“NAREIT”), U.S.
−Removed: REIT 2023 capital raising was modestly higher than 2022, though 2022 represented the lowest level since 2009.
+Added: REIT 2024 capital raising was higher than 2022 and 2023, but remained lower than 2019-2021 levels.
Financial markets for REITs and the cannabis industry have been volatile in general for an extended period of time, which has also significantly reduced our access to capital.
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In addition, we monitor the payment history data for all of our tenants and, in some instances, we monitor our tenants by periodically conducting site visits and meeting with the tenants to discuss their operations.
−Removed: In many instances, we will generally not be entitled to financial results or other credit-related data from our tenants.
+Added: In many instances, we will generally not be entitled to
+Added: financial results or other credit-related data from our tenants.
See the section “Risks Related to Our Business” under Item 1A, “Risk Factors.”
The current market for properties that meet our investment objectives is limited.
−Removed: In addition, we believe finding properties that are appropriate for the specific use of allowing regulated cannabis operators may be limited as more
−Removed: competitors enter the market, and as regulated cannabis operators obtain greater access to alternative financing sources, including but not limited to equity and debt financing sources.
+Added: In addition, we believe finding properties that are appropriate for the specific use of allowing regulated cannabis operators may be limited as more competitors enter the market, and as regulated cannabis operators obtain greater access to alternative financing sources, including but not limited to equity and debt financing sources.
We face significant competition from a diverse mix of market participants, including but not limited to, other companies with similar business models, independent investors, hedge funds and other real estate investors, hard money lenders, and cannabis operators themselves, all of whom may compete with us in our efforts to acquire real estate zoned for regulated cannabis facilities.
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In addition, due to a number of factors, including but not limited to potential greater clarity of the laws and regulations governing regulated cannabis by state and federal governments, the number of entities and the amount of funds competing for suitable investment properties may increase substantially, resulting in increased demand and increased prices paid for these properties.
−Removed: Furthermore, changes in federal regulations pertaining to cannabis could also lead to increased access to U.S.
+Added: Furthermore, changes in federal regulations pertaining to cannabis as well as the rescheduling of cannabis from Schedule I to Schedule III under the Controlled Substances Act of 1970 (the “CSA”) could also lead to increased access to U.S.
capital markets for our competitors and for regulated cannabis operators (including but not limited to access to the Nasdaq Stock Market and/or the New York Stock Exchange).
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Cannabis (with the exception of hemp containing no more than 0.3% THC by dry weight) is illegal under U.S.
−Removed: federal government regulates drugs through the Controlled Substances Act of 1970 (the “CSA”) .
+Added: federal government regulates drugs through the CSA .
The CSA classifies marijuana (cannabis) as a Schedule I controlled substance, and as such, the manufacture, distribution and dispensing of marijuana is illegal under U.S.
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Under the Obama administration, the DOJ previously issued memoranda, including the so-called “Cole Memo” on August 29, 2013, providing internal guidance to federal prosecutors concerning enforcement of federal cannabis prohibitions under the CSA.
−Removed: This guidance essentially characterized as inefficient the use of federal law enforcement resources to prosecute those complying with state laws allowing the use, manufacture and distribution of cannabis where states have enacted laws legalizing cannabis in some form and have also implemented strong and effective regulatory and enforcement systems to control the cultivation, processing, distribution, sale and possession of cannabis, conduct in compliance with those laws and regulations was not a priority for the DOJ.
+Added: This guidance essentially characterized as inefficient the use of federal law enforcement resources to prosecute those complying with state laws allowing the use, manufacture and distribution of cannabis where
+Added: states have enacted laws legalizing cannabis in some form and have also implemented strong and effective regulatory and enforcement systems to control the cultivation, processing, distribution, sale and possession of cannabis, conduct in compliance with those laws and regulations was not a priority for the DOJ.
Instead, the Cole Memo directed U.S.
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Barr did not take a formal position on federal enforcement of laws relating to cannabis.
−Removed: Attorney General Merrick Garland, who was confirmed as U.S.
−Removed: Attorney General on March 10, 2021, has not provided a clear policy directive for the United States as it pertains to state-legal cannabis-related activities, and there can be no assurances that DOJ or other law enforcement authorities will not seek to vigorously enforce current U.S.
+Added: Merrick Garland served as U.S.
+Added: Attorney General from 2021 to January 20, 2025.
+Added: The DOJ under Mr.
+Added: Garland also did not take a formal position on federal enforcement of laws relating to cannabis.
+Added: Pamela Bondi was confirmed by the United States Senate as Attorney General of the United States on February 4, 2025.
+Added: During her tenure as Attorney General in the State of Florida, Bondi routinely opposed the softening of anti-cannabis laws, including opposition to ballot initiatives to broaden access to medical cannabis, but she also generally faithfully enforced state cannabis laws to maintain a well-regulated medical cannabis market.
+Added: Bondi has not provided a clear policy directive for the United States as it pertains to state-level cannabis-related activities, and there can be no assurances that DOJ or other law enforcement authorities will not seek to vigorously enforce current U.S.
federal laws.
+Added: It is generally expected that Bondi will closely follow the Trump Administration’s enforcement priorities.
In August 2023, the U.S.
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HHS based this recommendation on a Food and Drug Administration (“FDA”) review of cannabis’ classification pursuant to President Biden’s executive order in October 2022.
−Removed: The process for reclassification will require DEA approval and likely complex administrative rulemaking proceedings, and it remains unclear how long this process will take and the scope of any final decisions or rules.
+Added: On May 16, 2024, the DEA issued a Notice of Proposed Rulemaking, which proposed to schedule cannabis as a Schedule III substance under the CSA.
+Added: During the 60-day comment period that followed publication of the notice in the Federal Register, the majority of commenters favored either the proposed rescheduling or the complete removal of cannabis as a scheduled substance under the CSA.
+Added: The prospects for this reclassification effort under the Trump administration remain unclear.
+Added: A DEA administrative law judge canceled the rulemaking hearing on this issue that was set to begin on January 21, 2025 following a series of challenges by various parties, including parties seeking to remove the DEA from the proposed rulemaking process.
+Added: Since that postponement, President Trump has appointed Derek Maltz to lead the DEA.
+Added: Neither Trump nor Maltz has released any official policy directive related to rescheduling.
+Added: No further hearings have been scheduled beyond a status update slated for April 2025.
+Added: If successful, this reclassification effort could also allow cannabis companies to take certain tax deductions, including for depreciation or interest expense, in their federal taxes.
+Added: Currently, cannabis companies are barred from taking these deductions by Code Section 280E, which prevents businesses from deducting these expenses if they are engaged in the “trafficking” of Schedule I or Schedule II substances.
+Added: If cannabis were rescheduled to a Schedule III drug, our tenants may no longer be subject to Code Section 280E and could be able to deduct the same business expenses as other companies, decreasing their tax liability although many interpretive issues are likely to exist in connection with the change in treatment.
+Added: However, it remains unclear if reclassification will occur and if so how long the reclassification process will take or whether reclassification will result in cannabis companies no longer being subject to Code Section 280E.
One legislative safeguard for the medical cannabis industry, appended to federal appropriations legislation, remains in place.
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Under the terms of the Rohrabacher-Blumenauer rider, the federal government is prohibited from using congressionally appropriated funds to enforce federal cannabis laws against regulated medical cannabis actors operating in compliance with state and local law.
−Removed: In January 2024, a stopgap spending bill passed, extending the application of the Rohrabacher-Blumenauer Amendment until March 8, 2024.
+Added: On December 20, 2024, Congress passed a continuing resolution to extend government funding, extending the application of the Rohrabacher-Blumenauer Amendment until March 14, 2025.
There is no assurance that Congress will approve inclusion of a similar prohibition on DOJ spending in the appropriations bills for future years.
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As a result, applicable state and local laws and regulations vary widely, including, but not limited to, regulations governing the medical cannabis program (such as the type of cannabis products permitted under the program, qualifications and registration of health professionals that may recommend treatment with medical cannabis, and the types of medical conditions that qualify for medical cannabis), product testing, the level of enforcement by state and local authorities on non-licensed cannabis operators, state and local taxation of regulated cannabis products, local municipality bans on operations and operator licensing processes and renewals.
−Removed: As a result of these and other factors, if our tenants default under their leases, we may not be able to find new tenants that can successfully engage in the cultivation, processing or dispensing of regulated cannabis on the properties.
+Added: As a result of these and other factors, if our tenants default
+Added: under their leases, we may not be able to find new tenants that can successfully engage in the cultivation, processing or dispensing of regulated cannabis on the properties.
There is no guarantee that state laws legalizing and regulating the sale and use of cannabis will not be repealed, amended or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions.
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Despite these laws, the U.S.
−Removed: Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a memorandum on February 14, 2014 (the “FinCEN Memorandum”) outlining the pathways for financial institutions to bank state-sanctioned cannabis businesses in compliance with federal enforcement priorities.
−Removed: Concurrently with the FinCEN Memorandum, the DOJ issued supplemental guidance directing federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memo with respect to federal anti-money laundering, unlicensed money transmitter and Bank Secrecy Act offenses based on cannabis-related violations of the CSA.
−Removed: The FinCEN Memorandum sets forth extensive requirements for financial institutions to meet if they want to offer bank accounts to
−Removed: cannabis-related businesses and echoed the enforcement priorities of the Cole Memo.
+Added: Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a memorandum on February 14, 2014 (the “FinCEN Memorandum”) outlining the pathways for financial institutions to provide services to state-sanctioned cannabis businesses consistent with Bank Secrecy Act obligations and in alignment with federal enforcement priorities.
+Added: The FinCEN Memorandum sets forth extensive requirements for financial institutions to meet if they want to offer bank accounts to cannabis-related businesses and echoed the enforcement priorities of the Cole Memo.
Under these guidelines, financial institutions must submit a Suspicious Activity Report (“SAR”) in connection with all cannabis-related banking activities by any client of such financial institution, in accordance with federal anti-money laundering laws.
These cannabis-related SARs are divided into three categories – cannabis limited, cannabis priority, and cannabis terminated – based on the financial institution’s belief that the business in question follows state law, is operating outside of compliance with state law, or where the banking relationship has been terminated, respectively.
−Removed: This is a level of scrutiny that is far beyond what is expected of any normal banking relationship.
−Removed: As a result, many banks are hesitant to offer any banking services to cannabis-related businesses, including opening bank accounts.
−Removed: While we currently maintain banking relationships, our inability to maintain those accounts or the lack of access to bank accounts or other banking services in the future, would make it difficult for us to operate our business, increase our operating costs, and pose additional operational, logistical and security challenges.
−Removed: Similarly, if our proposed tenants are unable to access banking services, they will not be able to enter into triple-net leasing arrangements with us, as our leases will require rent payments to be made by check or wire transfer.
−Removed: The rescission of the Cole Memo has not yet affected the status of the FinCEN Memorandum, nor has the Department of the Treasury given any indication that it intends to rescind the FinCEN Memorandum itself.
+Added: Concurrently with the issuance of the FinCEN Memorandum, the DOJ issued supplemental guidance (the “2014 Cole Memorandum”) directing federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memo with respect to federal anti-money laundering, unlicensed money transmitter and Bank Secrecy Act offenses based on cannabis-related violations of the CSA.
+Added: The 2014 Cole Memorandum has been rescinded as of January 4, 2018, removing guidance that enforcement of applicable financial crimes against state-compliant actors was not a DOJ priority.
+Added: The rescission of the Cole Memo and the 2014 Cole Memorandum has not yet affected the status of the FinCEN Memorandum, nor has the Department of the Treasury given any indication that it intends to rescind the FinCEN Memorandum itself.
+Added: In subsequent guidance not directly related to cannabis-related businesses, FinCEN has indicated financial institutions should continue to rely on and follow the FinCEN Memorandum.
+Added: In December 2019, FinCEN and other federal banking regulators released an interagency statement on Providing Financial Services to Customers Engaged in Hemp-Related Businesses (“FinCEN Hemp Statement”).
+Added: In June 2020, FinCEN issued further guidance regarding Due Diligence Requirements under the Bank Secrecy Act for Hemp-Related Business Customers (“FinCEN Hemp Guidance”).
+Added: The FinCEN Hemp Statement and FinCEN Hemp Guidance provided financial institutions with anti-money laundering risk considerations for hemp-related businesses to ultimately enhance the availability of financial services for, and the financial transparency of, hemp-related businesses in compliance with federal law.
+Added: In the FinCEN Hemp
+Added: Statement and FinCEN Hemp Guidance, FinCEN directed banks, within the context of cannabis-related businesses, to continue relying on and following the guidance in the FinCEN Memorandum.
+Added: The FinCEN Hemp Statement and FinCEN Hemp Guidance do not replace or supersede the FinCEN Marijuana-Related Guidance.
Although the FinCEN Memorandum remains intact, it is unclear whether the current administration will continue to follow the guidelines of the FinCEN Memorandum.
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A change in the DOJ’s priorities could result in the DOJ’s prosecuting banks and financial institutions for crimes that were not previously prosecuted.
+Added: As a result, many banks are hesitant to offer any banking services to cannabis-related businesses, including opening bank accounts.
+Added: While we currently maintain banking relationships, our inability to maintain those accounts or the lack of access to bank accounts or other banking services in the future, would make it difficult for us to operate our business, increase our operating costs, and pose additional operational, logistical and security challenges.
+Added: Similarly, if our proposed tenants are unable to access banking services, they will not be able to enter into triple-net leasing arrangements with us, as our leases will require rent payments to be made by check or wire transfer.
In addition, for our tenants that are publicly traded companies, securities clearing firms may refuse to accept deposits of securities of those tenants, which may negatively impact the trading and valuations of such tenants and have a material adverse impact on our tenants’ ability to finance their operations and growth through the capital markets.
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Further, some regulations have strictly forbidden or significantly limited the use of certain chemicals and materials.
−Removed: Licenses, permits and approvals must be obtained from governmental authorities requiring such licenses, permits and approvals before chemicals and materials can be used at grow facilities.
+Added: Licenses, permits and approvals must be obtained from
+Added: governmental authorities requiring such licenses, permits and approvals before chemicals and materials can be used at grow facilities.
Reports on the usage of such chemicals and materials must be submitted pursuant to applicable laws, ordinances, and regulations and the terms of the specific licenses, permits and approvals.
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Changes to zoning, land use and other laws, ordinances and regulations may also prevent us from leasing a property for regulated cannabis cultivation, processing and/or dispensing in the future.
−Removed: For three of our properties (one located in San Bernardino, California and two located in Palm Springs, California), as of December 31, 2023, we were evaluating alternative non-cannabis uses for the properties, due in part to changes in the zoning of the property that no longer allow for regulated cannabis cultivation and processing.
+Added: For two of our properties (one located in San Bernardino, California and one located in Palm Springs, California), we continue to evaluate alternative non-cannabis uses for the properties, due in part to changes in the zoning of the properties that no longer allow for regulated cannabis cultivation and processing.
Our property management activities, to the extent we are required to engage in them due to lease defaults by tenants or vacancies on certain properties, will likely be subject to state real estate brokerage laws and regulations as determined by the particular real estate commission for each state.
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Our employees are our most valuable asset, and we believe we have an inclusive and engaging work environment, where each person is an integrated member of the team and is critical to our company’s continued success.
−Removed: We meet regularly as a full team, including throughout the COVID-19 pandemic, where each member is encouraged to actively participate in a wide range of topics relating to our company’s execution.
−Removed: We are also committed to the health and safety of our employees.
−Removed: During the COVID-19 pandemic, we implemented a number of safety protocols to protect our employees, including protocols regarding social distancing and working remotely.
+Added: We meet regularly as a full team where each member is encouraged to actively participate in a wide range of topics relating to our company’s execution.
We believe that attracting, developing, engaging and retaining our team is an absolute priority.
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● Many of our tenants are, and we expect that many of our future tenants will be, companies with limited histories of operations and may be unable to pay rent with funds from operations or at all.
+Added: ● Continuing unfavorable market dynamics affecting the regulated cannabis industry could adversely affect our business, liquidity and financial condition, and overall results of operations.
● The inability of any single tenant to make its lease payments could adversely affect our business.
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● Our real estate investments consist of primarily properties suitable for cultivation and production of cannabis, which may be difficult to sell or re-lease upon tenant defaults or lease terminations.
−Removed: ● We have a limited operating history and may not be able to continue to operate our business successfully.
● The assets we acquire may be subject to impairment charges.
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● The market price of our capital stock could be materially, adversely affected by our level of cash distributions.
+Added: ● We may enter into forward sale transactions that subject us to certain risks.
Risks Related to Our Taxation as a REIT
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● Legislative, regulatory or administrative changes could adversely affect us or our stockholders.
+Added: ● Any repurchase of our Notes due 2026 at a discount may result in cancellation of debt income.
General Risk Factors
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Therefore, the success of our investments will be materially dependent on the financial stability of these tenants.
−Removed: We rely on our management team to perform due diligence investigations of our potential tenants, related guarantors and their properties, operations and prospects, of which there is generally little or no publicly available operating and financial information.
+Added: We rely on our management team to perform due diligence investigations of our
+Added: potential tenants, related guarantors and their properties, operations and prospects, of which there is generally little or no publicly available operating and financial information.
We may not learn all of the material information we need to know regarding these businesses through our investigations, and these businesses are subject to numerous risks and uncertainties, including but not limited to regulatory risks and the rapidly evolving market dynamics of each state’s regulated cannabis program.
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In recent months, pricing for regulated cannabis products has dropped significantly, driven in part by the lack of effective enforcement on the illicit market, while input costs, including labor, supplies and construction materials, have increased significantly as a result of the broader higher inflationary environment.
−Removed: In our evaluation of our existing leases with tenants at our properties, we record associated revenue on a cash basis due to the uncertainty of collectability of lease payments from tenants due to the U.S.
−Removed: federal regulatory uncertainty surrounding the regulated cannabis industry and our tenants’ limited operating history (for more information, see Note 2 “Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements – Revenue Recognition” in our consolidated financial statements included in this report).
Some of our tenants may be subject to significant debt obligations and may rely on debt financing to make rent payments to us.
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Furthermore, we may be unable to monitor and evaluate tenant credit quality on an on-going basis.
−Removed: According to Viridian, worldwide cannabis capital raises in 2023 constituted a multi-year low, with less than $2 billion in total capital raises, versus over $4.3 billion in 2022 and over $12 billion in 2021.
−Removed: Total equity and debt capital raising for public and private cannabis cultivation and retail companies in the United States decreased 74% from 2022 and were lower than any previously year since before 2018, with debt accounting for over 80% of all capital raised for cannabis cultivation operations.
Any lease payment defaults by a tenant could adversely affect our cash flows and cause us to reduce the amount of distributions to stockholders.
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Furthermore, we will not operate any of the facilities that we purchase.
−Removed: In July 2022, Kings Garden defaulted on its obligations to pay rent at all of the properties it leases with us, and pursuant to a confidential, conditional settlement agreement executed on September 11, 2022 between us and Kings Garden, we terminated the leases for two properties that were in development or redevelopment as of December 31, 2023 and regained possession of those properties.
−Removed: In September 2023, we regained possession of the four remaining properties that Kings Garden had occupied, where Kings Garden paid stipulated rent during its period of occupancy until September 20, 2023.
−Removed: In November 2022, Parallel defaulted on its obligations to pay rent at one of our properties in Pennsylvania, and we regained possession of that property in October 2023.
−Removed: In February 2023, Parallel also defaulted on its obligations to pay rent at one of our properties in Texas, and we regained possession of that property in March 2023.
−Removed: In November 2022, Green Peak defaulted on its obligations to pay rent at one of our properties in Michigan.
−Removed: In March 2023, a receiver was appointed over substantially all of Green Peak’s assets, and we subsequently regained possession of one property that was under redevelopment as a regulated cannabis cultivation and processing facility and three retail properties in Michigan.
−Removed: We also expect to regain possession of the remaining regulated cannabis cultivation and processing facility still occupied by the receiver on March 1, 2024.
−Removed: See Note 11 “Commitments and Contingencies — Litigation” to our consolidated financial statements included in this report for more information regarding Kings Garden, Parallel and Green Peak.
+Added: Continuing unfavorable market dynamics affecting the regulated cannabis industry could adversely affect our business, liquidity and financial condition , and overall results of operations.
+Added: Market dynamics in the regulated cannabis industry have negatively impacted our tenants’ ability to make their lease payments on the properties they lease from us.
+Added: Regulated cannabis operators have experienced, among other things:
+Added: ● federal, state and local taxation and regulatory burdens;
+Added: ● declines in unit pricing for regulated cannabis products;
+Added: ● ineffective state and local law enforcement efforts to curtail the illicit production and sale of cannabis;
+Added: ● limited access to capital on acceptable terms or at all.
+Added: As a result of these unfavorable market dynamics, certain regulated cannabis operators, including some of our tenants, have consolidated operations or shuttered certain operations to reduce costs, which may lead to increased default rates on the leases for our properties.
+Added: In November 2022, Green Peak Industries, Inc.
+Added: (“Green Peak”) defaulted on its obligations to pay rent at one of our properties in Michigan.
+Added: During 2023, a receiver was appointed over substantially all of Green Peak’s assets and we regained possession of one property that was under redevelopment as a regulated cannabis cultivation and processing facility and three retail properties in Michigan.
+Added: In February 2024, we regained possession of the remaining regulated cannabis cultivation and processing facility that was leased to Green Peak.
+Added: In May 2024, Temescal Wellness defaulted on its obligations to pay rent at one of our properties in Massachusetts and we regained possession of that property in September 2024.
+Added: In December 2024, PharmaCann defaulted on its obligations to pay rent for the month of December under six leases for properties located in Illinois, Massachusetts, Michigan, New York, Ohio and Pennsylvania.
+Added: See “Business – Tenant Concentration” for a discussion of our recent tenant defaults.
+Added: Failure by any of our tenants to comply with the terms of its lease agreement with us could require us to seek another lessee for the applicable property.
+Added: We cannot assure you that we will be able to re-lease that property for the rent we currently receive, or at all, or that a lease termination would not result in our having to sell the property at a loss.
+Added: In addition, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing properties on which any of our tenants default on their lease obligations.
+Added: The result of any of the foregoing risks could materially and adversely affect our business, liquidity, financial condition and results of operations and our ability to make distributions to our stockholders.
Because we lease our properties to a limited number of tenants, and to the extent we depend on a limited number of tenants in the future, the inability of any single tenant to make its lease payments could adversely affect our business and our ability to make distributions to our stockholders.
As of December 31, 2024, we owned 109 properties.
−Removed: Five of our tenants, PharmaCann (at eleven of our properties), Ascend (at four of our properties), Green Thumb (at three of our properties), Parallel (at four of our properties, two of which we regained possession in 2023 as a result of Parallel’s defaults under those leases) and Curaleaf (at eight of our properties), represented approximately 15%, 10%, 8%, 7% and 7%, respectively, of our rental revenues (including tenant reimbursements) for the twelve months ended December 31, 2023.
+Added: As of such date, five of our tenants, PharmaCann (at eleven of our properties), Ascend (at four of our properties), Green Thumb (at three of our properties), Holistic (at five of our properties) and Curaleaf (at eight of our properties), represented 17%, 11%, 8%, 7% and 7%, respectively, of our rental revenues (including tenant reimbursements) for the twelve months ended December 31, 2024.
Lease payment defaults by any of our tenants or a significant decline in the value of any single property would materially adversely affect our business, financial position and results of operations, including our ability to make distributions to our stockholders.
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We may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing that property.
−Removed: Furthermore, we cannot assure you that
−Removed: we will be able to re-lease that property for the rent we currently receive, or at all, or that a lease termination would not result in our having to sell the property at a loss.
+Added: Furthermore, we cannot assure you that we will be able to re-lease that property for the rent we currently receive, or at all, or that a lease termination would not result in our having to sell the property at a loss.
The result of any of the foregoing risks could materially and adversely affect our business, financial condition and results of operations and our ability to make distributions to our stockholders.
−Removed: See Note 11 “Commitments and Contingencies — Litigation” to our consolidated financial statements for more information regarding Kings Garden, Parallel and Green Peak, which defaulted on their obligations under certain leases with us.
Because our real estate investments consist of primarily industrial and greenhouse properties suitable for cultivation and production of cannabis, our rental revenues are significantly influenced by demand for these facilities generally, and a decrease in such demand would likely have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio.
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To the extent that any of these conditions occur, they are likely to affect demand and market rents for cannabis cultivation and processing facilities, which could cause a decrease in our rental revenue.
−Removed: Any such decrease could impair our ability to make distributions to you.
−Removed: Other than with respect to three properties (one located in San Bernardino, California and two located in Palm Springs, California) where we are evaluating alternative non-cannabis uses as of December 31, 2023, we do not currently and do not expect in the future to invest in other real estate or businesses to hedge against the risk that industry trends might decrease the profitability of our facilities leased for cannabis operations.
+Added: Any such decrease could impair our ability to make distributions to investors.
+Added: Other than with respect to one property located in San Bernardino, California and one property located in Palm Springs, California, where we are evaluating alternative non-cannabis uses as of December 31, 2024, we do not currently have any material investments in other real estate or businesses to hedge against the risk that industry trends might decrease the profitability of our facilities leased for cannabis operations.
Our real estate investments consist of primarily industrial and greenhouse properties suitable for cultivation and production of cannabis, which may be difficult to sell or re-lease upon tenant defaults or lease terminations, either of which would adversely affect returns to stockholders.
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With these kinds of properties, if the current lease is terminated or not renewed, we may be required to make expenditures and rent concessions in order to lease the property to another tenant.
−Removed: In addition, in the event we are forced to sell or re-lease the property, we may have difficulty finding qualified purchasers who are willing to buy the property or tenants who are willing to lease the property on terms that we expect,
+Added: In addition, in the event we are forced to sell or re-lease the property, we may have difficulty finding qualified purchasers who are willing to buy the property or tenants who are willing to lease the property at our current rental rates, or at all.
As our properties are concentrated in the regulated cannabis industry, a shift in property preferences by regulated cannabis operators, including but not limited to changing preferences regarding location and types of improvements, could have a significant negative impact on the desirability of our properties to prospective tenants when we need to re-lease them, in addition to other challenges, such as obtaining the necessary state and local authorizations for a new tenant to commence operations at the property.
These and other limitations may affect our ability to sell or re-lease properties, which may adversely affect returns to our stockholders.
−Removed: Certain regulated cannabis operators have recently announced that they are consolidating operations or shuttering certain operations to reduce costs, which if prolonged, could have a material negative impact on operators’ demand for regulated cannabis facilities, including our existing tenants.
−Removed: See Note 11 “Commitments and Contingencies — Litigation” to our consolidated financial statements for more information regarding Kings Garden, Parallel and Green Peak, which defaulted on their obligations under certain leases with us.
−Removed: We have a limited operating history, and may not be able to continue to operate our business successfully or generate sufficient cash flow to sustain distributions to our stockholders.
−Removed: We completed our initial public offering and commenced real estate operations with the acquisition of our first property in December 2016, and have a limited operating history.
−Removed: We are subject to many of the business risks and uncertainties associated with any business enterprise with a limited operating history.
−Removed: Furthermore, our properties are concentrated in the regulated cannabis industry, an industry in its very early stages of development, and we cannot predict how tenant demand and competition for these properties will change over time.
−Removed: We cannot assure you that we will be able to operate our business successfully or profitably or find additional suitable investments.
−Removed: Our ability to provide attractive risk-adjusted returns to our stockholders over the long term is dependent on our ability both to generate sufficient cash flow to pay an attractive dividend and to achieve capital appreciation, and we cannot assure you we will do either.
−Removed: There can be no assurance that we will be able to continue to generate sufficient revenue from operations to pay our operating expenses and make distributions to stockholders.
−Removed: The results of our operations and the execution on our business plan depend on several factors, including the availability of additional opportunities for investment, the performance of our existing properties and tenants, the evolution of tenant demand for regulated cannabis facilities, competition, the evolution of alternative capital sources for potential tenants, the availability of adequate equity and debt financing, the federal and state regulatory environment relating to the regulated cannabis industry, conditions in the financial markets and economic conditions.
+Added: Certain regulated cannabis operators have consolidated operations or shuttered certain operations to reduce costs, which if prolonged, could have a material negative impact on operators’ demand for regulated cannabis facilities, including our existing tenants.
The assets we acquire may be subject to impairment charges.
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If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset which could have an adverse effect on our results of operations in the period in which the impairment charge is recorded.
−Removed: See Note 11 “Commitments and Contingencies — Litigation” to our consolidated financial statements for more information regarding Kings Garden, Parallel and Green Peak, which defaulted on their obligations under certain leases with us.
−Removed: While we have not determined that an impairment has occurred with respect to these properties, as we periodically evaluate these and other properties, we may be required to make an adjustment to the net carrying value of one or more of these properties in the future.
We face significant risks associated with the development and redevelopment of properties that we acquire.
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● weather-related and geological interference, including hurricanes, landslides, earthquakes, floods, drought, wildfires and other events, which may result in delays or increased costs.
−Removed: The realization of any of the risks above or other delays in development and redevelopment activities at a property may also materially adversely impact our tenant’s ability to commence, continue or expand its operations, which may result in that tenant defaulting on its rent obligations to us.
−Removed: As of December 31, 2023, we had properties consisting of an aggregate of approximately 1.4 million rentable square feet under development or redevelopment, and we had committed to fund improvements at our properties in the future totaling up to approximately $40.1 million.
+Added: The realization of any of the risks above or other delays in development and redevelopment activities at a property may also materially adversely impact our tenant’s ability to commence, continue or expand its operations, which may
+Added: result in that tenant defaulting on its rent obligations to us.
+Added: As of December 31, 2024, we had properties consisting of an aggregate of 666,000 rentable square feet under development or redevelopment, and we had committed to fund improvements at our properties in the future totaling up to $38.3 million.
For one of our properties located in San Bernardino, California, as of December 31, 2024, we are evaluating alternative non-cannabis uses for the property, due in part to changes in the zoning of the property that no longer allow for regulated cannabis cultivation and processing.
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We are currently subject to securities lawsuits and we may be subject to similar or other litigation in the future, which may divert management’s attention and have a material adverse effect on our business, financial condition and results of operations.
−Removed: A purported securities class action lawsuit has been filed against us and certain of our executive officers alleging that the Company made false or misleading statements regarding its business.
−Removed: According to the filed complaint, the p laintiff is seeking an undetermined amount of damages, interest, attorneys’ fees and costs and other relief on behalf of the putative classes of all persons who acquired shares of the Company’s common stock between August 7, 2020 and August 4, 2022.
+Added: Purported securities class action lawsuits have been filed against us and certain of our executive officers alleging that the Company made false or misleading statements regarding its business.
Derivative lawsuits also have been filed against us and certain of our officers and directors asserting putative derivative claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets against our directors and certain of our officers.
−Removed: According to the filed complaint, t he plaintiffs are seeking declaratory relief, direction to reform and improve corporate governance and internal procedures, and an undetermined amount of damages, restitution, interest, and attorneys’ fees and costs.
See Note 11 “Commitments and Contingencies” for a full description of these actions.
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During times when inflation is greater than increases in rent as provided for in our leases, rent increases may not keep up with the rate of inflation.
−Removed: Likewise, even though net leases reduce our exposure to rising property expenses due to inflation,
−Removed: substantial inflationary pressures and increased costs may have an adverse impact on our tenants if increases in their operating expenses exceed increases in their revenues, which may adversely affect our tenants’ ability to pay rent.
+Added: Likewise, even though net leases reduce our exposure to rising property expenses due to inflation, substantial inflationary pressures and increased costs may have an adverse impact on our tenants if increases in their operating expenses exceed increases in their revenues, which may adversely affect our tenants’ ability to pay rent.
Substantial inflation in the cost of construction materials and labor may also adversely impact our and our tenants’ ability to complete building projects on budget and on time, which may also materially adversely impact our tenants’ ability to commence operations of facilities and consequently our tenants’ ability to pay rent.
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Our growth will depend upon future acquisitions of regulated cannabis facilities, and we may be unable to consummate acquisitions on advantageous terms.
−Removed: Our growth strategy is focused on the acquisition of specialized industrial real estate assets on favorable terms as opportunities arise.
+Added: Our growth strategy is focused on primarily the acquisition of specialized industrial real estate assets on favorable terms as opportunities arise.
Our ability to acquire these real estate assets on favorable terms is subject to the following risks:
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● a complete or partial closure of, or other operational issues at, one or more of our properties resulting from government or tenant actions;
−Removed: ● the temporary inability of consumers and patients to purchase our tenant’s cannabis products due to a number of factors, including but limited to illness, dispensary closures or limitations on operations (including but not limited to shortened operating hours, social distancing requirements and mandated “curbside only” pickup), quarantine, financial hardship, and “stay at home” orders, could severely impact our tenants’ businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations;
+Added: ● the temporary inability of consumers and patients to purchase our tenant’s cannabis products due to a number of factors, including but limited to illness, dispensary closures or limitations on operations (including but not limited to shortened operating hours, social distancing requirements and mandated “curbside only” pickup), quarantine, financial hardship, and “stay at home” orders, could severely impact our tenants’ businesses,
+Added: financial condition and liquidity and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations;
● difficulty accessing equity and debt capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital necessary to fund business operations and our tenants’ ability to fund their business operations and meet their obligations to us;
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We rely on our tenants to renew or otherwise maintain the requisite state and local cannabis licenses and other authorizations on a continuous basis.
−Removed: If one or more of our tenants are unable to renew or otherwise maintain its licenses or other state and local authorizations necessary to continue its cannabis operations, such tenants may default on their lease payments to us.
+Added: If one or more of our tenants are unable to renew or otherwise maintain its licenses or other state and
+Added: local authorizations necessary to continue its cannabis operations, such tenants may default on their lease payments to us.
Any such noncompliance by our tenants of state and local laws, rules and regulations may also subject us, as the owner of such properties, to potential penalties, fines or other liabilities.
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In the event of a default by a tenant, we may also experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property as operators of cannabis cultivation and production facilities are generally subject to extensive state licensing requirements, including required state and local authorizations for a new tenant to take over operations at a facility.
−Removed: In July 2022, Kings Garden, a prior tenant of ours at six properties that we own in southern California, defaulted on
−Removed: its obligations to pay rent.
−Removed: As previously disclosed, for one property in San Bernardino, California, we are evaluating alternative non-cannabis uses for the property, due in part to changes in the zoning of the property that no longer allow for regulated cannabis cultivation and processing.
+Added: In July 2022, Kings Garden, a prior tenant of ours at six properties that we own in southern California, defaulted on its obligations to pay rent.
+Added: As previously disclosed, for two of our properties (one located in San Bernardino, California and one located in Palm Springs, California), we continue to evaluate alternative non-cannabis uses for the properties, due in part to changes in the zoning of the properties that no longer allow for regulated cannabis cultivation and processing.
In September 2023, we regained possession of the remaining four properties that Kings Garden previously occupied.
−Removed: Of those four properties, we are evaluating non-cannabis uses for two properties representing less than 1% of our invested capital at December 31, 2023, also due in part to changes in the zoning of the property that no longer allow for regulated cannabis cultivation and processing.
In November 2022, a subsidiary of Parallel defaulted on its obligations to pay rent at one of our properties in Pennsylvania, and we regained possession of the property in October 2023.
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The Texas regulated cannabis program is a restricted medical cannabis program with a limited number of operator licenses, and as a result, we may encounter longer delays and other challenges in development and finding a suitable tenant, versus in states with more licensed operators and a more open regulated cannabis program.
−Removed: See Note 11 “Commitments and Contingencies — Litigation” to our consolidated financial statements for more information regarding Kings Garden and Parallel.
We acquired our properties, and expect to acquire other properties, “as-is,” which increases the risk of an investment that requires us to remedy defects or costs without recourse to the prior owner.
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As of February 21, 2025, we owned properties in 19 states, and we expect that the properties that we acquire will be geographically concentrated in these states and other states that have established cannabis programs.
−Removed: See “Geographic Concentration” under Item 1, “Business” for a table of properties owned by us and organized by state as of December 31, 2023.
+Added: See “Geographic Concentration” under Item 1, “Business” for a table of properties owned by us and organized by state as of
+Added: December 31, 2024.
Circumstances and developments related to operations in these markets that could negatively affect our business, financial condition, liquidity and results of operations include, but are not limited to, the following factors:
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Because cannabis remains illegal under federal law, there is no assurance that federal bankruptcy courts will provide relief for parties who engage in cannabis-related businesses.
−Removed: Recent bankruptcy court rulings have denied bankruptcy relief for certain cannabis businesses on the basis that businesses cannot violate federal law and then claim the benefits of federal bankruptcy for such activity and on the basis that courts cannot ask a bankruptcy trustee to take possession of, and distribute cannabis assets, as such action would violate the CSA.
+Added: A number of recent bankruptcy court rulings have denied bankruptcy relief for certain cannabis businesses on the basis that businesses cannot violate federal law and then claim the benefits of federal bankruptcy for such activity and on the basis that courts cannot ask a bankruptcy trustee to take possession of, and distribute cannabis assets, as such action would violate the CSA.
Any inability of our tenants to seek bankruptcy protection may impact their ability to secure financing for their operations and prevent our tenants from utilizing the benefits of reorganization of their businesses under bankruptcy protection to operate in a financially sustainable way, thereby reducing the probability that such a tenant would be able to honor its lease obligations with us.
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We cannot give any assurance that other such conditions do not exist or may not arise in the future.
−Removed: The potential impacts of future climate change on our properties could adversely affect our ability to lease or sell such properties or to borrow using such properties as collateral.
+Added: The potential impacts of future
+Added: climate change on our properties could adversely affect our ability to lease or sell such properties or to borrow using such properties as collateral.
Liability for uninsured losses could adversely affect our financial condition.
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In June 2021, we executed a construction loan agreement with a developer, pursuant to which we agreed to make available up to $18.5 million for the development of a regulated cannabis cultivation and processing facility in California.
−Removed: In January 2023, we amended our construction loan agreement to provide up to an additional $4.5 million for the development as a result of costs incurred by the developer that were in excess of the original budget, making our total potential investment in the project $23.0 million.
+Added: In February 2023, we amended our construction loan agreement to provide up to an additional $4.5 million for the development as a result of costs incurred by the developer that were in excess of the original budget, making our
+Added: total potential investment in the project $23.0 million.
We may invest in other such loans in the future.
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As a result, federal prosecutors could, and still can, use their prosecutorial discretion to decide to prosecute actors compliant with their state laws.
−Removed: Although there have not been any identified prosecutions of state law compliant
−Removed: cannabis entities, there can be no assurance that the federal government will not enforce federal laws against the regulated cannabis industry generally, including our tenants and us.
−Removed: Current Attorney General Merrick Garland has not provided a clear policy directive for the United States as it pertains to state-legal cannabis-related activities, and there can be no assurance that DOJ or other law enforcement authorities will not seek to vigorously enforce existing laws.
+Added: Although there have not been any identified prosecutions of state law compliant cannabis entities, there can be no assurance that the federal government will not enforce federal laws against the regulated cannabis industry generally, including our tenants and us.
+Added: Pamela Bondi was confirmed by the United States Senate as Attorney General of the United States on February 4, 2025.
+Added: During her tenure as Attorney General in the State of Florida, Bondi routinely opposed the softening of anti-cannabis laws, including opposition to ballot initiatives to broaden access to medical cannabis, but she also generally faithfully enforced state cannabis laws to maintain a well-regulated medical cannabis market.
+Added: Bondi has not provided a clear policy directive for the United States as it pertains to state-level cannabis-related activities, and there can be no assurances that DOJ or other law enforcement authorities will not seek to vigorously enforce current U.S.
+Added: federal laws.
+Added: It is generally expected that Bondi will closely follow the Trump Administration’s enforcement priorities.
Congress previously enacted an omnibus spending bill that includes the Rohrabacher-Blumenauer Amendment prohibiting the DOJ (which includes the DEA) from using funds appropriated by that bill to prevent states from implementing their medical-use cannabis laws.
This provision will expire on March 8, 2024.
+Added: On December 20, 2024, Congress passed a continuing resolution to extend government funding, extending the application of the Rohrabacher-Blumenauer Amendment until March 14, 2025.
There can be no assurance that Congress will approve inclusion of a similar prohibition in future appropriations bills to prevent DOJ from using congressionally appropriated funds to enforce federal cannabis laws against regulated medical cannabis actors operating in compliance with state and local law.
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The penalties for violation of these laws include imprisonment, substantial fines and forfeiture.
−Removed: Prior to the DOJ’s rescission of the Cole Memo, supplemental guidance from the DOJ issued under the Obama administration directed federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memo when determining whether to charge institutions or individuals with any of the financial crimes described above based upon cannabis-related activity.
−Removed: This supplemental guidance was followed by the February 14, 2014 FinCEN Memorandum outlining the pathways for financial institutions to bank state-sanctioned cannabis businesses in compliance with federal enforcement priorities.
+Added: Prior to the DOJ’s rescission of the Cole Memo, supplemental guidance from the DOJ issued in the 2014 Cole Memorandum directed federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memo when determining whether to charge institutions or individuals with any of the financial crimes described above based upon cannabis-related activity.
+Added: This supplemental guidance was followed by the February 14, 2014 FinCEN Memorandum outlining the pathways for financial institutions to provide services to state-sanctioned cannabis businesses consistent with Bank Secrecy Act obligations and in alignment with federal enforcement priorities.
Under these guidelines, financial institutions must submit a SAR in connection with all cannabis-related banking activities by any client of such financial institution, in accordance with federal money laundering laws.
−Removed: These cannabis-related SARs are divided into three categories - cannabis limited, cannabis priority, and cannabis terminated - based on the financial institution’s belief that the business in question follows state law, is operating outside of compliance with state law, or where the banking relationship has been terminated, respectively.
+Added: These cannabis-related SARs are divided into three categories - cannabis limited, cannabis priority, and cannabis terminated - based on the financial institution’s belief that the business in question follows state law, is operating outside of compliance with state law, or where the banking
+Added: relationship has been terminated, respectively.
The FinCEN Memorandum states that in some circumstances, it is permissible for banks to provide services to cannabis-related businesses without risking prosecution for violation of federal money laundering laws.
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Federal prosecutors have significant discretion and no assurance can be given that the federal prosecutor in each judicial district where we purchase a property will not choose to strictly enforce the federal laws governing cannabis operations.
−Removed: Any change in the federal government’s enforcement posture with respect to state-licensed cannabis operations, including the enforcement postures of individual federal prosecutors in judicial districts where we purchase properties, would result in our inability to execute our business plan, and we would likely suffer significant losses with respect to our investment in cannabis facilities in the United States, which would adversely affect the trading price of our
+Added: Any change in the federal government’s enforcement posture with respect to state-licensed cannabis operations, including the enforcement postures of individual federal prosecutors in judicial districts where we purchase properties, would result in our inability to execute our business plan, and we would likely suffer significant losses with respect to our investment in cannabis facilities in the United States, which would adversely affect the trading price of our securities.
Furthermore, following any such change in the federal government’s enforcement position, we could be subject to criminal prosecution, which could lead to imprisonment and/or the imposition of penalties, fines, or forfeiture.
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Any one of these factors could slow or halt additional legislative authorization of cannabis, which could harm our business prospects.
−Removed: For example, we believe that California’s taxation of regulated cannabis at local and state governmental levels and ineffective enforcement policy with respect to illicit cannabis sales have significantly limited the growth and profitability of operators in that state.
+Added: For example, we believe that California’s taxation of regulated cannabis at local and state governmental levels and ineffective enforcement policy with respect to illicit cannabis sales have significantly limited the growth and profitability
+Added: of operators in that state.
According to Global Go Analytics, the illicit market for cannabis remains a much larger portion of overall sales in the state, and state and local authorities have assessed significant taxes on regulated cannabis products, both of which have had the impact of significantly limiting the growth and profitability for operators in the state’s regulated cannabis market.
+Added: This also extends beyond California, with reports coming from states like Oregon, Massachusetts, and New York that buyers are turning to the illicit cannabis market to avoid state sales taxes.
+Added: These states report difficulties in enforcement as well, allowing the illicit market to thrive, and limiting the growth and profitability for operators in the regulated markets of those states.
Recently, many states have also experienced significant declines in unit pricing for regulated cannabis products, with that decline more pronounced in certain states than in others.
−Removed: As a result, certain regulated cannabis operators have announced that they are consolidating operations or shuttering certain operations to reduce costs, which if prolonged, could have a material negative impact on operators’ demand for regulated cannabis facilities, including our existing tenants.
+Added: As a result, certain regulated cannabis operators have consolidated operations or shuttered certain operations to reduce costs, which if prolonged, could have a material negative impact on operators’ demand for regulated cannabis facilities, including our existing tenants.
New laws that are adverse to the business of our tenants may be enacted, and current favorable national, state or local laws or enforcement guidelines relating to cannabis operations may be modified or eliminated in the future.
We have acquired and are targeting for acquisition properties that are owned by state-licensed cannabis operators.
−Removed: Relevant state or local laws may be amended or repealed, or new laws may be enacted in the future to eliminate existing
−Removed: laws permitting cannabis operations.
+Added: Relevant state or local laws may be amended or repealed, or new laws may be enacted in the future to eliminate existing laws permitting cannabis operations.
If our tenants were forced to close their operations, we would need to replace those tenants with tenants who are not engaged in the cannabis industry, who most likely pay significantly lower rents.
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However, this guidance does not provide any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the DOJ, FinCEN or other federal regulators.
+Added: Further, prosecution of financial institutions of offenses under the Bank Secrecy Act based on transactions
+Added: involving cannabis proceeds does not require an underlying cannabis-related conviction under federal or state law.
Thus, most banks and other financial institutions in the United States do not appear to be comfortable providing banking services to cannabis-related businesses, or relying on this guidance, which can be amended or revoked at any time by the executive branch.
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Such property owners may also attempt to assert such a claim in federal court as a civil matter under the Racketeer Influenced and Corrupt Organizations Act.
−Removed: If a property owner were to assert such a claim against us, we may be required to devote significant resources and costs to defending ourselves against such a claim, and if a property owner were to be successful on such a claim, our tenants may be unable to continue to operate their business in its current form at the property, which could materially adversely impact the tenant’s business and the value of our property, our business and financial results and the trading price of our securities.
+Added: If a property owner were to assert such a claim against us, we may be required to devote significant
+Added: resources and costs to defending ourselves against such a claim, and if a property owner were to be successful on such a claim, our tenants may be unable to continue to operate their business in its current form at the property, which could materially adversely impact the tenant’s business and the value of our property, our business and financial results and the trading price of our securities.
Laws and regulations affecting the regulated cannabis industry are constantly changing, which could materially adversely affect our operations, and we cannot predict the impact that future regulations may have on us.
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In August 2023, HHS recommended to the DEA that cannabis be reclassified from a Schedule I drug to a Schedule III drug under the CSA.
−Removed: HHS based this recommendation on an FDA review of cannabis’ classification pursuant to
−Removed: President Biden’s executive order in October 2022.
−Removed: The process for reclassification will require DEA approval and likely complex administrative rulemaking proceedings, and it remains unclear how long this process will take and the scope of any final decisions or rules.
−Removed: Further, the impact of such decisions or rules, if any are promulgated, on existing state-regulated cannabis programs remains unclear, including but not limited to FDA and other federal regulatory agency involvement, the impact of such a decision on potential federal legislative reform such as proposals to de-schedule cannabis and provide greater access to capital markets for state-regulated cannabis operators, and the potential entry into the cannabis markets of large, well-capitalized companies as a result of any re-scheduling.
+Added: HHS based this recommendation on an FDA review of cannabis’ classification pursuant to President Biden’s executive order in October 2022.
+Added: On May 16, 2024, the DEA issued a Notice of Proposed Rulemaking, which proposed to schedule cannabis as a Schedule III substance under the CSA.
+Added: During the 60-day comment period that followed publication of the notice in the Federal Register, the majority of commenters favored either the proposed rescheduling or the complete removal of cannabis as a scheduled substance under the CSA.
+Added: The prospects for this reclassification effort under the Trump administration remain unclear.
+Added: A DEA administrative law judge canceled the rulemaking hearing on this issue that was set to begin on January 21, 2025, following a series of challenges by various parties, including parties seeking to remove the DEA from the proposed rulemaking process.
+Added: Since that postponement, President Trump has appointed Derek Maltz to lead the DEA.
+Added: Neither Trump nor Maltz has released any official policy directive related to rescheduling.
+Added: No further hearings have been scheduled beyond a status update slated for April, 2025.
+Added: The impact of such decisions or rules, if any are promulgated, on existing state-regulated cannabis programs remains unclear, including but not limited to FDA and other federal regulatory agency involvement, the impact of such a decision on potential federal legislative reform such as proposals to de-schedule cannabis and provide greater access to capital markets for state-regulated cannabis operators, and the potential entry into the cannabis markets of large, well-capitalized companies as a result of any re-scheduling.
Assets leased to cannabis businesses may be forfeited to the federal government.
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Therefore, there is a compelling argument that the federal bankruptcy courts cannot provide relief for parties who engage in the cannabis or cannabis related businesses.
−Removed: Recent bankruptcy rulings have denied bankruptcies for dispensaries upon the justification that businesses cannot violate federal law and then claim the benefits of federal bankruptcy for the same activity and upon the justification that courts cannot ask a bankruptcy trustee to take possession of, and distribute cannabis assets as such action would violate the CSA.
+Added: Recent bankruptcy rulings have denied bankruptcies for dispensaries upon the justification that businesses cannot violate federal law and then claim the benefits of federal bankruptcy for the same activity and upon the justification that courts cannot
+Added: ask a bankruptcy trustee to take possession of, and distribute cannabis assets as such action would violate the CSA.
Therefore, we may not be able to seek the protection of the bankruptcy courts and this could materially affect our business or our ability to obtain credit.
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The presence of hazardous substances on a property may materially and adversely affect our ability to sell the property and we may incur substantial remediation costs.
−Removed: In addition, although we may require in our leases that tenants operate in compliance with all applicable laws and indemnify us against any environmental liabilities arising from a tenant’s activities on the property, we could nonetheless be subject to liability by virtue of our ownership interest and we cannot
−Removed: be sure that our tenants would satisfy their indemnification obligations to us.
+Added: In addition, although we may require in our leases that tenants operate in compliance with all applicable laws and indemnify us against any environmental liabilities arising from a tenant’s activities on the property, we could nonetheless be subject to liability by virtue of our ownership interest and we cannot be sure that our tenants would satisfy their indemnification obligations to us.
Such environmental liability exposure associated with properties we acquire could harm our business, financial condition, liquidity and results of operations.
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Our access to capital will depend upon a number of factors over which we have little or no control, including general market conditions, restrictions imposed on potential investors and other capital markets participants due to our tenants’ operations in the regulated cannabis industry, and the market’s perception of our current and potential future earnings.
−Removed: If general economic instability or downturn leads to an inability to borrow at attractive rates or at all, our ability to obtain capital to finance the purchase of real estate assets could be negatively impacted.
+Added: If general economic instability or downturn leads to an inability to borrow at attractive rates or at all, our
+Added: ability to obtain capital to finance the purchase of real estate assets could be negatively impacted.
In addition, banks and other financial institutions may be reluctant to enter into lending transactions with us, particularly secured lending, because we intend to acquire properties used in the cultivation, production or dispensing of cannabis.
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In addition, securities clearing firms may refuse to accept deposits of our securities, which may negatively impact the trading of our securities and have a material adverse impact on our ability to obtain capital.
−Removed: In recent months, general financial conditions have deteriorated significantly, which has also significantly reduced our access to capital.
+Added: In recent years, general financial conditions have deteriorated significantly, which has also significantly reduced our access to capital.
If sustained, this would have a material adverse effect on our business, financial condition and results of operations , including our ability to continue to make acquisitions of new properties and fund draws for future improvements at existing properties.
Our Notes due 2026 and any future indebtedness reduce our cash available for distribution and may expose us to the risk of default.
−Removed: As of February 27, 2024, we had outstanding $300.0 million aggregate principal amount of our Notes due 2026.
−Removed: Payments of principal and interest on our Notes due 2026 and borrowings that we may incur in the future, including pursuant to the Revolving Credit Facility, may leave us with insufficient cash resources to operate our properties or to
−Removed: pay the distributions currently contemplated or necessary to satisfy the requirements for REIT qualification.
+Added: As of December 31, 2024, we had outstanding $300.0 million aggregate principal amount of our Notes due 2026.
+Added: Payments of principal and interest on our Notes due 2026 and borrowings that we may incur in the future, including pursuant to the Revolving Credit Facility, may leave us with insufficient cash resources to operate our properties or to pay the distributions currently contemplated or necessary to satisfy the requirements for REIT qualification.
Our level of debt and the limitations imposed on us by these debt agreements could have significant material and adverse consequences, including the following:
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Our senior management team has broad discretion over our investments, and our stockholders will have no opportunity to evaluate the terms of transactions or other economic or financial data concerning our investments that are not described in periodic filings with the SEC.
−Removed: We rely on the senior management team’s ability to execute acquisitions and dispositions of cannabis facilities, subject to the oversight and approval of our board of directors.
+Added: We rely on the senior management team’s ability to execute acquisitions and dispositions of properties, subject to the oversight and approval of our board of directors.
Our senior management team is authorized to pursue acquisitions and dispositions of real estate investments in accordance with very broad investment guidelines, subject to approval of our board of directors.
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These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by a Maryland corporation’s board of directors prior to the time that the interested stockholder becomes an interested stockholder.
−Removed: The “control share” provisions of the MGCL provide that, subject to certain exceptions, a holder of “control shares” of a Maryland corporation (defined as shares which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) has no voting rights with respect to such shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our personnel who are also our directors.
+Added: The “control share” provisions of the MGCL provide that, subject to certain exceptions, a holder of “control shares” of a Maryland corporation (defined as shares which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) has no voting rights with respect to such shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding
+Added: votes entitled to be cast by the acquirer of control shares, our officers and our personnel who are also our directors.
Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock.
7 unchanged sentences
Our charter permits our board of directors to authorize us to issue additional shares of our authorized but unissued common or preferred stock.
−Removed: In addition, our board of directors may, without stockholder approval, amend our charter to
−Removed: increase the aggregate number of our shares of stock or the number of shares of stock of any class or series that we have the authority to issue and classify or reclassify any unissued shares of common or preferred stock and set the terms of the classified or reclassified shares.
+Added: In addition, our board of directors may, without stockholder approval, amend our charter to increase the aggregate number of our shares of stock or the number of shares of stock of any class or series that we have the authority to issue and classify or reclassify any unissued shares of common or preferred stock and set the terms of the classified or reclassified shares.
As a result, our board of directors may establish a class or series of shares of common or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for shares of our common stock or otherwise be in the best interest of our stockholders.
9 unchanged sentences
Each of our Operating Partnership’s subsidiaries is or will be a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from such entities.
−Removed: In addition, because we are a holding company, your claims as stockholders will be structurally subordinated to all existing and future liabilities and obligations of our Operating Partnership and its subsidiaries.
+Added: In addition, because we are a holding company, your claims as stockholders will be structurally subordinated to all existing and future liabilities and
+Added: obligations of our Operating Partnership and its subsidiaries.
Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our Operating Partnership and its subsidiaries will be able to satisfy your claims as stockholders only after all of our and our Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.
7 unchanged sentences
If we issue limited partnership interests in our Operating Partnership in exchange for property, the value placed on such partnership interests may not accurately reflect their market value, which may dilute your interest in us.
−Removed: If we issue limited partnership interests in our Operating Partnership in exchange for property, the per unit value attributable to such interests will be determined based on negotiations with the property seller and, therefore, may not reflect the fair market value of such limited partnership interests if a public market for such limited partnership interests
+Added: If we issue limited partnership interests in our Operating Partnership in exchange for property, the per unit value attributable to such interests will be determined based on negotiations with the property seller and, therefore, may not reflect the fair market value of such limited partnership interests if a public market for such limited partnership interests existed.
If the value of such limited partnership interests is greater than the value of the related property, your interest in us may be diluted.
15 unchanged sentences
In order for us to qualify as a REIT under the Code, the relevant sections of our charter provide that, subject to certain exceptions, no person or entity may own, or be deemed to own, by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% (in value or number of shares, whichever is more restrictive) of the aggregate of our outstanding shares of stock or more than 9.8% (in value or number of shares, whichever is more restrictive) of our outstanding common stock or any class or series of our outstanding preferred stock, including our 9.00% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”).
−Removed: These ownership limits and other restrictions could have the effect of discouraging a takeover or other transaction in which
−Removed: holders of our common stock might receive a premium for their shares over the then prevailing market price or which holders might believe to be otherwise in their best interests.
+Added: These ownership limits and other restrictions could have the effect of discouraging a takeover or other transaction in which holders of our common stock might receive a premium for their shares over the then prevailing market price or which holders might believe to be otherwise in their best interests.
We plan to continue to operate our business so that we are not required to register as an investment company under the Investment Company Act.
32 unchanged sentences
Subject to applicable law, our board of directors, without stockholder approval, may authorize us to issue additional shares of our common stock or to raise capital through the issuance of preferred stock (including equity or debt securities convertible into preferred stock), options, warrants and other rights, on terms and for consideration as our board of directors in its sole discretion may determine.
−Removed: Any such issuance could result in dilution of the equity of our stockholders.
+Added: Any such issuance could result in dilution of the equity of our
+Added: stockholders.
Sales of substantial amounts of shares of our common stock in the public market, or the perception that such sales might occur, could adversely affect the market price of our common stock.
5 unchanged sentences
In addition, under certain circumstances, the issuance of additional preferred stock may delay, prevent, render more difficult or tend to discourage a merger, tender offer, or proxy contest, the assumption of control by a holder of a large block of our securities, or the removal of incumbent management.
−Removed: Furthermore, we filed an automatic shelf registration statement, which may permit us, from time to time, to offer and sell common stock, preferred stock, warrants and other securities to the extent necessary or advisable to meet our liquidity needs.
+Added: Furthermore, we intend to file an automatic shelf registration statement, which may permit us, from time to time, to offer and sell common stock, preferred stock, warrants and other securities to the extent necessary or advisable to meet our liquidity needs.
Additionally, from time to time we also may issue shares of our common stock or operating partnership units of our Operating Partnership in connection with property acquisitions.
1 unchanged sentence
Sales of substantial amounts of our common stock or operating partnership units of our Operating Partnership, or the perception that these sales could occur, may adversely affect the prevailing market price of our common stock or may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities.
−Removed: As of February 27, 2024, 28,205,423 shares of our common stock were issued and outstanding, and we had reserved an additional 683,342 shares of common stock for future issuance under our 2016 Omnibus Incentive Plan (the “2016 Plan”).
−Removed: In addition, as of February 27, 2024, we had approximately $490.0 million in shares of common stock available for future issuance under the ATM Program.
+Added: As of December 31, 2024, 28,331,833 shares of our common stock were issued and outstanding, and we had reserved an additional 457,654 shares of common stock for future issuance under our 2016 Omnibus Incentive Plan (the “2016 Plan”).
+Added: In addition, as of December 31, 2024, we had $490.0 million in shares of common stock and/or Series A Preferred Stock available for future issuance under the ATM Program.
The existence of operating partnership units, shares of Series A Preferred Stock, shares of our common stock reserved for issuance under our 2016 Plan and shares available for future issuance under the ATM Program may adversely affect the terms upon which we may be able to obtain additional capital through the sale of equity securities.
6 unchanged sentences
Our board of directors will determine future distributions based on a number of factors, including cash available for distribution, economic conditions, operating results, our financial condition, especially in relation to our anticipated future capital needs, then current expansion plans, the distribution requirements for REITs, and other factors our board deems relevant.
−Removed: In addition, we may borrow money, sell assets or use offering proceeds to make distributions to our stockholders, if we are unable to make distributions from cash flows from operations.
+Added: addition, we may borrow money, sell assets or use offering proceeds to make distributions to our stockholders, if we are unable to make distributions from cash flows from operations.
Our charter permits us to pay distributions from any source and, as a result, the amount of distributions paid at any time may not reflect the performance of our properties or as cash flow from operations.
9 unchanged sentences
Our failure to meet the market’s expectations with regard to future earnings and cash distributions likely would materially and adversely affect the market price of our common stock and Series A Preferred Stock.
+Added: We may enter into forward sale transactions that subject us to certain risks.
+Added: We may enter into forward sale agreements, including under our ATM Program, that subject us to certain risks.
+Added: The future issuance of any shares of common stock upon settlement of any forward sale agreement will result in dilution to our earnings per share, return on equity, and dividends per share.
+Added: The purchase of common stock in connection with the unwinding of the forward purchaser’s hedge position could cause our stock price to increase (or prevent a decrease) over such time, thereby increasing the amount of cash we would owe (or decreasing the amount of cash owed to us) upon a cash settlement.
+Added: In addition, pursuant to each forward sale agreement, the relevant forward purchaser will have the right to accelerate the settlement of the forward sale agreement in connection with certain specified events.
+Added: In such cases, we could be required to settle that particular forward sale agreement and issue common stock irrespective of our capital needs.
+Added: Under Section 1032 of the Code, generally, no gains and losses are recognized by a corporation in dealing in its own shares, including pursuant to a “securities futures contract” as defined in the Code.
+Added: However, because it is not clear whether a forward sale agreement qualifies as a “securities futures contract,” the U.S.
+Added: federal income tax treatment of any cash settlement payment is uncertain.
+Added: In the event that we recognize a significant gain from a forward sale agreement, we may not be able to satisfy the gross income requirements applicable to REITs under the Code, may not be able to rely upon certain relief provisions and could lose our REIT status under the Code.
+Added: Even if relief provisions apply, we would be subject to a tax based on the amount of non-qualifying income.
Risks Related to Our Taxation as a REIT
117 unchanged sentences
The effect of any technical corrections with respect to the TCJA could have an adverse effect on us or our stockholders.
+Added: Any repurchase of our Notes due 2026 at a discount may result in cancellation of debt income.
+Added: Any repurchase of our outstanding Notes due 2026 at a discount may result in us recognizing cancellation of debt (“COD”) income for U.S.
+Added: federal income tax purposes generally in an amount equal to the discount.
+Added: COD income must generally be included in our REIT taxable income.
+Added: While a REIT’s COD income is not taken into account in determining whether a REIT satisfies the tax requirements mandating that certain percentages of a REIT’s gross income be from specified sources and the tax rules also provide an exception from the distribution requirement for a REIT’s “excess noncash income” (including COD income), the amount of excess noncash income is determined by a formula and may be significantly less than the amount of the REIT’s actual noncash income (including COD income).
+Added: Moreover, even when a REIT’s distribution requirement is reduced by the exclusion of excess noncash income, the REIT is taxable at regular corporate income tax rates on its undistributed REIT taxable income and there may be other tax implications that could adversely affect our operations or financial condition.
General Risk Factors
10 unchanged sentences
The occurrence of cyber incidents or cyberattacks could disrupt our operations, result in the loss of confidential information and/or damage our business relationships and reputation.
−Removed: We rely on technology to run our business, and as such we are subject to risk from cyber incidents, including cyberattacks attempting to gain unauthorized access to our systems to disrupt operations, corrupt data or steal confidential information, and other electronic security breaches.
+Added: We rely on technology to run our business, and as such we are subject to risk from cyber incidents, including cyberattacks attempting to gain unauthorized access to our systems to disrupt operations, corrupt data or steal
+Added: confidential information, and other electronic security breaches.
While we have implemented measures to help mitigate these threats, such measures cannot guarantee that we will be successful in preventing a cyber incident.
5 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.