Innovative Industrial Properties Expands Partnership with PharmaCann with Acquisition and Long-Term Lease of Massachusetts Property

SAN DIEGO, May 31, 2018–(BUSINESS WIRE)–Innovative Industrial Properties, Inc. (the “Company”) (NYSE: IIPR), the leading provider of creative real estate capital solutions to the medical-use cannabis industry, announced today that it closed on the acquisition of the property located at Lot 1, Hopping Brook Road, Holliston, Massachusetts, and entered into a long-term lease and development agreement with a subsidiary of PharmaCann LLC (“PharmaCann”) for an approximately 26,000 square foot industrial facility and an approximately 32,000 square foot greenhouse facility on the property.

The purchase price for the property was $3.0 million. The PharmaCann subsidiary is also expected to construct the two buildings at the property, for which the Company has agreed to provide reimbursement of up to $15.5 million (the “Construction Funding”). Assuming full reimbursement for the construction, the Company’s total investment in the property will be $18.5 million. PharmaCann operates two cultivation and processing facilities and four registered medical-use cannabis dispensaries in Illinois, one cultivation and processing facility and four registered medical-use cannabis dispensaries in New York, and one medical-use cannabis dispensary in Massachusetts, in addition to being provisionally approved for medical-use cannabis cultivation and processing at the property and dispensing at two other locations in Massachusetts, and provisionally approved for cultivation in Ohio and dispensing in both Maryland and Pennsylvania.

Concurrent with the closing of the purchase, the Company entered into a long-term, triple-net lease agreement with the PharmaCann subsidiary, which intends to operate the property upon completion of development as a medical-use cannabis cultivation and processing facility in accordance with Massachusetts medical-use cannabis regulations. The initial term of the lease is 15.25 years, with two options to extend the term for two additional five-year periods. The lease provides for an

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