IIPR

IIPR is a triple-net cannabis REIT whose top line is now in a two-year decline: revenue fell to $266M in FY2025 (-13.8%), off the FY2023 peak of $310M, and net income dropped to $118M (-26.9%) with diluted EPS down 28.8% to $3.93. The 10-K is explicit about the cause — 'current unfavorable market dynamics in the regulated cannabis industry have adversely affected our ability to re-lease properties upon tenant defaults at the rental rates we currently receive and, in some cases, for prolonged periods.' Management catalogs sustained unit-price declines, illicit-market competition, and 'reduced capital availability and significant debt maturities for cannabis operators' that pressure tenant credit. The operating portfolio is still 96.7% leased with a 12.8-year weighted-average lease term, but those are backward-looking; the revenue line shows the re-leasing problem is already biting.

The dividend is the crux of the bear case. IIPR paid $216M in dividends in FY2025 — more than its $198M of operating cash flow and more than FFO (net income $118M + D&A $74.1M ≈ $192M), a payout north of 110% of FFO. To bridge that gap the company is leaning on the balance sheet: long-term debt more than tripled to $394M (+192.4%), total liabilities rose 18.3% to $523M, and cash collapsed 67.5% to $47.6M. A roughly 12% trailing yield ($216M / 28.1M shares ≈ $7.69 per share against a $63.26 price) is the market telling you it does not believe the payout is safe. A dividend cut is the most identifiable forward catalyst, and it is usually a downward one for an income name.