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The hype and novelty in the legal marijuana industry has worn off because as development has been slowly than expected in both the U.S. and Canada.  In the past it was real easy for cannabis companies to raise money for their operations through the equity markets, but now, it has become a bit more challenging.

And with cannabis still illegal in the US on the federal level, many companies had to resort to buying their storefronts because landlords weren’t willing to rent them the space.  So with banks not giving these companies the time and day, with the equity markets drying up, these companies are being forced to sell off their assets…their real estate.

Innovative Industrial is a marijuana-based REIT that acquires cannabis-related properties. Innovative Industrial went public in 2016 on the New York Stock Exchange (NYSE).  Innovative Industrial is the only public company in the space that is taking is on the other side of these real estate transactions.

NOTE: REITs, or real estate investment trusts, are companies that own or finance income-producing real estate in a range of property sectors ad most of them trade on major stock exchanges, REITs lease space and collect rent on its real estate and generates income which is then paid out to shareholders in the form of dividends. But get this…REITs must pay out at least 90 percent of their taxable income to shareholders.

In July, the company issued 1,495,000 shares of common stock. Typically when a company issues more stock, where they dilute the earnings/share which is frown upon on Wall Street.  So the stock took a hit.

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I have been waiting patiently for price to retrace to the lower daily demand zones as an opportunity to get into Innovative Industrial Properties as short sellers were adding to their positions in the cannabis space.  I also had no idea Innovative Industrial Properties was set to announce their earnings on Weds.

<blockquote>

Cannabis-focused real estate company Innovative Industrial Properties, Inc. (NYSE: IIPR) reported Wednesday with third-quarter rental revenue of around $11.2 million, up 201% from the same quarter in 2018.

The increase in revenue was mostly due to new acquisitions and leasing of new properties, the company said in a press release.

Innovative Industrial Properties disclosed net income of $6.2 million, or 55 cents per diluted share, and adjusted funds from operations of $9.5 million, or 86 cents per diluted share, representing net income and AFFO higher by 314% and 270% from the third quarter of 2018, respectively.

</blockquote>

<center><a href="https://finance.yahoo.com/news/cannabis-reit-innovative-industrial-properties-171214854.html">Source</a></center>

Needless to say the stock rose on the news.

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So did I miss my opportunity to buy Innovative Industrial Properties this week?  I don't think so as chat shows price formed a death cross. If the 50-dma goes below the 200-dma, a ‘death cross’, it usually signals a further decline in price.
So I set an alert at $55.  If price makes it down this far, I will then formulate a game plan to buy. 

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This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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