After the market closed on Tuesday, cannabis REIT Innovative Industrial Properties, Inc. (NYSE: IIPR)said that it closed on the acquisition of a property in Illinois, and entered into a long-term lease with a subsidiary of 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF). The purchase price for the property was $6.5 million (excluding transaction costs). 4Front is expected to construct approximately 250,000 square feet of industrial space at the property, for which IIP has agreed to provide reimbursement of up to $43.75 million. Assuming full reimbursement for the construction, IIP’s total investment in the property is expected to be $50.25 million (excluding transaction costs). 4Front intends to operate the property upon completion of construction as a licensed cannabis cultivation and processing facility.
“We are excited to expand our partnership with IIP as the Illinois marketplace continues its record-breaking sales streak,” said Leo Gontmakher, Chief Executive Officer of 4Front. “This next-generation cultivation and manufacturing facility will not only allow us to best meet the state’s robust market demand, but it will also broaden the reach of our innovative, low-cost cultivation and manufacturing methodologies.”
Illinois, the eleventh state to legalize cannabis for adult-use, commenced adult-use cannabis sales at the beginning of last year. In this first year of adult-use sales, Illinois’ regulated cannabis sales were over $1.0 billion in 2020, including $669 million in adult-use sales and over $366 million in medical-use sales. In June 2021 alone, reflecting the continued strong and growing demand, Illinois adult-use cannabis dispensaries generated over $115 million in sales (excluding medical cannabis sales), according to the Illinois Department of Financial and Professional Regulation. For the first time, in the first quarter of 2021, Illinois’ tax revenues from regulated cannabis sales surpassed tax revenues from liquor sales. IIP owns seven regulated cannabis cultivation and processing facilities in Illinois, representing a total expected investment of approximately $254.9 million, which includes commitments by IIP to fund future tenant improvements and construction at certain properties.
“We are thrilled to expand our long-term real estate partnership with 4Front with this new ground-up development project in Illinois,” said Paul Smithers, President and Chief Executive Officer of IIP. “We look forward to working closely with the 4Front team in the coming months on the development of this state-of-the-art facility, which we expect will provide 4Front with tremendous, cost-effective scalability and a highly controlled environment for production of the quality products that 4Front is known for.”