This Might Be the Death Blow for Cannabis Stock
Cannabis stocks have been in the crosshairs of bearish investors due to the stock market's poor performance.
The pain has been widespread in the marijuana industry, with the Exchange Traded Fund for Alternative Harvest (MJ -3.10%) losing more than half of its value in less than two years.
Marijuana stock investors are hoping that cannabis legalization efforts at the federal level in the U.S. will open up a huge new market untouched and bring relief for suppliers that are dealing with too much cannabis.
The cannabis industry has its own effects on the financial markets.
The latest news from Innovative Industrial Properties raises new concerns that weak business practice conditions could start to have a classic domino effect.
Innovative Industrial stock is down. After the start of the regular trading session, shares of Innovative Industrial Properties fell. Concerns were raised by shareholders about how the business was faring after the cannabis-focused REIT made an announcement about its operating, investment, and capital markets activity.
Innovative Industrial owned more than 100 properties in 19 states. 1.9 million square feet of the company's space is currently under development for cannabis use.
100% of the properties are generally leased with an average lease length of more than 16 years. Innovative Industrial tries to avoid significant concentrations of clients to broaden its exposure. No single-tenant rental makes up more than 14 percent of the company's portfolio, and the company has limited its exposure to only one state. Most of its tenants are multistate operators, and the marijuanaREIT caters to businesses looking to cultivate or process cannabis.
One concern is whether Innovative Industrial's clients can keep up with their rent payments. It collected almost all of the expected rent for January, and for the three months from October to December, it contained nearly all of the expected rent. Innovative Industrial's figures for the year came to 97 percent. There were several defaults in Innovative Industrial's release.
Three tenants were in default on their rent payments as of January 18. Tenants can defer base rent payments for the most part on a limited basis in exchange for extended approximated lease terms or additional default provisions if they choose to do so, according to the REIT
Innovative Industrial's challenges with Kings Garden have not stopped. Innovative Industrial recovered significant payments above and beyond ordinary rent in the fourth quarter, as Kings Garden continues to pay rent for four California properties. Are producers not making enough money?
Innovative Industrial's business model saves cannabis producers the capital they need to get their own properties.
The regulatory challenges involved in good ethics operating within the cannabis industry make the REITs' access to properties and expertise in tailoring real estate to tenants' needs a big selling point for would-be partners.
The cannabis industry has been under pressure for a long time. Margins have been hit by a poor pricing environment. Innovative Industrial's tenants may default more.
Even though marijuana producers struggled, Innovative Industrial was able to stand out as a picks-and-shovels company. Innovative Industrial's stock has fallen so much that it suggests that the entire industry may be under too much financial pressure to carry on. Dan Caplinger has no position in any of them. There are positions in and recommendations for Innovative Industrial Properties.
Keywords: Innovative Industrial, Industrial, Alternative Harvest ETF, Innovative
Memphis lawmaker files bill to legalize medical cannabis in 2024
There is a city in Tennessee. It is all around us. You can hit either Mississippi or Arkansas if you come from my district. Many people leaving the state of Tennessee to go elsewhere have access to medical help that they can't get in Tennessee.
Tennessee would be the first state to allow medical cannabis for all residents.
The bill will allow people to register for a medical cannabis card if their doctor says they need it. The state has spent millions of dollars to enforce outdated cannabis laws. A lot of those people are just like me. The bill states that if a person is at least 18 years old, they can have up to 2.5 ounces of cannabis. According to the bill's text, there would be a limit on the amount of marijuana in food.
Some ailments described as qualified include cancer, glaucoma, HIV/AIDS, Alzheimer's disease, autism, chronic seizures or muscle spasms, and any condition an individual's doctor consent.
The Tennessee Department of Health would administer the program, and there is a provision for a successor agency to take over. A provision in the bill allows anyone in the state to petition the operating department cannabis to add a disease or health condition to the list. T
Medical cannabis supported by the Republican leadership? Think again.
The House Speaker said they could have that discussion. A lot would have to do with the way it is written. Senate Majority Leader Jack Johnson said he was open to continuing to advance that ball. We should be thoughtful and deliberate about how we do that.
Not all Republicans are on board. Marijuana remains a Schedule I drug, meaning it is against federal law to possess it, according to the lieutenant governor. I would still be opposed to the legalization of marijuana even if that changed.
He knows that if he wants to pass his bill, he will have a hard time. He was optimistic about the chances. There is a good chance that we can pass this bill if we put our ships in the same direction. There are protections for those in possession of a medical marijuana card, the doctor who approved the use of medical cannabis for their patient, or anyone involved in providing or selling cannabis paraphernalia with a valid card.
The bill text states that there would be protection for someone in the presence or vicinity of someone using medical cannabis.
Law enforcement cannot use possession of or application for a medical marijuana card as probable cause or reasonable suspicion, and anyone with a valid medical cannabis card can't be subject to search or seizure of that cannabis.
Several limitations built into the law include prohibiting using it on public transportation buses, any school property while operating a motor vehicle, and if not permitted to cultivate without proper certification. Private insurers wouldn't have to pay for medical cannabis costs. Should private businesses decide to prohibit cannabis on their premises, landlords would still be able to prohibit it on their properties.
The minimum age for medical cannabis is specified in the bill.
Still, there are exceptions, such as if the parent or guardian of a child younger than 18 who is on the list wants to receive a cannabis card for their child on the advice and documented need from their child. In that case, the parents or guardians must monitor the patient's usage. The bill outlines how to establish a dispensary. Any establishment must submit an application to the health department to get into the game and meet certain requirements. Marijuana dispensaries would not be allowed to hire anyone younger than 22 years old, and they would have to verify the ages of anyone working for them or buying cannabis products.
The health department would be able to put together rules immediately if the bill is passed, but the full effect of the bill would be delayed until January 1, 2019.