Innovative Industrial Properties, Inc. has reported that its tenant, Pharmacann Inc., has defaulted on all leases for eleven properties, representing 17% of IIP's total rental revenues for the three and nine months ended September 30, 2024.
Pharmacann defaulted on its obligations to pay rent for the month of December under six of the eleven leases, totaling $4.2 million for properties located in Illinois, Massachusetts, Michigan, New York, Ohio, and Pennsylvania. IIP used security deposits held by IIP to cover the defaulted rent, late penalties, and interest.
Additionally, Pharmacann paid rent in full under the remaining five leases, totaling $90,000 for the month of December. However, due to cross-default provisions in the leases, Pharmacann also defaulted on its obligations under these five leases as a result of the non-payment of rent on the other six leases.
As a response, IIP is continuing discussions with Pharmacann regarding the leases and expects to enforce its rights under the leases aggressively, which may include commencing eviction proceedings as necessary.
These developments are significant for IIP, as Pharmacann's default impacts a substantial portion of its rental revenues, and the company is taking steps to address the situation.
This news is likely to raise concerns among investors and industry observers about the potential financial impact on IIP and the broader implications for the cannabis industry. The company's ability to mitigate the impact of these defaults and its future leasing arrangements will be closely watched. Following these announcements, the company's shares moved -23.5%, and are now trading at a price of $72.92. For more information, read the company's full 8-K submission here.
