Core Insights - The ancillary cannabis sector is gaining attention as it provides essential services without directly handling the plant, facing fewer regulatory challenges compared to plant-touching companies [1][2] - Despite a slowdown in the U.S. cannabis market growth in 2025, analysts maintain a long-term positive outlook, prompting investors to seek stable investment opportunities [1][2] Industry Overview - The U.S. cannabis market is expanding, with new recreational states emerging, although the growth rate has decelerated in 2025 [1] - Ancillary companies are less affected by retail price fluctuations, providing a more predictable revenue stream, making them attractive to investors [2] Company Profiles Innovative Industrial Properties (IIPR) - IIPR is a leading cannabis real estate investment trust, focusing on cultivation and processing facilities with long-term triple-net lease agreements [5][6] - The company operates primarily in limited-license states, ensuring stable demand and indirect exposure to retail performance [6][8] - Despite industry challenges, IIPR remains profitable, maintaining a conservative balance sheet and steady rental income [8][9] NewLake Capital Partners (NLCP) - NLCP adopts a focused approach, owning both industrial and dispensary properties under triple-net leases, ensuring steady rental income [10][12] - The company emphasizes conservative borrowing and predictable income, making it a lower-risk option in the ancillary sector [12][13] - NLCP has maintained stable financial performance and continues to pay solid dividends, with potential for growth as new recreational states emerge [14][15] Chicago Atlantic Real Estate Finance (REFI) - REFI operates as a commercial mortgage REIT, providing secured loans to cannabis operators rather than owning properties, which reduces operational risk [16][19] - The company focuses on credit quality and capital preservation, generating attractive interest income from its loan portfolio [18][19] - REFI's strategy allows it to participate in cannabis growth while avoiding many risks associated with cultivation or retail operations [19]