The cannabis sector may have gone through a tough time over the course of the past months, but Innovative Industrial Properties Inc (NYSE:IIPR) has remained one of the bright spots. IIP is not a cannabis producer but a real estate investment trust which works with the cannabis industry.

What to Expect Now?

However, IIPR stock was recently in the news after Grizzly Research published an explosive short-seller report and called the company ‘the WeWork of cannabis.’ IIP called the report ‘flawed,’ and the company’s shares actually rose. In such a situation, it is important to figure out if the IIP stock is to be avoided or it is a buying opportunity.

In its paper, Grizzly stated that IIP is going to face difficulties since the coronavirus pandemic is going to put its rental income at risk as more and more companies find it difficult to generate sales. While IIP has acknowledged that such a risk does exist, investors need to take a closer look at the company’s tenants. IIP’s biggest tenant PharmaCann, which makes up 26% of its revenues recently posted openings for three job positions, and that does not sound like the conduct of a company that is facing difficulties. On the other hand, Ascend Wellness, which makes up 12% of its revenues and operates mainly in Illinois and Michigan, should also be out of trouble.

Medical cannabis has been designated as an essential item in both those states, and sales should continue to rise through online orders. Grizzly also stated that Executive Chairman Alan Gold’s founding of two real estate firms hints at a ‘Ponzi scheme.’ However, it should be noted that Gold has not sold a single share in IIP since the company had its IPO. The company is also profitable and is well known for paying out dividends consistently. While it is true that the IIPR stock could be a bit of a risk in the present circumstance, investors could do well to not react to the short-seller report.

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