What changed in this filing

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Item 1. Business

2026-02-24 compared with 2025-02-21 · 513 added, 258 removed, 1111 unchanged (41% of the section changed)

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”).

We are an internally-managed REIT focused on the acquisition, ownership and management of specialized industrial properties in the United States.

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.

We have leased and expect to continue to lease our properties on a triple-net lease basis, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, real estate taxes and insurance.

We are an internally-managed REIT focused on the acquisition, ownership and management of specialized industrial and commercial properties in the United States.

Our properties are primarily leased to experienced, state-licensed operators for their regulated cannabis facilities.

We have acquired and expect to continue to acquire our cannabis properties through sale-leaseback transactions and third-party purchases.

These properties are generally leased, and we expect to continue leasing them on a triple-net lease basis, pursuant to which the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, real estate taxes and insurance.

Outside of the cannabis sector, our leases may include different lease structures that do not require tenants to assume all property-related expenses.

In addition to our cannabis-related real estate portfolio, we also have financial investments in the life science industry and intend to actively pursue acquisitions of properties within that sector as a key component of our growth strategy.

We may continue expanding our investment activities to include joint ventures, debt or mezzanine financing, preferred or joint venture equity interests, and interests in other real estate funds or REITs.

We were incorporated in Maryland on June 15, 2016.

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2025 Business Update

During 2024, we acquired two new properties and made additional investments into existing properties under development or redevelopment.

Real Estate Investments

During 2025, we acquired one new property and made additional investments into existing properties under development or redevelopment.

As of December 31, 2025, we owned 111 properties comprising an aggregate of 8.9 million rentable square feet (including 303,000 rentable square feet under development/redevelopment) in 19 states.

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We do not include in our operating portfolio the following properties (all of which were under development/redevelopment as of December 31, 2025 , and together are expected to comprise 255,000 rentable square feet upon completion of development/redevelopment):

● 63795 19 th Avenue in Palm Springs, California (pre-leased);

• Inland Center Drive in San Bernardino, California;

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For more information regarding our properties and tenants, see the sections entitled “— Tenant Concentration” and “— Geographic Concentration” below.

Property Sale

In May 2024, we sold a property in Los Angeles, California for $9.1 million (excluding closing costs) to a third-party buyer.

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.

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.

The transaction did not qualify for recognition as a completed sale since not all of the criteria were met.

Accordingly, we have not derecognized the assets transferred.

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.

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.

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.

As discussed below under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Impacting Our Operating Results—Conditions in Our Markets,” market dynamics in the regulated cannabis industry have been extremely challenging in recent years.

These challenges include federal, state and local taxation burdens;

ineffective enforcement policies with respect to the illicit cannabis market;

declines in unit pricing for regulated cannabis products;

limited access to capital;

and inflation and supply chain constraints.

As previously disclosed, these challenges have negatively impacted the ability of certain of our tenants to make their lease payments on the properties they lease from us.

In light of these industry conditions and their impact on our existing portfolio, we have expanded our growth strategy to include a broader range of real estate and real estate-related investments.

See the subsections below entitled “Life Science Investments—Investment in IQHQ—IQHQ Revolving Credit Facility Investment.”

Life Science Investments

Investment in IQHQ

As previously disclosed, on August 6, 2025, the Company through its Operating Partnership entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with IQHQ, Inc., a Maryland corporation (“IQHQ REIT”) and certain of IQHQ REIT’s affiliates.

The Securities Purchase Agreement, together with certain exhibits thereto, set forth the terms under which the Operating Partnership agreed to:

(i) purchase up to $170 million of 15.0% Series G Cumulative Redeemable Preferred Stock of IQHQ REIT (the “IQHQ Preferred Stock”) at a price of $1,000 per share, together with corresponding warrants to purchase common equity units of IQHQ Holdings, LP, a Delaware limited partnership and the parent entity of IQHQ REIT (“IQHQ Holdings”), subject to the satisfaction of certain funding milestones of the IQHQ Preferred Stock;

and (ii) provide a $100 million commitment to IQHQ, LP (“IQHQ OP”), the operating partnership of IQHQ REIT, as a member of a lender syndicate under an Amended and Restated Credit Agreement (the “IQHQ Credit Facility”) with an initial term of three years and which can be extended for an additional 12 months upon payment of an extension fee and satisfaction of certain conditions.

On September 30, 2025, our Operating Partnership assigned its rights and obligations under the Securities Purchase Agreement to IIP Life Science Investments LLC (“IIP Life Science”), a wholly owned subsidiary of the Operating Partnership.

Following the assignment, IIP Life Science completed the initial closing of the Company’s investment in preferred equity of IQHQ REIT, purchasing 5,000 shares of IQHQ Preferred Stock for $5.0 million.

On October 31, 2025, the Company purchased an additional 45,000 shares of IQHQ Preferred Stock for $45.0 million, resulting in a total investment of 50,000 shares with an aggregate purchase price of $50.0 million.

The IQHQ Preferred Stock accrues cumulative dividends comprised of (i) a 10.0% annual cash dividend and (ii) a 5.0% paid-in-kind (“PIK”) dividend, both calculated on the Base Amount (as defined in the Securities Purchase Agreement), with dividends payable quarterly in arrears.

The PIK dividend rate increases by 1.25% on each of the fourth and fifth anniversaries of issuance.

In the event of a failure by IQHQ REIT to make required redemptions or cash dividend payments, the PIK dividend rate increases by an additional 5.0% until the failure is cured, subject to a cap on the increase.

The IQHQ Preferred Stock ranks senior to IQHQ REIT’s common equity and any junior securities, pari passu with its Series E Preferred Stock and other parity securities, and junior to its Series A and Series D-1 Preferred Stock with respect to dividends and liquidation preferences.

The IQHQ Preferred Stock is not convertible and carries limited voting rights, except as required by law or with respect to charter amendments that are materially adverse to holder rights.

The IQHQ Preferred Stock may be redeemed by IQHQ REIT at any time at the greater of $1,560 per share or the then-current Base Amount and may also be subject to holder redemption upon a change of control or sale transaction.

The remaining balance of the Company’s committed investment in IQHQ Preferred Stock, which totaled $120.0 million as of December 31, 2025, is expected to be funded in multiple tranches commencing the second quarter of 2026 and continuing through the second quarter of 2027, subject to extension options exercisable by IQHQ REIT.

In connection with the initial closing, IIP Life Science also received a warrant (the “IQHQ Warrant”) to purchase common equity units of IQHQ Holdings.

The IQHQ Warrant is exercisable for a number of common equity units representing 1.5% of the fully diluted outstanding common equity of IQHQ Holdings (after giving effect to all previously issued warrants) as of the date of the initial closing.

IQHQ Revolving Credit Facility Investment

In connection with the initial closing under the Securities Purchase Agreement, on September 30, 2025, IIP Life Science became a lender under the IQHQ Credit Facility.

Pursuant to the terms of the facility, IIP Life Science committed to provide a $100.0 million loan to IQHQ OP, which was fully funded on that same date.

As a result of IIP Life Science’s participation, the aggregate amount funded under the IQHQ Credit Facility by all lender parties increased to $400.0 million.

The IQHQ Credit Facility bears interest at a fixed annual rate of 13.5%, consisting of 12.0% payable in cash and 1.5% PIK, with interest payable quarterly.

The IQHQ Credit Facility has an initial term of three years from the closing date, with a one-time extension option of up to 12 months, subject to the satisfaction of certain conditions and payment of a facility extension fee.

All obligations under the IQHQ Credit Facility are unconditionally guaranteed by IQHQ REIT and secured by a first priority pledge of IQHQ OP’s majority ownership interest in an entity that owns a development project near Fenway Park in Massachusetts, subordinated to certain construction financing.

IIP Life Science is subject to a rate reduction penalty of up to 3.0% in the event it fails to make required purchases of IQHQ Preferred Stock under the Securities Purchase Agreement.

The IQHQ Credit Facility includes customary representations, warranties, and covenants, as well as major decision rights requiring lender approval.

IQHQ OP is required to prepay loans with proceeds from certain asset or equity sales and may voluntarily prepay or reduce commitments subject to specified conditions.

Relationships with IQHQ REIT

Alan Gold, our Company’s co-founder and Executive Chairman, was the co-founder and served as Executive Chairman of IQHQ REIT from December 2018 until December 2024.

Gary Kreitzer, the Vice Chairman of our Company’s board of directors, served as Vice Chairman and a member of the compensation committee of IQHQ REIT from December 2018 until December 2024.

No other executive officer or director of our Company has held a position with IQHQ REIT or any of its affiliates, except that Paul Smithers, our Company’s Chief Executive Officer, was appointed to the board of directors of IQHQ REIT pursuant to the Securities Purchase Agreement.

Certain members of our Company’s board of directors own equity interests of IQHQ REIT and its affiliates.

No director of our Company individually owns, nor do our directors own collectively, more than 1.0% of the outstanding equity interests of IQHQ REIT or its affiliates.

Pursuant to the terms of the Securities Purchase Agreement, upon the initial closing, IIP Life Science obtained the right to appoint one voting member to IQHQ REIT’s board of directors, subject to certain ownership thresholds, and designated Paul Smithers, our company’s Chief Executive Officer, for this role.

IIP Life Science also entered into a Right of First Offer Letter (the “ROFO Letter”) with IQHQ REIT and its affiliates (collectively, the “IQHQ Parties”), granting our Company a contractual right of first offer on certain real estate asset sales of the IQHQ Parties, which we expect will support the execution of our strategy to acquire life science properties.

Pursuant to the ROFO Letter, if the IQHQ Parties intend to sell any real property or related ownership interests to an unaffiliated third party, they must first offer such interests to our Company on the same material terms, including price.

If we waive our ROFO rights, the IQHQ Parties may proceed with the sale, provided it is completed within 12 months and at no less than 90% of the price initially offered to our Company.

Otherwise, the right of first offer process must be reinitiated.

The ROFO Letter will terminate automatically upon the earliest to occur of:

(i) our Company transferring more than 50% of the IQHQ Preferred Stock acquired under the Securities Purchase Agreement;

(ii) a change of control of IQHQ REIT or certain of its affiliates;

or (iii) our Company defaulting on any funding obligation under the Securities Purchase Agreement or the IQHQ Credit Facility

Property Sales

In April 2025, we sold a property in Michigan for $9.0 million (excluding transaction costs) and, in connection with the transaction, provided a secured loan to the buyer in the principal amount of $8.5 million.

The loan matures on April 24, 2028, with one twelve-month extension option subject to the payment of an extension fee, and is interest only with payments due monthly in advance.

The transaction did not qualify for recognition as a completed sale under GAAP because not all required criteria were met.

Accordingly, we have not derecognized the property transferred and the land and building and improvements with gross carrying values of $0.4 million and $9.6 million, respectively, and accumulated depreciation of $2.1 million as of December 31, 2025, remain on our consolidated balance sheet, and the buildings and improvements continue to be depreciated.

All consideration received to date, as well as any future payments, from the buyer are recorded as a deposit liability and will be included in other liabilities on our consolidated balance sheet until the

criteria for sale recognition are satisfied.

As of December 31, 2025, we had received $1.6 million related to the transaction, consisting of a loan origination fee and interest.

In June 2025, we sold a property in Palm Springs, California.

Net proceeds from the sale were $1.8 million and no gain or loss was recognized on the sale as the property was impaired and recognized at fair value less selling costs.

In December 2025, we sold a property in Mancos, Colorado.

Net proceeds from the sale were $0.5 million and we recognized a loss on sale of real estate of $0.3 million.

Financial Results

Years Ended December 31,

Years Ended December 31, Percentage

(dollars in thousands, except per share data)

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Net income attributable to common stockholders per share – diluted $ 3.93 $ 5.52 (29) %

AFFO per share – diluted (1)

AFFO attributable to common stockholders (1)

$ 205,412 $ 256,144 (20) %

AFFO attributable to common stockholders per share – diluted (1)

$ 7.24 $ 8.98 (19) %

Dividends per share of common stock declared $ 7.60 $ 7.52 1 %

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(1) For a definition and discussion of adjusted funds from operations (“AFFO”) and a reconciliation of AFFO to net income attributable to common stockholders, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Capital Activities

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 .

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.

In May 2024, we entered into 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 .

During the year ended December 31, 2025, we sold 1,016,852 shares of our Series A Preferred Stock pursuant to the ATM Program for net proceeds of $24.1 million.

No shares of our common stock were sold pursuant to the ATM program during the year ended December 31, 2025.

Share Repurchase Program

In March 2025, our board of directors authorized a share repurchase program of up to $100.0 million of the Company’s common stock.

The repurchase program expires on March 17, 2026, and may be extended, suspended, modified or discontinued at any time at the Company’s discretion.

During the year ended December 31, 2025, we repurchased and retired 371,538 shares of common stock for $20.1 million.

Revolving Credit Facility

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.

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

criteria set forth in the Loan Agreement.

The Loan Agreement initially provided $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 criteria set forth in the Loan Agreement.

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.

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.

2024, our Operating Partnership entered into an amendment to the Loan Agreement, pursuant to which the aggregate commitments under the Revolving Credit Facility was increased from $50.0 million to $87.5 million.

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.

At December 31, 2025, the interest rate was 9.0%.

The Revolving Credit Facility is subject to an unused line of credit fee, calculated in accordance with the Loan Agreement.

At December 31, 2025, there were $27.5 million of borrowings outstanding under the Revolving Credit Facility.

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.

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.

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.

There were no amounts outstanding under the Revolving Credit Facility as of December 31, 2024.

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.

IIP Life Science Credit Facility

In October 2025, our Operating Partnership and IIP Life Science entered into a loan agreement with a federally regulated commercial bank, as agent for the lenders that become party thereto from time to time (the “IIP Life Science Credit Facility”).

Under the IIP Life Science Credit Facility, our Operating Partnership has a revolving line of credit available up to $100.0 million until the maturity date on October 3, 2028.

The IIP Life Science Credit Facility includes an accordion feature under which the revolving line of credit may be increased up to an aggregate of $135.0 million, under certain conditions, including obtaining additional lender commitments.

The availability of credit at any given time under the IIP Life Science Credit Facility is subject to, among other things, the amount of collateral available and a borrowing base formula based upon the value of eligible investments in certain securities and an eligible loan receivable.

All obligations under the IIP Life Science Credit Facility are secured by substantial assets of the loan parties, including the Company’s investment through IIP Life Science in IQHQ Preferred Stock, the IQHQ Warrant, and the IQHQ Credit Facility.

Borrowings under the IIP Life Science Credit Facility bear interest on the outstanding daily balance at a rate of interest per annum equal to the greater of (i) the one-month Secured Overnight Financing Rate ("SOFR"), as administered by CME Group Benchmark Administration, plus 2.0% and (ii) 6.1%.

At December 31, 2025, the interest rate was 6.1% and there were $75.0 million of borrowings outstanding under the IIP Life Science Credit Facility.

The IIP Life Science Credit Facility contains a liquidity covenant and a debt service coverage ratio covenant, which requires that the ratio of the Company’s consolidated EBITDA to debt service costs not be less than 2.0 to 1.0, measured as of the end of each fiscal quarter.

Management believes that it was in compliance with those covenants as of December 31, 2025.

Our Properties

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The following table sets forth certain information regarding our property portfolio by property type for the year ended and as of December 31, 2025 (dollars in thousands):

Rentable Square Feet

Contractual Rent

Rentable Square Feet Contractual Rent

Collected for

Development or

the Year Ended

Property Type

Redevelopment

December 31, 2025 (1)

Property Type Number of

Properties Operating Under

Development or

Redevelopment

Industrial (2)

68 7,841,000 240,000 $ 220,590 90 %

Retail 33 152,000 — 6,643 3

Industrial/Retail 10 572,000 63,000 16,510 7

(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

recognized as a deposit liability and included in other liabilities on our consolidated balance sheets.

Contractual rent collected excludes tenant reimbursements.

Total 111 8,565,000 303,000 $ 243,743 100 %

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(1) Contractual rent collected includes base rent and property management fees and excludes tenant reimbursements.

(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.

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, 2025, 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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• Experienced Management Team.

Alan Gold, our executive chairman, and other members of our senior management team have substantial experience in all aspects of the real estate industry, including acquisitions, dispositions, construction, development, management, finance and capital markets.

Alan Gold, our executive chairman, and other members of our senior management team have substantial experience operating within highly regulated, specialized industries, including the legal cannabis and life science sectors.

In addition to their broad real estate experience across acquisitions, dispositions, construction, development, management, finance and capital markets, our senior leadership has a demonstrated track record of identifying and executing on opportunities in industries that require specialized facilities and regulatory sophistication.

In particular, in August 2004, Mr.

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• Regulated Cannabis Industry Growth Trends.

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.

Based on the strong historical and, according to BDSA (a leading market intelligence company for the legal cannabis industry), 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

Our principal business objective is to maximize stockholder returns through a combination of (1) distributions to our stockholders, and (2) sustainable long-term growth in cash flows from increased rents, which we hope to pass on to stockholders in the form of increased distributions.

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.

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.

Our principal business objective is to maximize stockholder returns through a combination of regular distributions to our stockholders and sustainable long-term growth in cash flows driven by increased rents, income from financial investments and disciplined portfolio expansion.

We seek to achieve this objective by acquiring, owning, and actively managing a portfolio of specialized industrial and commercial properties, with a core focus on regulated cannabis facilities leased to experienced tenants holding the requisite state licenses to operate in the regulated cannabis industry, along with our financial investments in the life science industry.

While regulated cannabis properties remain our primary investment focus, we may diversify our portfolio by investing in life science facilities and other real estate or real estate-related assets that exhibit return and risk characteristics consistent with our investment objectives.

Our strategy includes primarily the following components:

• Owning Specialized Industrial Properties and Related Real Estate Assets for Income.

We primarily acquire regulated cannabis facilities from licensed operators who will continue their cultivation, processing and/or dispensing operations after our acquisition of the property.

We expect to hold acquired properties for investment, with the goal of generating stable and increasing rental income from leasing these properties to licensed operators.

We primarily acquire specialized industrial properties, including regulated cannabis facilities from licensed operators who will continue their cultivation, processing and/or dispensing operations after our acquisition of the property.

We expect to hold acquired properties for investment, with the objective of generating stable and increasing rental income from leasing these properties to licensed operators.

• Expanding as Additional States Enact Regulated Cannabis Programs.

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We are focused on maintaining a flexible capital structure for financing our growth initiatives.

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.

In order to capitalize on the appropriate acquisition opportunities, we may modify or expand our growth strategy from time to time.

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.

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.

As of December 31, 2025, our debt is comprised of $291.2 million principal amount of our 5.50% Senior Notes due May 2026 (the “Notes due 2026”), $27.5 million outstanding on the Revolving Credit Facility, and $75.0 million outstanding on the Life Science Credit Facility, equating to leverage of 14.5% of our total gross assets of $2.7 billion.

In order to capitalize on the appropriate acquisition and investment opportunities, including opportunities in the life science industry, we may modify or expand our growth strategy from time to time.

In addition to our existing investment programs, we may pursue direct acquisitions or development of specialized real estate assets, make senior secured, mezzanine or preferred equity investments, acquire interests in or co-invest alongside real estate-focused funds or REITs, or enter into asset-level joint ventures.

We also may sell minority interests in existing assets to strategic partners where doing so advances our capital allocation objectives.

From time to time, we may invest in debt, mezzanine loans, preferred equity or other forms of joint venture equity.

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take limited enforcement actions against non-licensed cannabis operators;

restrict the method by which cannabis can be consumed;

the method by which cannabis can be consumed;

restrict the ability of alternative health care providers to recommend medical cannabis for treatment;

limit the medical conditions that are eligible for cannabis

limit the medical conditions that are eligible for cannabis treatment;

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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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.

In recent years, financial markets have been volatile, reflecting heightened geopolitical risks and continued uncertainty regarding monetary policy.

Driven in part by overall macroeconomic conditions, capital availability has declined for regulated cannabis operators over the last several years.

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.

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.

According to Viridian Capital Advisors (“Viridian”), worldwide cannabis capital raises in 2025 decreased modestly to $2.1 billion, compared to $2.3 billion in 2024, but remain materially below levels observed in prior years, such as $4.3 billion in 2022.

In contrast, Viridian reports that mergers and acquisitions activity in the North American regulated cannabis industry increased to approximately $2.1 billion in 2025, up from $1.2 billion in 2024.

Capital raising activities by U.S.

REITs continued to increase in 2024 with $85 billion of capital raised compared to $62 billion in 2023.

REITs decreased in 2025 with $80 billion of capital raised compared to $85 billion in 2024.

According to the National Association of Real Estate Investment Trusts, Inc.

(“NAREIT”), U.S.

REIT 2024 capital raising was higher than 2022 and 2023, but remained lower than 2019-2021 levels.

REIT 2025 capital raising was higher than 2022 and 2023, but remained lower than 2019-2021 and 2024 levels.

Tenant Concentration

As of December 31, 2025, all of our rental revenues were derived from 111 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):

Properties Total Invested

and Committed

Contractual Rent

Total Invested

Collected for

and Committed

the Year Ended

December 31, 2025 (3)

Ascend Wellness Holdings, Inc.

("Ascend") 4 $ 214,050 $ 31,137 13 %

PharmaCann Inc.

("PharmaCann") 7 185,058 7,395 4

Ascend Wellness Holdings, Inc.

Green Thumb Industries, Inc.

("Green Thumb")

Curaleaf Holdings, Inc.

Green Thumb Industries, Inc ("Green Thumb") 3 176,800 22,589 10

Curaleaf Holdings, Inc ("Curaleaf") 8 175,047 20,719 9

The Cannabist Company 21 147,834 18,341 8

Trulieve Cannabis Corp.

Trulieve, Inc.

("Trulieve") 6 146,503 19,704 9

Cresco Labs Inc.

("Cresco") 5 120,845 16,897 7

4Front Ventures Corp.

("4Front") (4)

Gold Flora, LLC ("Gold Flora")

4 120,684 1,750 1

SH Parent, Inc.

("Parallel") 2 107,900 16,136 7

Holistic Industries, Inc ("Holistic") 4 107,650 17,050 7

Total 64 $ 1,502,371 $ 171,718 75 %

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(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, 2025.

(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.

(3) Contractual rent collected includes base rent and property management fees, including amounts collected for one property and a portion of one other 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.

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.

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.

For some or all of 2025, we expect that many of our tenants will continue to incur losses as their expenses increase in connection with the expansion of their operations and the current operating environment, and that they have made and will continue to make rent payments to us from proceeds from the sale of the applicable property or cash on hand, and not funds from operations.

Our tenants primarily operate in the regulated cannabis industry and are subject to a combination of macroeconomic, industry-specific, and regulatory risks, including federal, state, and local tax burdens;

competition from illicit operators;

declining unit pricing for regulated cannabis products;

constrained access to capital;

inflationary pressures;

elevated interest rates;

significant debt maturities;

labor and supply chain constraints;

evolving trade policies;

and broader U.S.

consumer financial conditions.

Market dynamics and regulatory frameworks vary by state and may materially affect tenant profitability and demand for regulated cannabis facilities.

These conditions have already adversely affected certain tenants’ ability to meet their lease obligations and have had a material adverse effect on our financial condition, results of operations, and cash flows.

If these challenges persist or worsen, additional tenant defaults may occur, and we may be unable to re-lease affected properties on favorable terms, or at all.

Many of our tenants have limited operating histories and lack sustained profitability.

For some or all of 2026, we expect that many tenants will continue to incur losses and may rely on cash on hand or asset sale proceeds, rather than operating cash flows, to fund rent payments.

If tenants are unable to improve operating performance or access additional liquidity, their ability to satisfy lease obligations may be materially adversely affected.

Furthermore, each of our leases does not prohibit the tenant from conducting adult-use cannabis operations at the applicable property, provided such operations are in compliance with applicable state and local laws.

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.

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.

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.

(“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.

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.

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.

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.

In November 2022, Green Peak Industries, Inc.

(“Green Peak”) defaulted on its obligations to pay rent at one of our properties in Michigan.

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.

In February 2024, we regained possession of the remaining regulated cannabis cultivation and processing facility that was leased to Green Peak.

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.

at one property in Missouri, Temescal Wellness of Massachusetts, LLC (“Temescal Wellness”) at one property in Massachusetts and 4Front at one property in Illinois.

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.

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.

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.

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.

December rent, including base rent, property management fees and estimated tax and insurance payments, totaled $4.3 million for these six properties.

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.

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.

We also entered into amendments with PharmaCann with respect to two of its leases for cultivation properties in Michigan and Massachusetts.

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.

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.

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.

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

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.”

The Company previously entered into leases with PharmaCann Inc.

and its affiliates for eleven properties.

Rent pursuant to two of such leases, for cultivation facilities in Michigan and Massachusetts and representing aggregate monthly base rent of approximately $1.3 million, was fully abated effective February 1, 2025, under lease amendments entered into by the parties in January 2025.

The Company re-leased the 205,000 square foot Michigan property to Berry Green in April 2025 and has leased to a third party the former PharmaCann cultivation facility located in Holliston, Massachusetts.

As previously disclosed, PharmaCann defaulted on its rent obligations under the remaining nine of these leases, covering properties in New York, Illinois, Pennsylvania, Ohio and Colorado, with total amounts due of $29.2 million in base rent, property management fees, and estimated tax and insurance payments as of December 31, 2025.

The Company recovered possession of one of its retail properties in Colorado through a default judgment, and PharmaCann has paid and continues to pay full rent on the remaining four retail properties located in Colorado.

In December 2025, the Company obtained a judgment in its favor in an eviction action relating to the PharmaCann facility located in Dwight, Illinois and recovered possession of that property, which is currently vacant and under the Company’s control.

The Company has commenced litigation and is actively seeking possession of the remaining properties located in New York, Pennsylvania, and Ohio.

As of December 31, 2025, the properties leased to PharmaCann collectively accounted for approximately 9.9% of the Company's annualized contractual rent due.

The Company continues to enforce its rights under the applicable lease agreements and intends to pursue all remedies available under such agreements and applicable law.

See Note 6 “Investments in Real Estate” in the notes to our consolidated financial statements for further information regarding our leases with PharmaCann.

In March 2025, the Company launched a strategic initiative aimed at improving long-term financial performance by seeking to refresh a substantial portion of its tenant base with more financially viable, long-term tenants.

As part of this initiative, the Company declared certain tenants and their affiliates in default for failure to pay contractual rent in full, including 4Front Ventures Corp., Gold Flora, LLC, and TILT Holdings Inc.

These tenants, which collectively accounted for approximately 11.6% of the Company’s annualized contractual rent due as of December 31, 2025, owed $23.0 million, $2.7 million and $5.6 million, respectively, in base rent, property management fees, and estimated tax and insurance payments as of such date.

The Company is actively pursuing its rights under these leases, which may include initiating eviction proceedings.

Gold Flora and 4Front Ventures are both currently operating under receivership and 4Front Ventures has filed for bankruptcy protection in Canada and for voluntary receivership in Massachusetts and Illinois.

Therefore, any actions with respect to their leases may involve additional legal processes and delays.

In July 2025, we terminated the lease with an affiliate of Gold Flora for our property located in Palm Springs, California, which represents one of three leases with affiliates of Gold Flora.

During the year ended December 31, 2025, the Company declared additional defaults on its leases with two tenants for failure to pay rent in full.

These leases represent, in the aggregate, less than 2% of our total rental revenues for the year ended December 31, 2025.

In March 2025, we amended our lease with a subsidiary of AYR Wellness, Inc.

at one of our Florida properties to reduce the improvement allowance by $2.5 million to $27.5 million, which also resulted in a corresponding adjustment to the base rent for the lease at the property.

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 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

The following table sets forth certain state-by-state information regarding our property portfolio for the year ended and as of December 31, 2024 (dollars in thousands):

The following table sets forth certain state-by-state information regarding our property portfolio as of and for the year ended December 31, 2025 (dollars in thousands):

State Number of

Properties Rentable

Total Invested and

Committed Capital (2)

Contractual Rent

Collected for

Total Invested and

the Year Ended

Committed Capital (2)

December 31, 2025 (3)

Arizona 3 377,000 $ 27,738 $ 4,477 2 %

California 11 689,000 204,004 10,013 4

Colorado 26 229,000 82,192 7,782 3

Florida 5 1,153,000 207,050 30,372 13

Illinois 7 965,000 307,234 31,624 13

Maryland 5 319,000 101,585 13,381 5

Massachusetts (4)

10 993,000 306,883 27,225 11

Michigan 13 901,000 287,164 22,166 9

Minnesota 1 89,000 9,710 1,881 1

Missouri 1 85,000 28,250 4,280 2

Nevada 1 43,000 9,600 1,647 1

New Jersey 4 291,000 103,985 13,718 6

New York 2 623,000 211,986 15,525 6

North Dakota 3 42,000 15,849 2,067 1

Ohio 5 374,000 115,795 15,014 6

Pennsylvania 10 1,361,000 385,930 37,039 15

Texas 2 138,000 30,231 2,509 1

Virginia 1 82,000 19,750 3,023 1

Washington 1 114,000 17,500 — —

Total 111 8,868,000 $ 2,472,436 $ 243,743 100 %

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(1) Includes 303,000 square feet under development/redevelopment.

(2) Total invested and committed capital includes development and improvements allowances not funded as of December 31, 2025.

Contractual rent collected excludes tenant reimbursements.

(3) Contractual rent collected includes base rent and property management fees and excludes tenant reimbursements.

(4) 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.

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Our Financing Strategy

We intend to meet our long-term liquidity needs through cash flow from operations and the issuance of equity and debt securities, including common stock, preferred stock and notes, and draws from our Revolving Credit Facility.

Where possible, we also may issue limited partnership interests in our Operating Partnership to acquire properties from existing owners seeking a tax-deferred transaction.

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.

We may also issue common stock to permanently finance properties that were previously financed by debt securities or draws from our Revolving Credit Facility.

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.

We may also issue common stock to permanently finance properties that were previously financed by debt securities or draws from our Credit Facilities.

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.

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.

We have filed a registration statement with the SEC, allowing 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.

REITs continued to increase in 2024 with $85 billion of capital raised compared to $62 billion in 2023.

REITs decreased in 2025 with $80 billion of capital raised compared to $85 billion in 2024.

According to the National Association of Real Estate Investment Trusts, Inc.

(“NAREIT”), U.S.

REIT 2024 capital raising was higher than 2022 and 2023, but remained lower than 2019-2021 levels.

REIT 2025 capital raising was higher than 2022 and 2023, but remained lower than 2019-2021 and 2024 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.

In many instances, we will generally not be entitled to

financial results or other credit-related data from our tenants.

In many instances, we will generally not be entitled to financial results or other credit-related data from our tenants.

See the section “Risks Related to Our Business” under Item 1A, “Risk Factors.”

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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.

lenders, and cannabis operators themselves, all of whom may compete with us in our efforts to acquire real estate zoned for regulated cannabis facilities.

In some instances, we will be competing to acquire real estate with persons who have no interest in the cannabis industry, but have identified value in a piece of real estate that we may be interested in acquiring.

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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.

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.

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.

Instead, the Cole Memo directed U.S.

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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.

The Sessions Memo states that “these principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” The Sessions Memo went on to state that given the DOJ’s well-established general principles, “previous nationwide guidance specific to marijuana is unnecessary and is rescinded, effective immediately.” 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 relating to cannabis in the future and it remains unclear what impact the Sessions Memo will have on the regulated cannabis industry, if any.

established general principles, “previous nationwide guidance specific to marijuana is unnecessary and is rescinded, effective immediately.” 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 relating to cannabis in the future and it remains unclear what impact the Sessions Memo will have on the regulated cannabis industry, if any.

Jeff Sessions resigned as U.S.

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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.

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.

It is generally expected that Bondi will closely follow the Trump Administration’s enforcement priorities.

Bondi has not provided a clear policy directive for the United States as it pertains to state-level cannabis-related activities, 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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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.

The prospects for this reclassification effort under the Trump administration remain unclear.

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.

Since that postponement, President Trump has appointed Derek Maltz to lead the DEA.

Neither Trump nor Maltz has released any official policy directive related to rescheduling.

No further hearings have been scheduled beyond a status update slated for April 2025.

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.

Initially, prospects for this reclassification effort stalled with the transition to the new Trump administration.

Further, the 2026 Agriculture appropriations law passed by Congress and signed by President Trump in November 2025 revised the federal definition of hemp under the Agriculture Improvement Act of 2018, commonly known as the “Farm Bill,” to a focus on “total THC” and THC-like effects, and functionally bans intoxicating hemp products beginning in November 2026.

However, on December 18, 2025, President Trump issued an Executive Order (the “Executive Order”), Increasing Medical Marijuana and Cannabidiol Research, that directs the Attorney General in the most expeditious manner in accordance with federal law, to complete the rulemaking process related to rescheduling that was begun during the Biden Administration.

The order, to be carried out consistent with existing law and available funding, impacts both “medical marijuana, which is primarily made up of two cannabinoids, cannabidiol (CBD) and tetrahydracannabinol (THC),” and “appropriate full-spectrum CBD products.” The Executive Order mandates the Attorney General to “take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the CSA.” It also calls on the Assistant to the President and Deputy Chief of Staff for Legislative, Political, and Public Affairs to collaborate with Congress to amend statutory definitions of final hemp derived cannabinoid products.

If completed, reclassification could also allow cannabis companies to take certain tax deductions, including for depreciation or interest expense, in their federal taxes.

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.

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Commonly referred to as the “Rohrabacher-Blumenauer Amendment”, this so-called “rider” provision has been appended to the Consolidated Appropriations Acts since 2015.

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.

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.

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.

On January 23, 2026, President Trump signed H.R.

6938, which contains the appropriations funding for the Departments of Commerce, Justice, Interior, and other related agencies, thereby extending the application of the Rohrabacher-Blumenauer Amendment until September 30, 2026.

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.

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.

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.

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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Violation of federal law could subject a bank to loss of its charter.

Financial transactions involving proceeds generated by cannabis-related conduct can form the basis for prosecution under the federal money laundering statutes, unlicensed money transmitter statutes and the Bank Secrecy Act.

For example, under the Bank Secrecy Act, banks must report to the federal government any suspected illegal activity, which would include any transaction associated with a cannabis-related business.

For example, under the Bank Secrecy Act, banks must report to the federal government any suspected illegal or suspicious activity, which would include any transaction associated with a cannabis-related business.

These reports must be filed even though the business is operating in compliance with applicable state and local laws.

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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.

Under these guidelines, financial institutions looking to provide banking services to cannabis-related businesses are subject to increased customer due diligence requirements and reporting obligations.

Pursuant to the FinCEN Memorandum, 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.

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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.

In the FinCEN Hemp

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.

In the FinCEN Hemp 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.

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.

While the FinCEN Memorandum purported to clarify how financial institutions can provide banking services to state-sanctioned cannabis-related businesses in a manner consistent with their obligations under the Bank Secrecy Act, the FinCEN Memorandum is not law.

FinCEN’s guidance, which may be modified or rescinded at any time, does not insulate financial institutions from regulatory inquiry or examination, or provide any safe harbors or legal defenses from regulatory or criminal enforcement actions by the DOJ, FinCEN or other federal regulators.

The DOJ continues to have the right and power to prosecute crimes committed by banks and financial institutions, such as money laundering and violations of the Bank Secrecy Act, that occur in any state including states that have in some form legalized the sale of cannabis.

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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.

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.

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.

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.

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.

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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Available Information

We make available to the public free of charge through our website our Definitive Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC.

We make available to the public free of charge through our website our Definitive Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits and amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC.

Our internet website address is www.innovativeindustrialproperties.com.

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You can also access on our website our Code of Business Conduct and Ethics, Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, and Nominating and Corporate Governance Committee Charter.

The content of our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.

The content of our website is not incorporated by reference into this Annual Report on

Form 10-K or in any other report or document we file with the SEC, and any references to our website are intended to be inactive textual references only.

Human Capital

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• We face significant risks associated with the development and redevelopment of properties that we acquire.

● We are currently subject to securities lawsuits and we may be subject to litigation in the future, which may divert management’s attention and have a material adverse effect on us.

● Inflation may adversely affect our business and our tenants’ financial condition and results of operations.

• We are currently subject to securities lawsuits and an SEC investigation, and we may be subject to litigation in the future, which may divert management’s attention and have a material adverse effect on us.

• Competition for the acquisition of properties suitable for regulated cannabis operations and alternative financing sources for licensed operators may make new acquisitions difficult or less economically attractive.

● Our growth will depend upon future acquisitions of regulated cannabis facilities.

• Our growth depends, in part, upon future acquisitions of regulated cannabis facilities.

• There may only be a limited number of cannabis facilities operated by suitable tenants available for acquisition.

● Our and our tenants’ businesses may be materially and adversely affected by global pandemics.

• Our tenants may be unable to renew or otherwise maintain their licenses for their cannabis operations.

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• Our property portfolio is and will be geographically concentrated in certain states.

● Some of our tenants could be susceptible to bankruptcy.

• Certain of our tenants have experienced financial distress or are in receivership, which increases the risk of lease defaults and potential delays in enforcing our rights.

• Our tenants may be subject to Section 280E of the Internal Revenue Code of 1986, as amended (the “Code”).

● We have acquired and may continue to acquire and lease cannabis retail stores and dispensaries, which present additional risks in comparison to properties for the cultivation and production of regulated cannabis.

• We are exposed to the potential impacts of future climate change.

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• Construction loans involve an increased risk of loss and other risks that are different from owning properties.

● We may purchase properties subject to ground leases or engage in other transactions involving ground leases.

Risks Related to Regulation

Risks Related to Our Life Science Investments and Real Estate-Related Assets

• Our investments in the IQHQ Credit Facility and IQHQ Preferred Stock expose us to borrower credit risk, structural subordination, illiquidity, collateral impairment, reduced or delayed returns, and potential loss of principal.

• Payment-in-kind dividends and interest on our investments in IQHQ Preferred Stock and the IQHQ Credit Facility may result in taxable income without corresponding cash receipts, which could adversely affect our liquidity and financial condition.

• As part of our investment strategy, we may invest in equity and secured and unsecured debt of private REITs, which involve limited liquidity, uncertain valuations, restricted access to financial and operational information, dependence on issuer performance and structure, and features that make the timing and amount of returns uncertain.

Risks Related to Investments in Life Science Properties

• Intense competition in the life sciences industry may limit our ability to acquire attractive assets and successfully execute our investment strategy.

• Any investment in life science properties subjects us to industry-specific risks, including heightened regulatory scrutiny, specialized infrastructure and capital needs, and potential liability for hazardous materials that may exceed insurance coverage.

• Any future investments in life science properties involve uncertainty in leasing, occupancy, and returns due to industry downturns, oversupply, reduced funding, consolidation, high capital costs for repositioning, and potential geographic shifts away from key hubs.

Risks Related to Cannabis Regulation

• Cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws regarding cannabis would likely result in our inability and the inability of our tenants to execute our respective business plans.

• Certain of our tenants engage in operations for the adult-use cannabis industry, which may subject us and our properties to additional risks associated with such adult-use cannabis operations.

● New laws 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.

• Our ability to grow our business depends on state laws pertaining to the cannabis industry.

• New laws 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.

• FDA regulation of cannabis facilities could negatively affect the regulated cannabis industry.

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Risks Related to Financing Our Business

• Our independent auditor's report includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern, and if we are unable to obtain refinancing or other additional financing, we may be unable to continue operating as a going concern.

• Our operating results and financial condition could be adversely affected if we are unable to refinance our Notes due 2026 or extend, renew or replace our Revolving Credit Facility.

• Our growth depends on external sources of capital, which may not be available on favorable terms or at all.

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• A downgrade in our investment grade credit rating could adversely affect our business and financial condition.

● Our Notes due 2026 include restrictive covenants that limit our operational flexibility.

• Our Notes due 2026 and our Credit Facilities include restrictive covenants that limit our operational flexibility.

• Rising interest rates could increase our cost of capital, reduce investment returns, and adversely affect our ability to make distributions to our shareholders.

• Increased debt service obligations under our Credit Facilities or otherwise reduce the amount of cash available for distribution to our shareholders.

Risks Related to Our Organization and Structure

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• We cannot assure you of our ability to make distributions in the future.

● 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.

• 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 our cash flow from operations.

• The market price of our capital stock could be materially, adversely affected by our level of cash distributions.

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• The REIT distribution requirements could adversely affect our ability to execute our business plan, and require us to make unfavorable borrowing decisions or subject us to tax.

● If Section 280E of the Code applies to us, tax deductions may be disallowed, resulting in federal income tax and potentially jeopardizing our REIT status.

• If Section 280E of the Code applies to us while cannabis remains classified as a Schedule I drug, tax deductions may be disallowed, resulting in federal income tax and potentially jeopardizing our REIT status.

• Complying with REIT requirements may cause us to forego attractive business opportunities or asset sales.

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Therefore, the success of our investments will be materially dependent on the financial stability of these tenants.

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.

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.

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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Any lease payment defaults by a tenant could adversely affect our cash flows and cause us to reduce the amount of distributions to stockholders.

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 regulated cannabis cultivation and production facilities are generally subject to extensive state licensing requirements, including limited licenses in certain states.

cannabis cultivation and production facilities are generally subject to extensive state licensing requirements, including limited licenses in certain states.

In addition, applicable state licensing authorities may have little experience re-leasing a cannabis property, which may extend the delays we experience in re-leasing a property.

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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.

In November 2022, Green Peak Industries, Inc.

(“Green Peak”) defaulted on its obligations to pay rent at one of our properties in Michigan.

In February 2024, we regained possession of the remaining regulated cannabis cultivation and processing facility that was leased to Green Peak.

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.

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.

See “Business – Tenant Concentration” for a discussion of our recent tenant defaults.

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As of December 31, 2025, we owned 111 properties.

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.

As of such date, five of our tenants, Ascend (at four of our properties), Green Thumb (at three of our properties), Curaleaf (at eight of our properties), Trulieve (at six of our properties) and The Cannabist Company (at 21 of our properties) represented 12%, 9%, 8%, 8% and 8%, respectively, of our rental revenues (including tenant reimbursements) for the year ended December 31, 2025.

Lease payment defaults by any of our tenants or a significant decline in the value of any single property would materially advers ely affect our business, financial position and results of operations, including our ability to make distributions to our stockholders.

Our lack of diversification also increases the potential that a single underperforming investment or tenant could have a material adverse effect on our cash flows and the price we could realize from the sale of our properties.

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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.

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.

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.

Because our portfolio of properties primarily consists of industrial and greenhouse properties used in the regulated cannabis industry, we are subject to risks inherent in investments in a single industry.

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Any such decrease could impair our ability to make distributions to investors.

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.

As of December 31, 2025, other than our investments in IQHQ, we do not have any other 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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• weather-related and geological interference, including hurricanes, landslides, earthquakes, floods, drought, wildfires and other events, which may result in delays or increased costs.

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.

As of December 31, 2025, we had properties consisting of an aggregate of 303,000 rentable square feet under development or redevelopment, and we had committed to fund improvements at our properties in the future totaling up to $6.5 million.

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Ongoing inflation for construction and labor costs, labor shortages and global supply chain issues also continue to adversely impact costs and timing for completion of our development and redevelopment projects, which are resulting in cost overruns and delays in commencing operations on certain projects.

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.

We are currently subject to securities lawsuits and an investigation by the U.S.

Securities and Exchange Commission, which may divert management’s attention and have a material adverse effect on our business, financial condition and results of operations.

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.

See Note 11 “Commitments and Contingencies” for a full description of these actions.

We will continue to incur legal fees in connection with these pending cases, including expenses for the reimbursement of legal fees of our officers and directors under indemnification obligations.

The expense of continuing to defend such litigation may be significant.

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.

See Note 12 “Commitments and Contingencies — Litigation” for a full description of these actions.

In addition, on February 13, 2026, the Company was notified that the SEC is conducting a formal investigation of the Company concerning matters similar to those alleged in the above-described lawsuits, and the Company received a subpoena from the Denver Regional Office of the Division of Enforcement of the SEC requesting the production of documents and information.

The timing and outcome of the investigation cannot be predicted, and SEC investigations can take years to complete and may result in civil or criminal penalties, fines, disgorgement, restitution, cease-and-desist orders, deferred prosecution agreements, or other sanctions or remedial actions.

We intend to defend these lawsuits vigorously, but there can be no assurance that we will be successful in any defense.

If any of the lawsuits are adversely decided, we may be liable for significant damages directly or under our indemnification obligations, which could adversely affect our business, results of operations and cash flows.

Further, the amount of time that will be required to resolve these lawsuits is unpredictable and these actions may divert management's attention from the day-to-day operations of our business, which could adversely affect our business, results of operations and cash flows.

We cannot predict the outcome of these lawsuits and we may be subject to other similar securities litigation in the future.

Monitoring and defending against legal actions, whether or not meritorious, is time-consuming for our management and detracts from our ability to fully focus our internal resources on our business activities.

In addition, we may incur substantial legal fees and costs in connection with litigation.

Although we have insurance, coverage could be denied or prove to be insufficient.

We are not currently able to estimate the possible cost to us from the currently pending lawsuits, and we cannot be certain how long it may take to resolve these matters or the possible amount of any damages that we may be required to pay.

We have not established any reserves for any potential liability relating to these or future lawsuits.

It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages.

A decision adverse to our interests on these actions could result in the payment of substantial damages and could have a material adverse effect on our business, results of operations and financial condition.

In addition, the uncertainty of the currently pending lawsuits could lead to volatility in our stock price.

The ultimate outcome of litigation could have a material adverse effect on our business and the trading price for our securities.

We have not established reserves for any potential liability relating to the pending litigation or the SEC investigation, and although we maintain insurance, coverage could be denied or prove to be insufficient.

The Company has incurred and expects to continue to incur significant legal and other expenses in connection with the pending litigation and SEC investigation, including the reimbursement of legal fees for certain officers and directors.

These matters are time-consuming and require substantial financial and managerial resources, including significant legal costs and the diversion of management’s attention from the day-to-day operation of our business.

The duration and outcome of these proceedings are uncertain, and the Company cannot estimate the possible loss or range of loss.

Regardless of the outcome, the costs and management distraction associated with these matters could have a material adverse effect on our business, financial condition, results of operations, and the market price of our securities.

Inflation may adversely affect our business and our tenants’ financial condition and results of operations.

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We also compete as a provider of capital to regulated cannabis operators with alternative financing sources to these companies, including both equity and debt financing alternatives.

For example, many larger, publicly traded multi-state cannabis operators are able to raise significant capital through public equity offerings, in addition to access to significant debt financing options.

For example, many larger, publicly traded multi-state

cannabis operators are able to raise significant capital through public equity offerings, in addition to access to significant debt financing options.

Furthermore, changes in federal regulations pertaining to cannabis could also lead to increased access to U.S.

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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;

● 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;

• the temporary inability of consumers and patients to purchase our tenant’s cannabis products due to a number of factors, including but not 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;

• 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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• delays in construction at our properties may adversely impact our tenants’ ability to commence operations and generate revenues from projects, including but not limited to delays caused by:

o construction moratoriums by local, state or federal government authorities;

o delays by applicable governmental authorities in providing the necessary authorizations to continue construction or commence operations;

o reductions in construction team sizes to effectuate social distancing and other requirements;

o infection by one or more members of a construction team necessitating a partial or full shutdown of construction;

o manufacturing and supply chain disruptions for materials sourced from other geographies which may be experiencing shutdowns and/or restrictions on transportation of such materials;

◦ construction moratoriums by local, state or federal government authorities;

◦ delays by applicable governmental authorities in providing the necessary authorizations to continue construction or commence operations;

◦ reductions in construction team sizes to effectuate social distancing and other requirements;

◦ infection by one or more members of a construction team necessitating a partial or full shutdown of construction;

◦ manufacturing and supply chain disruptions for materials sourced from other geographies which may be experiencing shutdowns and/or restrictions on transportation of such materials;

• a general decline in business activity in the regulated cannabis industry would adversely affect our ability to grow our portfolio of regulated cannabis properties;

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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.

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.

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.

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.

Any lease payment defaults by a tenant or additional liability on us could adversely affect our cash flows and cause us to reduce the amount of distributions to stockholders.

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.

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.

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.

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As of February 23, 2026, 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.

See “Geographic Concentration” under Item 1, “Business” for a table of properties owned by us and organized by state as of

December 31, 2024.

See “Geographic Concentration” under Item 1, “Business” for a table of properties owned by us and organized by state as of December 31, 2025.

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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Our tenants may be subject to Section 280E of the Code because of the nature of their business activities, which could have an adverse impact on their financial condition due to a disallowance of certain tax deductions.

Section 280E of the Code provides that, with respect to any taxpayer, no deduction or credit is allowed for expenses incurred during a taxable year “in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the CSA) which is prohibited by federal law or the law of any state in which such trade or business is conducted.” Because cannabis is a Schedule I controlled substance under the CSA, Section 280E by its terms applies to the purchase and sale of cannabis products.

Section 280E of the Code provides that, with respect to any taxpayer, no deduction or credit is allowed for expenses incurred during a taxable year “in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the CSA) which is prohibited by federal law or the law of any state in which such trade or business is conducted.” Because cannabis is presently a Schedule I controlled substance under the CSA, and there can be no assurance that the reclassification called for by the Executive Order will occur, Section 280E by its terms applies to the purchase and sale of cannabis products.

Our tenants are engaged in the cultivation, processing and sale of cannabis and cannabis-related products, and therefore may be subject to Section 280E.

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We cannot give any assurance that other such conditions do not exist or may not arise in the future.

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.

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.

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.

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

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 lessee under a ground lease, we would be exposed to the possibility of losing the property upon termination, or an earlier breach by us, of the ground lease, which could have a material adverse effect on our business, financial condition and results of operations, our ability to make distributions to our stockholders and the trading price of our common stock.

Risks Related to Regulation

Risks Related to Our Life Science Investments and Real Estate-Related Assets

Credit and structural risks related to our investment in the IQHQ Credit Facility may adversely affect our return on investment and financial condition.

Through IIP Life Science, a wholly owned subsidiary of our Operating Partnership, we became a lender under the IQHQ Credit Facility through the funding of a $100.0 million loan to the operating partnership of IQHQ REIT.

The ability of IQHQ REIT and its operating partnership to meet their obligations under the facility depends on numerous factors, including the performance of IQHQ REIT’s real estate assets, prevailing market conditions in the life sciences and commercial real estate sectors, and the financial health of the borrower and its affiliates.

A deterioration in the financial condition of the borrower or its affiliates could impair their ability to service the loan or meet other obligations under the IQHQ Credit Facility in a timely manner.

There can be no assurance that we will recover the full value of our investment in the IQHQ Credit Facility.

In the event of a default or restructuring, our ability to recover principal or interest could be delayed, reduced, or eliminated.

While the loan is secured by a pledge of a majority ownership interest in IQHQ REIT’s Fenway Center project held by an affiliate of IQHQ REIT, this collateral does not generate cash flow and is not expected to contribute to repayment of the loan under the IQHQ Credit Facility.

A decline in the value of the pledged interest in the Fenway Center project could reduce the amount recoverable in the event of a default, particularly because the pledge is subordinate to certain construction financing.

Additionally, the real estate collateral securing our investment in the IQHQ Credit Facility may be negatively impacted by market fluctuations, changes in environmental and zoning laws, casualty or condemnation losses, regulatory limitations on rents, decreases in property values, changes in the appeal of properties to potential tenants, changes in supply and demand for competing properties in an area, the financial resources of potential tenants, changes in availability of debt financing that may render the sale or refinancing of properties difficult or impracticable, changes in building, environmental and other laws, energy and supply shortages, various uninsured or uninsurable risks and other unforeseen occurrences.

In addition, if we fail to meet our separate funding obligations under the Securities Purchase Agreement with respect to the purchase of IQHQ Preferred Stock, the interest rate payable to us under the IQHQ Credit Facility may be reduced by up to 3.0% per annum.

This would negatively affect our investment returns even absent a borrower default.

Accordingly, this investment exposes us to borrower credit risk, structural subordination, potential collateral impairment, and other uncertainties that could adversely affect our return on investment and financial condition.

Our investment through the IQHQ Credit Facility likely will not qualify as a “real estate asset” for our REIT asset test requirement that 75% of the value of our total assets be represented by real estate assets, cash, cash items and government securities.

If such investment does not qualify as a “real estate asset”, then it cannot represent more than 5% of the value of our total assets under an additional REIT asset test.

If the investment doesn't qualify as a "real estate asset", any related interest income will not qualify as “good income” for our REIT income test that requires that we derive directly or indirectly at least 75% of our gross income, excluding gross income from prohibited transactions, from investments relating to real property or mortgages on real property, including “rents from real property.” While we presently believe we have adequate other qualifying real estate assets and income to meet these REIT asset and income test requirements, no assurances can be provided that these tests will be met in the future.

If we fail the REIT asset test in any calendar quarter or we fail a REIT income test in any calendar year, and cannot avail ourselves of certain relief provisions, we would cease to qualify as a REIT.

Our investment in IQHQ Preferred Stock subjects us to risks inherent in private company real estate investments and preferred equity instruments.

Through IIP Life Science, a wholly owned subsidiary of our Operating Partnership, we purchased the initial $5.0 million tranche of IQHQ Preferred Stock pursuant to the Securities Purchase Agreement.

On October 31, 2025, we purchased an additional 45,000 shares of IQHQ Preferred Stock for $45.0 million , resulting in a total investment of 50,000 shares with an aggregate purchase price of $50.0 million .

Subject to the exercise of certain rights by existing investors and other conditions, we may purchase up to an additional $120.0 million of IQHQ Preferred Stock in multiple tranches commencing in the second quarter of 2026 through the second quarter of 2027, subject to extension options by IQHQ REIT.

While this investment is structured to provide both cash and PIK dividends, it remains subject to a number of significant risks.

Investments in preferred equity securities of private real estate companies, such as IQHQ REIT, are inherently illiquid and subordinate to all debt obligations of the issuer.

While preferred equity may confer certain negotiated rights, such as consent or approval rights over specified actions and redemption provisions, such rights are generally more limited in scope than the legal remedies and enforcement mechanisms available to secured lenders.

In the event of a default,

liquidation, or restructuring, our ability to recover invested capital may be limited, delayed, or entirely impaired, particularly where IQHQ REIT’s obligations to senior creditors remain unsatisfied.

These structural and contractual limitations may adversely affect the value of our investment and our ability to realize expected returns.

Furthermore, the payment of dividends on the IQHQ Preferred Stock is not guaranteed and is subject to the financial condition and performance of IQHQ REIT.

If IQHQ REIT fails to generate sufficient cash flows, experiences project delays, faces cost overruns, or encounters disruptions in the life science real estate market, it may be unable to meet its dividend or redemption obligations.

These risks are heightened given the capital-intensive nature of life science development projects and the sector’s exposure to shifting demand, tenant concentration, and regulatory risk.

In addition, although the IQHQ Preferred Stock includes a fixed cash dividend and PIK component, the dividend rate may be reduced by up to 3.0% in the event we fail to meet our funding obligations to purchase additional IQHQ Preferred Stock under the Securities Purchase Agreement, regardless of the performance of the underlying real estate assets.

There is no public market for the IQHQ Preferred Stock, and any ability to monetize this investment may be limited to contractual redemption rights or a liquidity event involving IQHQ REIT, neither of which is assured or within our control.

As a result, the timing and amount of any returns on this investment are inherently uncertain and may not meet our expectations.

Any adverse developments related to IQHQ REIT, its projects, capital structure, or operating performance could result in reduced income, impaired recoverability of our investment, or other negative impacts on our results of operations and financial condition.

Further, in connection with our IQHQ Preferred Stock investment we received warrants to purchase units in IQHQ Holdings, LP, a limited partnership that owns substantial equity in IQHQ REIT.

These warrants have a nominal exercise price and as such are treated as deemed exercised for federal income tax purposes, with the consequence that we are treated as holding equity units in IQHQ Holdings, L.P.

and may receive allocations of taxable income and gains from this entity even though we do not receive any current distributions.

This may require us to increase our distributions to continue to qualify as a REIT and to eliminate any entity level taxation or alternatively, we may need to pay tax upon allocation of such income to us.

We may need to raise or borrow funds to make these distributions or pay these taxes.

Payment-in-kind dividends and interest on our investments in IQHQ Preferred Stock and the IQHQ Credit Facility may result in taxable income without corresponding cash receipts, which could adversely affect our liquidity and financial condition.

A portion of the returns on our investments in IQHQ Preferred Stock and the IQHQ Credit Facility is payable in the form of PIK dividends or interest rather than cash.

federal income tax purposes, PIK dividends and interest are generally treated as taxable income to us when accrued, even though no cash is received at that time.

As a result, we may be required to recognize taxable income, make additional distributions to shareholders to meet our REIT distribution requirements and incur related tax liabilities with respect to PIK amounts before we receive any corresponding cash payments, or potentially without ever receiving cash payments.

This could require us to use cash from other sources, incur additional indebtedness, or dispose of assets to meet our REIT distribution requirements and satisfy our tax obligations, which could adversely affect our liquidity, financial condition, and results of operations.

In addition, the timing and character of income recognized with respect to PIK dividends and interest, including whether such amounts are treated as ordinary income, dividend income, or original issue discount, may be subject to complex tax rules and differing interpretations.

Any changes in applicable tax laws, regulations, or interpretations, or adverse determinations by taxing authorities, could increase the amount or accelerate the timing of taxable income attributable to these investments, potentially exacerbating the liquidity risks described above.

We may invest in the equity of private company REITs and real estate-related companies, which subjects us to additional risks, including limited liquidity, valuation uncertainty and operational risk.

As part of our investment strategy, we may invest in the equity of private REITs, such as our investment in IQHQ Preferred Stock, and other private real estate-related companies.

These investments may subject us to risks that are different from, or in addition to, those associated with our directly owned real estate portfolio or investments in publicly traded securities.

Private REITs and similar entities are generally not subject to the same disclosure, governance, or liquidity standards as publicly traded REITs.

As a result, we may have limited access to financial and operational information and may be unable to monitor these investments with the same degree of transparency.

Furthermore, valuations of equity interests in

private REITs may be difficult to assess and inherently uncertain due to the absence of active trading markets.

Private REITs are also subject to general real estate risks, including those related to tenant defaults, financing availability, property-level performance, and market conditions.

Investments in the equity of private REITs, such as our investment in IQHQ Preferred Stock, inherently involve limited liquidity, which may restrict our ability to exit such positions in a timely or cost-effective manner.

If we are required to liquidate an investment in a private REIT under adverse market conditions or before an optimal exit opportunity arises, we may be forced to do so at a discount or suffer a loss.

In addition, we may be exposed to indirect risks through our proportionate share of the REIT’s management practices, leverage, and compliance with REIT qualification requirements under the Internal Revenue Code.

A failure by a private REIT to maintain its REIT status could result in adverse tax consequences that could reduce the value of our investment and our returns.

Failure of a private REIT to maintain its REIT status would likely cause our investment to cease to be a qualifying “real estate asset” for our REIT asset test requirements, including that 75% of the value of our total assets be represented by real estate assets, cash, cash items and government securities.

Because private REITs may not distribute consistent or predictable cash flows, our ability to rely on these investments for income generation could be limited.

Additionally, income received from private REITs may consist of dividends, capital gains, or return of capital, each of which may be taxed differently and, in the case of dividends, may not qualify for favorable tax treatment applicable to qualified dividends.

Accordingly, while investments in private REITs and similar entities may offer opportunities for portfolio diversification and enhanced returns, they also introduce structural, operational, tax, and liquidity risks that could adversely affect our financial condition, results of operations, or ability to make distributions to our shareholders.

Some of our investments in real estate-related equity securities may become distressed, which could result in a high risk of loss, increased volatility, and limited liquidity.

Although our investment strategy generally focuses on non-distressed real estate-related assets, certain of our equity investments, such as our investment in IQHQ Preferred Stock, may be adversely affected by changing market conditions or negative developments impacting the issuer.

The life sciences sector, in particular, has experienced financial stress in recent years, including limited access to capital, rising financing costs, broad valuation declines, and industry consolidation.

These pressures have affected both public and private life sciences companies, those in earlier stages of development or with limited cash flow visibility.

See “Investments in Life Science Properties” below for a discussion of risks associated with investments in the life sciences sector.

Equity securities of companies operating in financially or operationally challenged sectors tend to be highly illiquid, more volatile, harder to trade, and may decline significantly in value.

In the event of issuer distress, including potential bankruptcy or restructuring, equity holders are subordinate to creditors and may experience a partial or total loss of capital.

Recovery prospects are typically more uncertain for equity investments than for debt, and any reorganization process may result in receipt of securities of reduced value, diminished voting rights, or other unfavorable terms.

As a result, our exposure to real estate-related equity securities, particularly in stressed sectors like life sciences, involves a higher degree of risk and could materially adversely affect our financial condition, results of operations, and our ability to make distributions to our shareholders.

Investments in real estate-related assets may be subject to risks including various creditor risks and early redemption features which may materially adversely affect our results of operations and financial condition.

The real estate-related assets in which we invest may include secured or unsecured debt at various levels of an issuer’s capital structure.

The real estate-related assets in which we invest may not be protected by financial covenants or limitations upon additional indebtedness, may be illiquid or have limited liquidity, and may not be rated by a credit rating agency.

Debt securities are also subject to other creditor risks, including (1) the possible invalidation of an investment transaction as a “fraudulent conveyance,” (2) lender liability claims by the issuer of the obligation and (3) environmental liabilities.

Our investments may be subject to early redemption features, refinancing options, prepayment options or similar provisions which, in each case, could result in the issuer or borrower repaying the principal on an obligation held by us earlier than expected, resulting in a lower return to us than anticipated or reinvesting in a new obligation at a lower return to us.

Risks Related to Investments in Life Science Properties.

Intense competition in the life science industry may limit our ability to acquire attractive life science real estate assets and successfully execute our investment strategy.

The life science industry is highly competitive.

In making investments in life science properties, we expect to face intense competition from other companies, including companies with significant financial, technical, and other resources.

This competitive environment may make it difficult for us to identify and acquire commercially viable life science properties on acceptable terms, which could adversely affect our business, financial condition, and results of operations.

Any investments in life sciences properties subjects us to industry-specific risks.

As part of our broader growth strategy, we have made and may continue to make investments in properties used by tenants in the life science sector, either through direct property acquisitions or through other investment structures such as joint ventures, debt or mezzanine financing, preferred or joint venture equity interests, and interests in other real estate funds or REITs.

These investments may expose us to risks that differ from those associated with our regulated cannabis industry portfolio.

Properties leased to life science tenants are subject to a variety of industry-specific risks.

If any of these risks were to materialize, they could adversely impact our financial condition, results of operations, and cash flows.

For example, tenants in the life sciences sector may face heightened regulatory scrutiny, including evolving healthcare regulations, increased government-imposed price controls, and other cost-containment measures.

In addition, the success of life science companies often depends on the safety and efficacy of their products, the availability of substantial capital to fund ongoing research and development, and their ability to maintain intellectual property protection.

Adverse developments in any of these areas could impair the financial condition of our potential tenants in the life science industry and their ability to meet their lease obligations, which in turn could negatively affect the revenue generated by such properties and their valuation.

In addition, life science properties typically require more capital-intensive improvements than traditional commercial or office space.

These may include enhanced structural loads, increased floor-to-ceiling heights, specialized HVAC systems, advanced environmental controls, upgraded plumbing and electrical infrastructure, and buildouts such as laboratories and clean rooms.

The cost and complexity of these improvements may limit the pool of replacement tenants and increase re-leasing costs, particularly if space must be reconfigured for a non-life science use.

If we acquire life science properties in the future, such properties may be used by tenants that handle hazardous materials, chemicals, or biological and radioactive substances as part of their operations.

As a result, we and any future tenants of such properties would be subject to federal, state, and local environmental laws and regulations governing the use, storage, handling, and disposal of these materials.

In the event of contamination or injury arising from such activities, we could, under certain circumstances, be held liable for damages, remediation costs, or regulatory penalties, even if caused solely by a tenant’s actions.

Such liabilities could exceed our available insurance coverage or financial resources and could have a material adverse effect on our business, financial condition, or ability to make distributions to our shareholders.

Accordingly, while investments in life science properties represent a key component of our growth strategy, they also introduce unique operational, regulatory, and environmental risks that may differ from those associated with our current portfolio.

Changes in the life science industry could adversely affect the performance of any future investments we make in lab properties.

As part of our growth strategy, we may pursue investments in life science properties, including lab space, either directly or through other investment structures.

If we do so, the performance of these investments could be adversely affected by economic, financial, regulatory, or industry-specific developments impacting the life science sector.

For example, a downturn in the life science industry could reduce demand for lab space, limit our ability to lease or re-lease such properties on favorable terms, or result in increased vacancy levels.

In addition, lab properties often require significant upfront capital investment due to their highly specialized infrastructure, and repositioning these assets for alternative uses could be costly and time-consuming.

Any oversupply of lab space, reduced funding for life science and biotech companies, or industry consolidation could also negatively impact tenant demand or reduce the amount of rentable square footage required by prospective tenants.

Moreover, any geographic shift in demand, including a migration of life science activity away from U.S.

markets or from key hubs such as South San Francisco, San Diego, and Boston, could adversely impact the viability of any lab property investments we may make in those areas.

As such, while we view life science investments as a potential avenue for long-term growth, these opportunities are also subject to distinct market and industry risks that could materially affect our future results of operations, financial condition, and cash flows.

Risks Related to Cannabis Regulation

Cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws regarding cannabis would likely result in our inability and the inability of our tenants to execute our respective business plans.

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federal laws.

It is generally expected that Bondi will closely follow the Trump Administration’s enforcement priorities.

Bondi has not provided a clear policy directive for the United States as it pertains to state-level cannabis-related activities, and it is generally expected that Bondi will closely follow the Trump Administration’s enforcement priorities.

On December 18, 2025, President Trump issued his Executive Order directing the Attorney General to complete the rulemaking process related to rescheduling of marijuana to Schedule III under the CSA that was begun during the Biden Administration.

However, there can be no assurance as to whether such rescheduling will be completed or when it might ultimately occur.

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.

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.

On January 23, 2026, President Trump signed H.R.

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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However, the Ninth Circuit’s opinion, which only applies to the states of Alaska, Arizona, California, Hawaii, and Idaho, also held that persons who do not strictly comply with all state laws and regulations regarding the distribution, possession and cultivation of medical-use cannabis have engaged in conduct that is unauthorized, and in such instances the DOJ may prosecute those individuals.

Furthermore, while we target the acquisition of medical-use cannabis facilities, our leases do not prohibit cannabis cultivation for adult-use that is permissible under the state and local laws where our facilities are located.

Furthermore, while we target the acquisition of medical-use cannabis facilities, our leases do

not prohibit cannabis cultivation for adult-use that is permissible under the state and local laws where our facilities are located.

Consequently, certain of our tenants currently (and additional tenants may in the future) cultivate adult-use cannabis in our medical-use cannabis facilities, as permitted by such state and local laws now or in the future, which may in turn subject the tenant, us and our properties to greater and/or different federal legal and other risks as compared to facilities where cannabis is cultivated exclusively for medical use, including not providing protection under the Congressional spending bill provision described above.

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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.

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.

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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Any one of these factors could slow or halt additional legislative authorization of cannabis, which could harm our business prospects.

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.

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.

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It is also possible that the FDA would require that facilities where cannabis is grown register with the FDA and comply with certain federally prescribed regulations.

In the event that some or all of these regulations or enforcement actions are imposed, we do not know what the impact this would have on the cannabis industry, including what costs, requirements and possible prohibitions may be enforced.

In the event that some or all of these regulations or enforcement actions are imposed, we do not know what the impact this would have on the cannabis industry, including what costs,

requirements and possible prohibitions may be enforced.

If we or our tenants are unable to comply with the regulations or registration as prescribed by the FDA, we and or our tenants may be unable to continue to operate their and our business in its current form or at all.

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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.

Further, prosecution of financial institutions of offenses under the Bank Secrecy Act based on transactions

involving cannabis proceeds does not require an underlying cannabis-related conviction under federal or state law.

Further, prosecution of financial institutions of offenses under the Bank Secrecy Act based on transactions 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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In addition, federal money laundering statutes and Bank Secrecy Act regulations discourage financial institutions from working with any organization that sells a controlled substance, regardless of whether the state it resides in permits cannabis sales.

While the United States House of Representatives has passed the SAFE Banking Act, which would permit commercial banks to offer services to cannabis companies that are in compliance with state law, it remains under consideration by the Senate, and if Congress fails to pass the SAFE Banking Act, the Company’s inability, or limitations on the Company’s ability, to open or maintain bank accounts, obtain other banking services and/or accept credit card and debit card payments may make it difficult for the Company to operate and conduct its business as planned or to operate efficiently.

Both the U.S.

House and Senate have considered legislation designed to reduce some of the legal risks financial institutions face under current law in providing financial services to state sanctioned cannabis-related businesses.

House of Representatives has on multiple occasions passed the SAFE Banking Act, which would permit commercial banks to offer services to cannabis companies that are in compliance with state law, however, the bill has not passed in the Senate.

In September 2023, the U.S.

Senate Banking Committee passed the Secure And Fair Enforcement Regulation Banking Act, or the SAFER Banking Act.

As with the SAFE Banking Act, the SAFER Banking Act is designed to provide protections for federally regulated financial institutions that serve state-sanctioned cannabis businesses.

The SAFER Banking Act has yet to be brought to the U.S.

Senate floor.

If Congress fails to pass the SAFE Banking Act, the SAFER Banking Act, or similar comprehensive legislation, the Company’s inability, or limitations on the Company’s ability, to open or maintain bank accounts, obtain other banking services and/or accept credit card and debit card payments may make it difficult for the Company to operate and conduct its business as planned or to operate efficiently.

Federal and state banking regulators closed two U.S.

banks in March 2023, and another U.S.

bank in May 2023, with which we have no banking, financing or other business relationships, precipitating financial industry and capital markets turmoil centered on concerns about the stability and solvency of other banks and financial institutions and the attendant risk they may be closed and/or forced by governmental agencies into receivership or sale.

they may be closed and/or forced by governmental agencies into receivership or sale.

The failure of other banks and financial institutions, if it occurs, could have a material adverse effect on our or our tenants’ liquidity or consolidated financial statements if we or our tenants have placed cash and cash equivalent deposits at such banks or financial institutions or have lending relationships with those banks.

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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.

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.

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.

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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The prospects for this reclassification effort under the Trump administration remain unclear.

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.

Since that postponement, President Trump has appointed Derek Maltz to lead the DEA.

Neither Trump nor Maltz has released any official policy directive related to rescheduling.

No further hearings have been scheduled beyond a status update slated for April, 2025.

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.

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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.

ask a bankruptcy trustee to take possession of, and distribute cannabis assets as such action would violate the CSA.

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.

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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Risks Related to Financing Our Business

The report of our independent registered public accounting firm contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern.

At February 23, 2026, the outstanding principal balance of our Notes due 2026 was $291.2 million, which matures in May 2026.

The maturity of this obligation within one year of the issuance of our consolidated financial statements, together with our current liquidity position, raises substantial doubt about our ability to continue as a going concern within one year from the date our financial statements are issued.

We currently do not have sufficient liquidity to satisfy this obligation at maturity.

Management is evaluating alternatives to address the maturity, including refinancing the existing indebtedness, negotiating an extension of the maturity date, or raising additional capital.

However, no agreements have been executed, and these potential transactions are not within our control.

There can be no assurance that any refinancing, extension, capital raise, or other transaction will be completed on acceptable terms, or at all.

If we are unable to retire or refinance the Notes due 2026, an event of default could occur, which would have a material adverse effect on our financial condition and results of operations.

Our consolidated financial statements have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result from the resolution of this uncertainty.

Our operating results and financial condition could be adversely affected if we are unable to refinance our Notes due 2026 or extend, renew or replace our Revolving Credit Facility.

Our Notes due 2026 mature on May 25, 2026, and there can be no assurance that we will be able to refinance or otherwise repay such notes on favorable terms, or at all.

The availability and cost of refinancing alternatives may be adversely affected by prevailing interest rates, market volatility, investor appetite for our securities, our sector exposure, and our credit ratings or any changes thereto.

If we are unable to refinance or repay the Notes due 2026 when due, we may be required to use available cash, draw on existing Credit Facilities to the extent available, sell or mortgage assets, reduce or delay investments, seek amendments or waivers from lenders on unfavorable terms, or pursue other strategic alternatives.

Any of these actions could adversely affect our business strategy and operating results and, if unsuccessful, could result in a default under the Notes due 2026 and potential cross-defaults under our Credit Facilities.

In addition, our Revolving Credit Facility matures on October 23, 2026.

There is no assurance that we will be able to extend, renew or replace our Revolving Credit Facility on acceptable terms or at all before its scheduled maturity.

Any inability to extend the facility or a renewal on more restrictive terms (including reduced commitments, higher pricing, additional collateral or tighter covenants) would further constrain our liquidity and financing flexibility.

Our growth depends on external sources of capital, which may not be available on favorable terms or at all.

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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.

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.

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.

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 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.

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.

As of December 31, 2024, we had outstanding $300.0 million aggregate principal amount of our Notes due 2026.

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.

As of December 31, 2025 , we had $291.2 million aggregate principal amount outstanding of our Notes due 2026.

Payments of principal and interest on our Notes due 2026 and borrowings that we may incur in the future, including pursuant to the Credit Facilities, 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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Any downgrade in terms of rating or outlook by the rating agency could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our financial condition, results of operations and liquidity and a material adverse effect on the market price of our common stock.

The terms governing our Notes due 2026 and the Revolving Credit Facility include restrictive covenants relating to our operations, which could limit our ability to respond to changing market conditions and our ability to make distributions to our stockholders.

The indenture governing the Notes due 2026 and the Loan Agreement governing the Revolving Credit Facility each contains financial and operating covenants that, among other things, restrict our ability to take specific actions, even if we believe them to be in our best interest, including restrictions on our ability to (1) consummate a merger, consolidation or sale of all or substantially all of our assets and (2) incur additional secured and unsecured indebtedness.

The covenants relating to our Notes due 2026 and Revolving Credit Facility may adversely affect our flexibility and our ability to achieve our operating plans.

Our ability to comply with these covenants and other provisions relating to our indenture governing the Notes due 2026 and the Loan Agreement governing the Revolving Credit Facility may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments or other events adversely impacting us.

The terms governing our Notes due 2026 and the Credit Facilities include restrictive covenants relating to our operations, which could limit our ability to respond to changing market conditions and our ability to make distributions to our stockholders.

The indenture governing the Notes due 2026 and the Loan Agreements governing the Credit Facilities each contains financial and operating covenants that, among other things, restrict our ability to take specific actions, even if we believe them to be in our best interest, including restrictions on our ability to (1) consummate a merger, consolidation or sale of all or substantially all of our assets and (2) incur additional secured and unsecured indebtedness.

In addition, our Credit Facilities are subject to borrowing conditions, borrowing-base limitations, and financial and other covenants that may restrict our ability to incur additional indebtedness.

The covenants relating to our Notes due 2026 and Credit Facilities may adversely affect our flexibility and our ability to achieve our operating plans.

Our ability to comply with these covenants and other provisions relating to our indenture governing the Notes due 2026 and the Loan Agreements governing the Credit Facilities may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments or other events adversely impacting us.

The breach of any of these covenants could result in a default under our indebtedness, which could cause those and other obligations to become due and payable.

If any of our indebtedness is accelerated, we may not be able to repay it, pursue our business plan or make distributions to our stockholders.

Rising interest rates could increase our cost of capital, reduce investment returns, and adversely affect our ability to make distributions to our shareholders.

We may fund our real estate-related investments, including our commitments under the IQHQ Credit Facility and purchases of IQHQ Preferred Stock, using borrowings under variable-rate debt instruments or other interest-sensitive liabilities.

In a rising interest rate environment, our cost of capital may increase, which could reduce the spread between our investment income and financing costs, negatively impacting our net returns and cash flows.

Although certain of our investments bear fixed rates of return and are not directly tied to market interest rates, their relative attractiveness may decline in a higher interest rate environment, and we could experience a negative interest rate spread if our cost of capital rises.

This may reduce the profitability of such investments and limit our ability to deploy capital on favorable terms.

Additionally, higher interest rates would increase interest expense on any variable-rate debt we may incur, reducing cash available for distributions to our shareholders.

If we are required to refinance existing debt during periods of elevated interest rates, we may face increased borrowing costs or be forced to dispose of assets at times or prices that are not optimal.

These conditions could materially and adversely affect our business, results of operations, financial condition, and our ability to make distributions to our shareholders.

Increased debt service obligations under our Credit Facilities or otherwise reduce the amount of cash available for distribution to our shareholders.

The interest and principal payments we are required to make on any outstanding debt under our Credit Facilities or otherwise directly decrease the cash flow available for distributions to our shareholders.

A significant portion of our operating cash flows may be allocated to meeting these debt obligations, which may limit our ability to make distributions.

In addition, if we are required to repay or refinance debt, we may need to liquidate one or more of our investments.

Such sales may occur under market conditions that do not permit us to realize the full value of those assets, further reducing the cash available for distribution to shareholders.

Risks Related to Our Organization and Structure

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• the amendment of our charter, except that our board of directors may amend our charter without stockholder approval to:

o change our name;

o change the name or other designation or the par value of any class or series of stock and the aggregate par value of our stock;

o increase or decrease the aggregate number of shares of stock that we have the authority to issue;

o increase or decrease the number of our shares of any class or series of stock that we have the authority to issue;

o effect certain reverse stock splits;

◦ change our name;

◦ change the name or other designation or the par value of any class or series of stock and the aggregate par value of our stock;

◦ increase or decrease the aggregate number of shares of stock that we have the authority to issue;

◦ increase or decrease the number of our shares of any class or series of stock that we have the authority to issue;

◦ effect certain reverse stock splits;

• our liquidation and dissolution;

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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.

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.

Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock.

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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.

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.

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.

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.

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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.

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.

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.

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We engage primarily in the business of investing in real estate and we have not and do not intend to register as an investment company under the Investment Company Act.

If our primary business were to change in a manner that would require us register as an investment company under the Investment Company Act, we would have to comply with substantial regulation under the Investment Company Act which could restrict the manner in which we operate and finance our business and could materially and adversely affect our business operations and results.

If our primary business were to change in a manner that would

require us register as an investment company under the Investment Company Act, we would have to comply with substantial regulation under the Investment Company Act which could restrict the manner in which we operate and finance our business and could materially and adversely affect our business operations and results.

Risks Related to Our Securities

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• our ability to make acquisitions on preferable terms or at all;

● equity issuances by us, including issuances by us of shares of common stock under our ATM Program, or share resales by our stockholders, or the perception that such issuances or resales may occur;

• equity issuances by us, including issuances by us of shares of common stock and Series A Preferred Stock under our ATM Program, or share resales by our stockholders, or the perception that such issuances or resales may occur;

• actual or anticipated accounting problems;

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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.

Any such issuance could result in dilution of the equity of our

stockholders.

Any such issuance could result in dilution of the equity of our 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.

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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.

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.

Furthermore, we have filed a registration statement with the SEC, allowing 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.

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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.

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.

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.

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.

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To the extent that our cash available for distribution is insufficient to cover our distributions, we expect to use our cash on hand, the proceeds from the issuance of securities in the future, the proceeds from borrowings or other sources to pay distributions.

It is possible that any distributions declared will be paid from our cash on hand or future issuances of shares of our common stock or preferred stock, which would constitute a return of capital to our stockholders.

It is possible that any

distributions declared will be paid from our cash on hand or future issuances of shares of our common stock or preferred stock, which would constitute a return of capital to our stockholders.

If we fund distributions from borrowings, sales of properties, future issuances of securities or cash on hand, we will have fewer funds available for the acquisition of additional properties resulting in potentially fewer investments, less diversification of our portfolio and a reduced overall return to our stockholders.

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Our ability to satisfy these asset tests depends upon the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals.

Our compliance with the REIT income and quarterly asset requirements also depends upon our ability to manage successfully the composition of our income and assets on an ongoing basis.

Our compliance with

the REIT income and quarterly asset requirements also depends upon our ability to manage successfully the composition of our income and assets on an ongoing basis.

Moreover, new legislation, court decisions or administrative guidance, in each case possibly with retroactive effect, may make it more difficult or impossible for us to qualify as a REIT.

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federal income tax and the 4% nondeductible excise tax.

However, we can

provide no assurances that we will have sufficient cash or other liquid assets to meet these requirements.

However, we can provide no assurances that we will have sufficient cash or other liquid assets to meet these requirements.

Difficulties in meeting the distribution requirements might arise due to competing demands for available funds or timing differences between tax reporting and cash receipts.

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federal excise tax and/or our REIT status may be jeopardized.

If we are deemed to be subject to Section 280E of the Code because of the business activities of our tenants, the resulting disallowance of tax deductions could cause us to incur U.S.

If we are deemed to be subject to Section 280E of the Code because of the business activities of our tenants, the resulting disallowance of tax deductions while cannabis remains a Schedule I drug could cause us to incur U.S.

federal income tax and jeopardize our REIT status.

Section 280E of the Code provides that, with respect to any taxpayer, no deduction or credit is allowed for expenses incurred during a taxable year “in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the CSA) which is prohibited by federal law or the law of any State in which such trade or business is conducted.” Because cannabis is a Schedule I controlled substance under the CSA, Section 280E by its terms applies to the purchase and sale of cannabis products.

Section 280E of the Code provides that, with respect to any taxpayer, no deduction or credit is allowed for expenses incurred during a taxable year “in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the CSA) which is prohibited by federal law or the law of any State in which such trade or business is conducted.” Because cannabis is presently a Schedule I controlled substance under the CSA, Section 280E by its terms applies to the purchase and sale of cannabis products.

Although we will not be engaged in the purchase, sale, growth, cultivation, harvesting, or processing of cannabis products, we will lease our properties to tenants who will engage in such activities, and therefore our tenants will likely be subject to Section 280E.

If the Service were to take the position that, through our rental agreements with our state-licensed cannabis tenants, we are primarily or vicariously liable under federal law for “trafficking” a Schedule 1 substance (cannabis) under section 280E of the Code or for any other violations of the CSA, the Service may seek to apply the provisions of Section 280E to our company and disallow certain tax deductions, including for employee salaries, depreciation or interest expense.

If the Service were to take the position that, through our rental agreements with our state-licensed cannabis tenants, we are primarily or vicariously liable under federal law for “trafficking” a Schedule I substance (cannabis) under section 280E of the Code or for any other violations of the CSA, the Service may seek to apply the provisions of Section 280E to our company and disallow certain tax deductions, including for employee salaries, depreciation or interest expense.

If such tax deductions are disallowed, we would be unable to meet the distribution requirements applicable to REITs under the Code, which could cause us to incur U.S.

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However, there is no assurance that the Service will not take such a position either currently or in the future.

If any of the efforts to reclassify cannabis to a Schedule III drug are successful, this will not eliminate these risks for periods prior to the effective date of any reclassification.

Complying with REIT requirements may cause us to forego otherwise attractive business opportunities or liquidate otherwise attractive investments.

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The remainder of our investment in securities (other than government securities, securities of corporations that are treated as taxable REIT subsidiaries (“TRSs”), and qualified REIT real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.

In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, no more than 20% of the value of our total securities can be represented by securities of one or more TRSs, and the aggregate value of debt instruments issued by public REITs held by us that are not otherwise secured by real property may not exceed 25% of the value of our total assets.

In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, no more than 20% (25%, effective for taxable years beginning after December 31, 2025, due to changes made in the One Big Beautiful Bill Act (OBBBA)) of the value of our total securities can be represented by securities of one or more TRSs, and the aggregate value of debt instruments issued by public REITs held by us that are not otherwise secured by real property may not exceed 25% of the value of our total assets.

If we fail to comply with these asset requirements at the end of any calendar quarter, we generally must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences.

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We are subject to a 100% tax on any income from a prohibited transaction.

“Prohibited transactions” generally include sales or other dispositions of property (other than property treated as foreclosure property under the Code) that is held as inventory or primarily for sale to customers in the ordinary course of a trade or business by a REIT, either directly or indirectly through certain pass-through subsidiaries.

indirectly through certain pass-through subsidiaries.

Although we do not intend to hold a significant amount of assets as inventory or primarily for sale to customers in the ordinary course of our business, the characterization of an asset sale as a prohibited transaction depends on the particular facts and circumstances.

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federal income tax rate applicable to dividend income from regular corporate dividends does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of our common stock.

Non-corporate stockholders, including individuals, generally may deduct 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend income, for taxable years beginning after December 31, 2017 and before January 1, 2026.

If we fail to qualify as a REIT, such stockholders may not claim this deduction with respect to dividends paid by us.

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If the Service were to take the position that, through our rental agreements with our state-licensed cannabis tenants, we are primarily or vicariously liable under federal law for “trafficking” a Schedule I substance (cannabis) under Section 280E of the Code or for any other violations of the CSA, the Service may apply the provisions of Section 280E of the Code to our company and disallow certain tax deductions, including for employee salaries, depreciation or interest expense.

such tax deductions are disallowed, we would be unable to meet the distribution requirements applicable to REITs under the Code, which could cause us to incur U.S.

If such tax deductions are disallowed, we would be unable to meet the distribution requirements applicable to REITs under the Code, which could cause us to incur U.S.

federal income tax and fail to qualify as a REIT.

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The effect of the significant changes made by the TCJA is highly uncertain, and administrative guidance will be required in order to fully evaluate the effect of many provisions.

The effect of any technical corrections with respect to the TCJA could have an adverse effect on us or our stockholders.

Many of the TCJA’s changes that were set to expire on December 31, 2025, were continued and made permanent by legislation commonly known as the “One Big Beautiful Bill Act” (“OBBBA”), which was signed into law on July 4, 2025.

The effect of any technical corrections with respect to the TCJA and OBBBA could have an adverse effect on us or our stockholders.

Any repurchase of our Notes due 2026 at a discount may result in cancellation of debt income.

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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.

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.

While we have implemented measures to help mitigate these threats, such measures cannot guarantee that we will be successful in preventing a cyber incident.

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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.

What changed 10-K

Item 1. Business