Innovative Industrial Properties, Inc. (IIP) (NYSE: IIPR) paid $1.35 million for a property in Missouri and entered into a long-term lease with CPC of Missouri – Smithville, LLC (CPC), a subsidiary of Calyx Peak, Inc. (Calyx). CPC is expected to construct approximately 83,000 square feet of industrial space at the property, for which IIP has agreed to provide reimbursement of up to $26.72 million. IIP’s total investment in the property is expected to be $28.25 million. CPC said it intends to operate the property upon completion of construction as a licensed cannabis cultivation and processing facility.
“We are excited to announce this new long-term real estate partnership with Calyx, expanding our footprint into Missouri as our 19th state,” said Paul Smithers, President and Chief Executive Officer of IIP. “Calyx has developed a strong reputation for quality, award-winning cannabis products in California, and we look forward to working closely with the Calyx team in coming months on the development of this new state-of-the-art facility in Missouri, as Calyx expands its operational platform to meet the tremendous growth in demand from patients throughout the state.”
Calyx currently operates a 235,000 square foot cannabis cultivation facility in California, and expects to begin construction on a dispensary location in southern California in the near future. Calyx also has a Tier 3 cultivation license and a provisional adult-use dispensary license in Massachusetts, and expects to open a dispensary in the West Plaza neighborhood of Kansas City, Missouri later this year. Founded in 2016, Calyx is headquartered in Massachusetts and plans to be vertically integrated in three states by the end of 2022.
“We are thrilled to enter into this long-term real estate partnership with IIP for the development of this new facility in Missouri,” said Erin Carachilo, CEO of Calyx, and Lee Hoffman of CPC. “While less than one year since the launch of Missouri’s medical cannabis program, we have witnessed a tremendous rate of adoption by patients and growth in sales throughout the state, and look forward to completing the development of this facility, which will be designed with next-generation systems in a highly controlled environment that will enable us to bring our premium, diversified genetics at scale to Missouri patients.”
Missouri began legal medical cannabis sales in October of 2020, and regulated medical-use sales have grown rapidly since then, with total sales in August 2021 alone of approximately $22 million, according to the Missouri Department of Health and Senior Services. As of August 31, 2021, there were over 177,000 patient applications and 5,800 caregiver applications in the state. Missouri’s regulations provide for numerous qualifying medical conditions for treatment with cannabis, including, among others, cancer, epilepsy, PTSD, HIV/AIDS, terminal illness, Alzheimer’s and any chronic medical condition normally treated with prescription medication that can lead to dependence. In addition, petitions for Missouri voters to approve the adoption of an adult-use cannabis program are targeting the November 2022 ballot.