PharmaCann Defaults on Innovative Industrial Properties Leases

LOS ANGELES- On December 19, 2024, PharmaCann Inc., a privately held and vertically integrated cannabis company, defaulted on its December rent obligations for six of the eleven properties leased from Innovative Industrial Properties, Inc. (IIP). These properties are located in Illinois, Massachusetts, Michigan, New York, Ohio, and Pennsylvania, with the unpaid rent totaling $4.2 million.

In response, IIP applied the security deposits held under these leases to cover the defaulted rent, including late penalties and interest. Although PharmaCann paid rent in full for the remaining five leases, amounting to $90,000 for December, cross-default provisions in the lease agreements resulted in defaults across all eleven properties.

The affected leases represented 17% of IIP’s total rental revenues for the three and nine months ended September 30, 2024. IIP is actively engaging with PharmaCann to address the situation and intends to enforce its rights under the leases, which may include initiating eviction proceedings if necessary.

This development has had a notable impact on IIP’s stock performance. Following the announcement, shares of IIP experienced a significant decline, reflecting investor concerns over the default and its implications for the company’s financial stability.

PharmaCann’s default underscores the financial challenges within the cannabis industry, particularly affecting companies like IIP that are closely tied to the sector’s performance. The situation remains under discussion between IIP and PharmaCann as they seek a resolution.