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NewLake Capital Partners (NLCP)
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NLCP
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NewLake Capital Partners (NLCP) Risk Analysis

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Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

NewLake Capital Partners disclosed 79 risk factors in its most recent earnings report. NewLake Capital Partners reported the most risks in the “Finance & Corporate” category.

Risk Overview Q1, 2026

Risk Distribution
79Risks
41% Finance & Corporate
29% Legal & Regulatory
18% Production
8% Ability to Sell
3% Tech & Innovation
3% Macro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

S&P500 Average
Sector Average
Risks removed
Risks added
Risks changed
NewLake Capital Partners Risk Factors
New Risk (0)
Risk Changed (0)
Risk Removed (0)
No changes from previous report
The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q1, 2026

Main Risk Category
Finance & Corporate
With 32 Risks
Finance & Corporate
With 32 Risks
Number of Disclosed Risks
79
+1
From last report
S&P 500 Average: 31
79
+1
From last report
S&P 500 Average: 31
Recent Changes
1Risks added
0Risks removed
0Risks changed
Since Mar 2026
1Risks added
0Risks removed
0Risks changed
Since Mar 2026
Number of Risk Changed
0
No changes from last report
S&P 500 Average: 1
0
No changes from last report
S&P 500 Average: 1
See the risk highlights of NewLake Capital Partners in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 79

Finance & Corporate
Total Risks: 32/79 (41%)Below Sector Average
Share Price & Shareholder Rights13 | 16.5%
Share Price & Shareholder Rights - Risk 1
Risks related to engaging in certain capital raising activities and secondary trading in our common stock
Many clearing firms in the United States are prohibited or very limited in their ability to settle securities of companies engaged in the cannabis industry, which could adversely impact our ability to raise funds in the capital markets. In the United States, many clearing firms for broker-dealers are prohibited by their internal policies or otherwise have refused to settle sales of securities offerings of companies engaged in the cannabis industry. We lease cultivation properties and dispensaries to tenants who operate in the cannabis industry, and thus many clearing firms and other market participants consider us to be engaged in the cannabis industry. Therefore, the number of clearing firms that will settle our securities offerings, or secondary sales of our common stock, is extremely limited. This means that broker-dealers that we may engage to sell our securities, will have few alternatives for clearing firms that will settle such transactions. This limitation is more pronounced for companies, like ours, that have securities that trade on the OTCQX® Best Market rather than on a national securities exchange. Therefore, our access to the capital markets may be constrained, including having to rely on best efforts securities offerings as opposed to more traditional underwritten securities offerings. Additionally, limitations on settling secondary sales of our securities may limit the marketability and daily trading volume of our securities. These conditions may adversely impact our ability to raise funds in the capital markets and fully execute our business plans as, the amount of proceeds we raise in best efforts securities offerings may be substantially less than the amount that we expect. Given the level of regulation and scrutiny of the cannabis industry by stock exchanges and other regulators, this condition may continue or become more pronounced in the future.
Share Price & Shareholder Rights - Risk 2
Risks related to non-U.S. stockholders
Non-U.S. stockholders generally are subject to U.S. federal withholding tax on dividends from REITs. Changes in U.S. tax law or in tax treaties could adversely affect the after-tax returns for non-U.S. investors, potentially reducing the attractiveness of our common stock in international markets.
Share Price & Shareholder Rights - Risk 3
Risks related to securities analysts, effect on the price of our common stock11
The research, ratings, and recommendations issued by securities analysts can significantly influence investor sentiment and the market price of our common stock. A downgrade or negative commentary by analysts may lead to a decline in our stock price and adversely affect our market capitalization.
Share Price & Shareholder Rights - Risk 4
Risks related to the effect of distributions on the price of our common stock
The payment of cash distributions may have the effect of reducing the market price of our common stock if investors believe that funds distributed are no longer available for reinvestment in growth opportunities. This dilution of reinvestable cash could adversely affect investor perceptions and the trading price of our stock.
Share Price & Shareholder Rights - Risk 5
Risks related to common stock and preferred stock eligible for future sale on share price
Future issuances or sales of our common or preferred stock, whether by us or by stockholders, may result in dilution or adverse market perceptions. Changes in the supply of securities available for sale could lead to a decline in the market price of our stock.
Share Price & Shareholder Rights - Risk 6
Risks related to the volatility of the market price of our common stock
The market price for our common stock has been and may continue to be volatile. Factors such as operating performance, market sentiment, regulatory changes, and economic conditions could cause significant price fluctuations that adversely affect stockholder value.
Share Price & Shareholder Rights - Risk 7
Risks related to ownership limits which may restrict change in control
Under certain provisions of Maryland law, as well as our charter, there may be ownership limits that restrict how control of the company can change hands. These limits could discourage or delay transactions that might otherwise result in a beneficial change in control or a premium for our stockholders.
Share Price & Shareholder Rights - Risk 8
Risks related to the difficulty of removing directors
Our corporate charter and applicable Maryland law make it difficult to remove directors from the board. This could delay necessary changes in management or corporate strategy even when such changes may be in the best interests of the company and its stockholders.
Share Price & Shareholder Rights - Risk 9
Risks related to limitations on rights to take action against our directors and officers
Our stockholders have limited rights to take direct action against our directors and officers, which could reduce their ability to hold management accountable for decisions that may negatively impact the company’s performance and the market price of our securities.
Share Price & Shareholder Rights - Risk 10
Risks related to conflicts of interest between stockholders and holders of LPI Units
Conflicts of interest may arise between the interests of our common stockholders and those of the holders of LPI Units, especially given our role as the general partner of our operating partnership. These conflicts could result in business decisions that favor one group over the other, potentially to the detriment of common stockholders.
Share Price & Shareholder Rights - Risk 11
Risks related to our authorized but unissued shares of common and preferred stock
Our charter permits the issuance of additional shares of common or preferred stock without stockholder approval. Such issuances could dilute the ownership interests of existing stockholders and potentially delay or prevent a change in control that might otherwise result in a premium for our common stock.
Share Price & Shareholder Rights - Risk 12
Risks related to certain provisions of Maryland law
Certain provisions of Maryland law, including those governing business combinations and director removal, could inhibit changes in control or limit our flexibility in pursuing corporate transactions. These legal constraints could restrict our ability to efficiently adapt to changing market conditions or to pursue strategic opportunities.
Share Price & Shareholder Rights - Risk 13
Risks related to certain stockholders’ rights to nominate members of our board
Certain of our stockholders have rights under an investor rights agreement to nominate members to our board of directors. This could limit the ability of other stockholders to influence corporate governance and board decisions, which might not always align with the interests of the majority of our investors.
Accounting & Financial Operations4 | 5.1%
Accounting & Financial Operations - Risk 1
Risks related to our ability to make distributions and their reflection of our performance
Our ability to make cash distributions to stockholders is dependent on our operating performance and cash flow generation. If our distributions do not accurately reflect our financial performance or are reduced due to operational challenges, the market price of our common stock may suffer.
Accounting & Financial Operations - Risk 2
Risks related to dividends payable by REITs and their tax implications
Dividends paid by REITs generally do not qualify for the favorable tax rates available to dividends from regular corporations. This disadvantage could make our stock less attractive to certain investors and adversely impact the market price of our common stock.
Accounting & Financial Operations - Risk 3
Risks related to our status as an emerging growth company and smaller reporting company
We are an “emerging growth company” and a “smaller reporting company” and may take advantage of reduced disclosure requirements. While this may lower certain costs, it could also make our common stock less attractive to investors relative to companies with full reporting obligations. This may result in a less active trading market and more volatile stock prices, potentially affecting our access to capital and overall market valuation.
Accounting & Financial Operations - Risk 4
Risks related to impairment charges
Our real estate assets may be subject to impairment charges. We evaluate our real estate assets for impairment whenever events or changes in circumstances indicate that the carrying amount of a property may not be recoverable. In the event a tenant defaults or vacates a property, we perform a recoverability test by comparing the carrying value of the property to the estimated future undiscounted cash flows expected to be generated by the asset. These evaluations require significant management judgment and are based on assumptions regarding re-tenancy periods, lease terms, achievable market rental rates, and required capital expenditures. If future conditions worsen, we may be required to record a material impairment charge.
Debt & Financing9 | 11.4%
Debt & Financing - Risk 1
Risks related to making investments in asset classes outside of our core investment strategy
We may make investments in asset classes outside of our core real estate-focused investment strategy in order to pursue growth opportunities. However, such diversification could be perceived as complicating our strategy relative to our peers. Entry into new asset classes may introduce unfamiliar risks, subject us to additional regulatory oversight, and increase the likelihood of litigation or other adverse outcomes.
Debt & Financing - Risk 2
Risks related to assets held at financial institutions
We currently, and may in the future, maintain assets at financial institutions in amounts that exceed the FDIC insurance limit of $250,000. If a financial institution fails, amounts above the insured threshold could be lost, which would adversely impact our liquidity, financial condition, and results of operations.
Debt & Financing - Risk 3
Risks related to accessing bankruptcy courts
Due to the federal illegality of cannabis, there is a compelling argument that federal bankruptcy courts cannot provide relief for parties engaged in cannabis-related businesses. As a result, if a tenant or business associated with cannabis operations seeks bankruptcy protection, our ability to obtain relief or recover unpaid amounts may be limited, adversely impacting our business.
Debt & Financing - Risk 4
Risks related to the service of banks and other financial institutions
We and our tenants may have difficulty accessing the service of banks and other financial institutions for transactions relating to real estate and cannabis operations. Due to federal prohibitions and the risk of enforcement action under anti-money laundering laws, many institutions are reluctant to provide banking services to cannabis-related businesses, which may constrain our ability to secure financing and conduct normal business operations.
Debt & Financing - Risk 5
Risks related to operating our business to avoid registration as an investment company
We have structured our business to operate as a REIT with a focus on real estate investments, thereby avoiding registration as an investment company. However, if market conditions force us to expand into other asset classes or business activities, we may face regulatory hurdles and adverse consequences that could negatively affect our business.
Debt & Financing - Risk 6
Risks related to our Revolving Credit Facility
Our Revolving Credit Facility is subject to certain liquidity and operating covenants and contains provisions that may allow lenders to accelerate repayment or restrict future borrowings in the event of a default. Changes in market conditions, breaches of covenants, or lender actions could severely limit our ability to access funds and negatively affect our business.
Debt & Financing - Risk 7
Risks related to interest rate fluctuations
Interest rates are sensitive to a variety of economic and political factors. An increase in interest rates could raise our borrowing costs and adversely affect our ability to refinance existing debt or obtain new financing. This would increase our expenses, reduce our cash flow, and potentially limit our growth opportunities.
Debt & Financing - Risk 8
Risks related to significant debt
We may incur significant debt through various financing arrangements, including bank credit facilities, public or private debt issuances, and derivative instruments. Increased leverage could subject us to restrictive covenants, higher interest costs, and refinancing risks that may materially impair our financial condition and reduce available cash flows for operations or distributions.
Debt & Financing - Risk 9
Risks related to external sources of capital
Our growth depends on external sources of capital, which may not be available on favorable terms or at all. Global or regional economic uncertainty, changes in the regulatory environment relating to cannabis, or adverse market conditions could prevent us from accessing the capital markets when needed, thereby limiting our ability to acquire additional assets or fund operations.
Corporate Activity and Growth6 | 7.6%
Corporate Activity and Growth - Risk 1
Risks related to changes to our investment strategies by our board
Our board of directors has broad discretion to change our investment objectives and strategies without requiring stockholder approval. Changes in strategy that are not aligned with stockholders’ expectations may adversely affect the company’s performance and the market price of our common stock.
Corporate Activity and Growth - Risk 2
Risk Management and Strategy
We employ a risk management strategy for the assessment, identification and management of material risks stemming from cybersecurity threats. Our methodologies involve a systematic evaluation of potential threats, vulnerabilities, and their potential impacts on our organization’s operations, data, and systems. Our cybersecurity risk management program includes: • Risk assessments designed to help identify material cybersecurity risks to our critical systems, data and our IT environment; • The use of third-party service providers to assess, test or otherwise assist with aspects of our security controls; • Cybersecurity awareness training for our employees and senior management through the use of third-party providers for regular mandatory trainings; • A cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • Designing and assessing our program using the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework as a set of guiding principles. Our third-party service providers are primarily responsible for the security of their own information technology environments and we rely on third-party service providers to supply and store our sensitive data in a secure manner. All of these third parties face potential risks relating to cybersecurity similar to ours which could disrupt their businesses and therefore adversely impact us. While we provide guidance and specific requirements in some cases, we do not directly control any of these parties' information technology security operations, or the amount of investment they place in guarding
Corporate Activity and Growth - Risk 3
Risks related to the acquisition of properties “as-is”
We acquired some of our properties, and expect to acquire other real estate properties, “as is” or otherwise with limited recourse to the prior owner and with only limited representations and warranties regarding the condition, use, and ownership of the property. There may be environmental or other unknown conditions associated with these properties. If such conditions exist or develop after acquisition, we could be exposed to significant liabilities and may not be able to recover losses from the prior owner.
Corporate Activity and Growth - Risk 4
Risks related to the development and redevelopment of properties we acquire
We face significant risks associated with the development and redevelopment of properties that we own. Many of our projects involve build-to-suit arrangements for cannabis cultivation centers and dispensaries. Risks include construction cost overruns, delays in permitting or construction, unavailability of raw materials, warranty claims, safety incidents, performance issues with contractors, unforeseen engineering or environmental problems, and weather-related disruptions. Any of these factors could materially delay a project or increase its cost, thereby adversely impacting our business.
Corporate Activity and Growth - Risk 5
Risks related to our acquisitions of dispensaries and entrance into leases with licensed operators for these properties
We have acquired and may continue to acquire dispensaries and enter into leases with licensed operators for those properties, which present additional risks and challenges in comparison to properties for the cultivation and production of cannabis. Cannabis dispensaries entail some risks that are different from those associated with regulated cannabis cultivation and processing facilities, including the impact of evolving retail distribution models, significant cash handling, local real estate market conditions, and cybersecurity risks related to data breaches that could affect customer information and reputations.
Corporate Activity and Growth - Risk 6
Risks related to our ability to consummate future acquisitions
Our growth will depend upon future acquisitions of cannabis-related facilities, and we may be unable to consummate acquisitions on advantageous terms or at all. Our growth strategy is focused on the acquisition of cultivation properties and dispensaries that are leased to tenants that are well positioned to benefit from the growth of the cannabis industry and for whom such real estate is operationally strategic to their business. Our ability to acquire these real estate assets on favorable terms is subject to the following risks, among others: significantly increased competition from other potential acquirers or increased availability of alternative debt and equity financing sources for tenants, unsuccessful purchase and lease transactions, challenges in financing, and the possibility of acquiring properties with limited recourse for liabilities. Our failure to consummate acquisitions on advantageous terms without substantial expense or delay would impede our growth and negatively affect our business (including our financial performance and condition).
Legal & Regulatory
Total Risks: 23/79 (29%)Above Sector Average
Regulation17 | 21.5%
Regulation - Risk 1
Added
There have been no material changes to the risk factors set forth in the section titled “Risk Factors” included in our Annual Report on Form 10-K, dated March 6, 2026, filed with the SEC. Our business involves significant risks. You should carefully consider the risks and uncertainties described in our Annual Report on Form 10-K, together with all of the other information in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report. The risks and uncertainties described in our Annual Report are not the only ones we face. Additional risk and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects as well as our ability to accomplish our strategic objectives. In that event, the market price of our common stock could decline and you could lose part or all of your investment.39
Regulation - Risk 2
Risks related to the Sarbanes-Oxley Act
We will be subject to the requirements of the Sarbanes-Oxley Act. Although as an emerging growth company we are permitted certain phased-in compliance measures, implementation of internal control over financial reporting and related remediation efforts could be costly and challenging. Any material weaknesses identified in our internal controls could lead to restatements, delays in filings, or a decline in the market price of our common stock.
Regulation - Risk 3
Risks related to FDA regulation of cannabis
FDA regulation of cannabis and the possible registration of facilities where cannabis is grown could negatively affect the cannabis industry, which would directly impact our business. If the FDA were to regulate cannabis as a drug under the Food, Drug and Cosmetics Act or require facilities to register, the resulting compliance costs and delays in product approvals could create additional uncertainty and adversely affect tenant operations.
Regulation - Risk 4
Risks related to the potential for new federal, state or local laws
New laws that are adverse to the business of our tenants may be enacted, and current favorable national, state or local laws or enforcement guidelines may be modified or eliminated in the future. Because cannabis regulation continues to evolve across jurisdictions, future regulatory inquiries, enforcement initiatives, or litigation in areas where our tenants operate are inherently uncertain and could have a material adverse effect on our business and financial condition.
Regulation - Risk 5
Risks related to engaging in operations for the adult-use of cannabis
Certain of our tenants engage in operations for the adult-use cannabis industry in addition to or in lieu of operations for the medical-use cannabis industry. Because adult-use operations may be subject to different or heightened regulatory standards—and may lack the protections afforded by certain legislative provisions—the associated risks, including increased enforcement or operational challenges, may adversely affect our tenants and, in turn, our business.
Regulation - Risk 6
Risks related to regulatory investigations, antitrust litigation, and enforcement actions involving our tenants, including recent state-level actions in Ohio
Regulatory investigations, enforcement actions, and litigation within the cannabis industry may adversely affect our tenants and, as a result, our business. For example, recent state-level antitrust actions in Ohio underscore the risk that regulatory scrutiny and litigation could force tenants to modify their business practices, incur significant legal costs, or suffer reputational harm, all of which could impair their ability to pay rent.
Regulation - Risk 7
Risks related to enforcement of federal laws regarding cannabis
Cannabis remains illegal under federal law, and therefore, strict enforcement of federal laws would likely result in our inability – and the inability of our tenants – to execute our respective business plans. Federal law prohibits the possession, distribution, cultivation, manufacture and use of cannabis regardless of state legalization, and federal enforcement actions could severely disrupt our operations and access to capital.
Regulation - Risk 8
Risks related to changing laws and regulations affecting the regulated cannabis industry
Laws and regulations affecting the regulated cannabis industry are constantly changing. Uncertainty regarding future state and federal regulations means that we cannot be sure that the current favorable regulatory environment will continue. Any adverse changes in the regulatory landscape could increase compliance costs, restrict operations, or otherwise harm our financial performance.
Regulation - Risk 9
Risks related to the concentration of our properties in states allowing cannabis operations
Our properties are, and are expected to continue to be, geographically concentrated in states that permit cannabis cultivation and dispensing, and we will be subject to social, political and economic risks of doing business in these states. As of December 31, 2025, we owned 34 properties in 12 states, and we expect that the properties that we acquire in the future will be geographically concentrated in these states and other states that have established cannabis use programs. Factors such as licensing challenges, local political environments, and regional economic conditions could adversely affect our operations.
Regulation - Risk 10
Risks related to legislative, regulatory or administrative changes
Our REIT status and the associated tax treatment of our earnings are subject to potential changes in laws, regulations, or their interpretations. Any adverse changes could have a material impact on our financial condition, liquidity, and ability to distribute earnings to our stockholders.
Regulation - Risk 11
The following risk factors may adversely affect our overall business, financial condition, results of operations, and cash flows; our ability to make distributions to our stockholders; our access to capital; or the market price of our common stock, as further described in each risk factor below. In addition to the information set forth herein, one should carefully review and consider the information contained in our other reports and filings that we make with the SEC from time to time. The risks that we describe in our public filings are not the only risks that we face. Additional risks and uncertainties not presently known to us or are out of our control, or that we currently consider immaterial, also may materially adversely affect our business, financial condition, and results of operations. Additional information regarding forward-looking statements is included herein.
Regulation - Risk 12
Risks related to complying with REIT requirements
Compliance with the extensive rules governing REITs—including asset, income, and distribution tests—can be challenging and may force us to forgo otherwise attractive business opportunities. Failure to meet these requirements would not only have tax consequences but could also jeopardize our status as a REIT, affecting our overall business strategy.
Regulation - Risk 13
Risks related to Section 280E of the Code and the possible effect on our REIT status
Because cannabis is classified as a Schedule I controlled substance under federal law, Section 280E of the Code may apply and disallow certain tax deductions normally available to businesses. If these provisions were applied to us or our tenants, it could affect our ability to remain compliant with REIT requirements and result in higher tax liabilities, adversely impacting our financial condition.
Regulation - Risk 14
Risks related to REIT distribution requirements
U.S. federal income tax law requires that a REIT distribute at least 90% of its taxable income annually. This stringent requirement may force us to pay out cash that might otherwise be used for growth opportunities, limiting our ability to reinvest in the business and potentially affecting our long-term competitive position.
Regulation - Risk 15
Risks related to failure to maintain our qualification as a REIT
To qualify as a REIT, we must comply with a number of statutory and regulatory tests regarding the nature and diversification of our assets, income, and distributions. Any failure to meet these requirements could result in adverse tax consequences and would likely reduce the cash available for distribution to our stockholders.
Regulation - Risk 16
Risks related to our properties being subject to extensive regulations
Our properties are, and will continue to be, subject to extensive regulatory requirements imposed by local, state, and federal authorities. These regulations can result in significant additional costs, delays in obtaining necessary permits or approvals, and other operational challenges that may materially affect our financial performance and the value of our properties.
Regulation - Risk 17
Risks related to our operating partnership issuing additional LPI Units
Our operating partnership may issue additional Limited Partnership Units (LPI Units) to third parties without the consent of our stockholders. This could dilute our ownership percentage and reduce the amount of cash distributions we receive from the operating partnership.
Litigation & Legal Liabilities1 | 1.3%
Litigation & Legal Liabilities - Risk 1
Risks related to the guarantors of our tenant leases being unable to satisfy their obligations
If the guarantors of our tenant leases and loan are unable to satisfy their obligations to us in connection with a default by the tenant or borrower, it could have a material adverse effect on our business (including our financial performance and condition).
Taxation & Government Incentives4 | 5.1%
Taxation & Government Incentives - Risk 1
Risks related to Section 280E of the Internal Revenue Code (the “Code”) and its effects on our tenants
Section 280E of the Code provides that no tax deduction is allowed for expenses incurred in carrying on any trade or business if that business consists of trafficking in controlled substances, including cannabis, which is classified as a Schedule I controlled substance under federal law. Because our tenants are engaged in activities subject to Section 280E, they may face significant tax burdens that could impair their financial condition and ability to make lease payments to us. Any material adverse impact on our tenants, as a result of such tax consequences, could harm our business.
Taxation & Government Incentives - Risk 2
Risks related to our Taxable REIT Subsidiary (“TRS”)
We have established a Taxable REIT Subsidiary (TRS) to engage in certain non-real estate activities. However, the TRS is subject to its own complex tax rules and limitations. Any adverse developments related to the TRS’s operations or its tax treatment could have a material adverse impact on our overall tax situation and cash flow available for distribution.
Taxation & Government Incentives - Risk 3
Risks related to the ability of our board to revoke our REIT election
Our board of directors has the authority to revoke our REIT election without stockholder approval if it determines that continuing as a REIT is not in our best interests. Such a revocation would subject us to corporate taxation and could significantly alter our business model, thereby reducing the funds available for distribution to stockholders.
Taxation & Government Incentives - Risk 4
Risks related to the tax on prohibited transactions
Certain transactions that are deemed prohibited under applicable tax laws may result in significant tax liabilities. These transactions could reduce the amount of cash available for distribution to our stockholders and adversely affect our financial flexibility and performance.
Environmental / Social1 | 1.3%
Environmental / Social - Risk 1
Risks related to potential liability for environmental matters and climate change
Potential liability for environmental matters could adversely affect our business (including our financial performance and condition). As an owner of real estate, we face risks under federal, state and local environmental laws for the remediation or removal of hazardous substances. Even if we include indemnification provisions in our leases, we may still be held liable for environmental contamination. Unforeseen environmental issues or the impact of climate change could further reduce property values and adversely affect our operations.
Production
Total Risks: 14/79 (18%)Above Sector Average
Employment / Personnel2 | 2.5%
Employment / Personnel - Risk 1
Risks related to key personnel
We depend on the expertise, experience, and network of our senior management and key personnel. The loss of any key individual or the failure to attract and retain suitably qualified personnel could delay or impair our business operations and have a material adverse effect on our financial performance.
Employment / Personnel - Risk 2
Risks related to our senior management
Our senior management team has broad discretion over our investments and plays a key role in executing our business strategies. Any inability to effectively manage our portfolio, or the loss of key decision-makers, could adversely impact the execution of our strategy and harm our business performance.
Costs12 | 15.2%
Costs - Risk 1
Risks related to our company structure and structurally subordinated rights of payment
As a holding company that operates through an operating partnership, our ability to generate cash for distributions is dependent on the performance of our subsidiaries. Stockholders of our company are structurally subordinated to the obligations of our operating partnership, which may limit their recoveries in the event of financial distress.
Costs - Risk 2
Risks related to severance agreements
Severance provisions included in the employment agreements with our executive officers require us to pay significant compensation if their service is terminated under certain conditions. These obligations could be costly and may delay or prevent a change in control even when it is in the best interests of the company.
Costs - Risk 3
Risks related to re-characterization of sale-leaseback transactions
We purchase properties and lease them back to sellers in sale-leaseback transactions. If any such transaction were to be re-characterized as a financing arrangement for tax purposes, the deductions normally available for depreciation and cost recovery could be disallowed. This re-characterization could cause us to fall short of REIT qualification tests and trigger material tax consequences.
Costs - Risk 4
Risks related to our tenants’ susceptibility to bankruptcy
Some of our tenants have been and could be susceptible to receivership and/or bankruptcy, which would affect our ability to generate rents from them and negatively affect our financial performance and condition. Because many of our tenants are involved in the cannabis industry – an industry subject to significant regulatory uncertainty and limited access to traditional financing – a bankruptcy or restructuring could delay or reduce cash flows and increase our costs related to re-leasing properties.
Costs - Risk 5
Risks related to our tenants’ ability to maintain their licenses for cannabis operations
Our tenants or borrower may be unable to renew or otherwise maintain the licenses or other requisite authorizations for their cannabis operations, which may result in such tenants or borrower not being able to operate their businesses and defaulting on their lease payments to us. As of December 31, 2025, 31 of our 34 properties were leased and these properties are primarily located in limited-license jurisdictions. Noncompliance with state and local licensing requirements may also expose us to penalties, fines, or additional liabilities.
Costs - Risk 6
Risks related to real estate assets and the real estate industry
Our business is subject to risks associated with real estate assets and the real estate industry, which could materially and adversely affect our business (including our financial performance and condition). Our ability to pay expected dividends to our stockholders depends on our ability to generate revenues in excess of expenses, scheduled principal payments on debt and capital expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control may decrease cash available for distribution and the value of our properties. These events include oversupply or reduction in demand in our markets, adverse changes in financial conditions, vacancies, increased operating costs, construction cost overruns and delays, civil unrest, acts of war, terrorist attacks, natural disasters, decreases in the underlying value of our real estate, changes in submarket demographics, and changes in traffic patterns.
Costs - Risk 7
Risks related to owners of properties located in close proximity to our properties
Owners of properties located in close proximity to our properties may assert claims against us regarding the use of our properties for cannabis cultivation, processing or dispensing. If such property owners successfully claim that our operations constitute a nuisance or otherwise reduce the market value of their properties, it could force us to incur significant legal costs or make concessions, adversely affecting our business.
Costs - Risk 8
Risks related to the potential forfeit of assets leased to cannabis businesses
Assets leased to cannabis businesses may be subject to forfeiture by federal authorities if used in violation of federal law. Even in states where cannabis is legal, federal policy permits asset forfeiture related to controlled substance activities. Such forfeitures would result in the loss of valuable property assets and could materially adversely affect our business.
Costs - Risk 9
Risks related to purchase of properties subject to ground leases
We may purchase properties subject to ground leases that expose us to the risk of losing the property. Under a ground lease, a tenant may develop or operate the property for a specified period, after which the improvements revert to the owner. A breach or termination of a ground lease could force us to relinquish control of the property, which could have a material adverse effect on our business and financial condition.
Costs - Risk 10
Risks related to obtaining various insurance policies
Due to our involvement in the regulated cannabis industry, we may have difficulty obtaining the various insurance policies desired to operate our business. Common coverages such as workers’ compensation, general liability, and directors’ and officers’ insurance may be more expensive or harder to obtain. Without adequate insurance or if coverage becomes limited or subject to onerous conditions, our business could be exposed to additional risks and financial liabilities.
Costs - Risk 11
Risks related to our properties’ access to adequate water and power supplies
If our properties’ access to adequate water and power supplies is interrupted, it could compromise their suitability for cannabis cultivation and production, thereby adversely affecting our ability to generate rental income. Securing additional water sources can require permits and incur additional costs, while reliance on uninterrupted power is critical—especially for indoor cultivation methods. Extended interruptions could harm tenant operations, leading to defaults on lease payments.
Costs - Risk 12
Risks related to liability of uninsured losses10
Liability for uninsured losses could materially and adversely affect our business (including our financial performance and condition). While our leases generally require tenants to maintain property and casualty insurance, losses from catastrophic events such as earthquakes, hurricanes, floods, or other disasters may be uninsurable or prohibitively expensive. In the event of an uninsured loss, we could lose a significant part of our capital investment or anticipated cash flows from affected properties.
Ability to Sell
Total Risks: 6/79 (8%)Above Sector Average
Competition1 | 1.3%
Competition - Risk 1
Risks related to competition for the acquisition of properties
Competition for the acquisition of properties suitable for the cultivation, production or retail sale of cannabis and alternative financing sources for licensed operators may impede our ability to make acquisitions or may increase the cost of these acquisitions. We face competition from a diverse mix of market participants including companies with similar business models, independent investors, hedge funds, and local real estate investors. Increased competition could force us to pay higher prices or agree to less favorable lease terms, thereby reducing our profitability.
Demand4 | 5.1%
Demand - Risk 1
Risks related to the limited operating history of our tenants
The tenant concentration risk (and related risk of tenant defaults) may be more pronounced in the cannabis industry due to the fact that some of our tenants have limited operating histories. See “Factors Impacting Our Operating Results - Financial Performance and Conditions of Our Tenants” for a discussion of our recent non-performing tenants. Some of our tenants have limited operating histories and may be more susceptible to payment and other lease defaults, which could materially and adversely affect our business (including our financial performance and condition).
Demand - Risk 2
Risks related to the limited number of cannabis-related facilities
There may only be a limited number of cannabis-related facilities located in our target jurisdictions operated by suitable tenants available for us to acquire, which could materially and adversely affect our growth prospects. We target primarily cannabis cultivation and dispensary facilities for acquisition and leasing to licensed operators under triple-net lease agreements. In light of the current regulatory landscape regarding cannabis, including the rigorous state licensing processes, limits on the number of licenses granted, zoning regulations, and banking challenges, the availability of suitable facilities may be limited.
Demand - Risk 3
Risks related to the demand for properties suitable for cannabis operations
Our portfolio of properties is concentrated in cultivation and dispensary properties used in the regulated cannabis industry. Further, we do not currently and do not expect in the future to invest in non-cannabis related real estate or businesses to hedge against the risk that cannabis industry trends might decrease the profitability of our facilities. A decrease in the demand for cannabis cultivation, processing and dispensary facilities would have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio.
Demand - Risk 4
Risks related to our limited number of tenants, and the inability of any of our tenants to make their lease payments
We have a very limited number of tenants, and the inability of any single tenant to make its lease payments could materially and adversely affect our business (including our financial performance and condition). We have a very limited number of tenants. As of December 31, 2025, we owned 34 total properties that were leased to 11 tenants. The following represents the percentage of our total annualized rental revenue, which is calculated by annualizing December 2025 monthly base rent for in-place leases in effect as of December 31, 2025, excluding revenue reimbursables, attributable to each tenant: Curaleaf (25.8%); Cresco Labs (14.8%); Trulieve (12.4%); The Cannabist Company (9.2%); C3 Industries, Inc. (8.4%); Calypso Enterprises (8.0%); Acreage (7.2%); Mint (6.7%); CODES (5.9%); PharmaCann (1.3%); and Bud’r (0.3%). During 2025, two tenants (from a total of 13 tenants at the beginning of the year) experienced payment defaults under their leases and subsequently vacated the leased properties, which exposes us to increased tenant credit risk. Lease payment defaults by any of our tenants or a significant decline in the value of any single property could materially and adversely affect our business (including our financial performance and condition). Our lack of tenant diversification also increases the potential that a single underperforming investment or tenant could have a material adverse effect on the price we could realize from the sale of our properties. Any adverse change in the financial condition of any of our tenants, including but not limited to the state cannabis markets not developing and growing in ways that we or our tenants projected, or any adverse change in the political climate regarding cannabis where our properties are located, would subject us to a significant risk of loss. In addition, failure by any of our tenants to comply with the terms of its lease agreement with us could require us to find another lessee for the applicable property. During 2025, as a result of the two tenant defaults described above, three properties became vacant, which exposes us to increased vacancy and re-leasing risk. We may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing that property. Furthermore, we cannot assure you that we will be able to re-lease that property for the rent we currently receive, or at all, or that a lease termination would not result in our having to sell the property at a loss.
Sales & Marketing1 | 1.3%
Sales & Marketing - Risk 1
Risks related to the sale or re-leasing of properties suitable for cannabis operations
We expect that at times we will deem it appropriate or desirable to sell or otherwise dispose of certain properties we own. The types of properties that we own are relatively illiquid compared to other types of real estate assets. This illiquidity could limit our ability to quickly dispose of properties in response to changes in regulatory, economic or other conditions, which could materially and adversely affect our business (including our financial performance and condition). In addition, if we are forced to sell or re-lease properties, we may not be able to obtain favorable terms, which could lead to losses.
Tech & Innovation
Total Risks: 2/79 (3%)Below Sector Average
Cyber Security1 | 1.3%
Cyber Security - Risk 1
Risks related to cyberattacks
The occurrence of cyber incidents or cyberattacks could disrupt our operations, result in the loss of confidential information, and/or damage our business relationships and reputation. Despite implementing various security measures, we cannot guarantee that our systems will be immune from sophisticated cyber threats.
Technology1 | 1.3%
Technology - Risk 1
Risks related to artificial intelligence
We may face challenges managing rapidly advancing artificial intelligence in our business which could adversely affect our competitive position. While artificial intelligence offers potential efficiencies and performance improvements, failure to effectively integrate or manage AI technologies could result in operational disruptions, security vulnerabilities, and competitive disadvantages.
Macro & Political
Total Risks: 2/79 (3%)Below Sector Average
Economy & Political Environment1 | 1.3%
Economy & Political Environment - Risk 1
Risks related to inflation
Inflation, whether real or anticipated, could adversely affect our tenants by increasing their operating expenses. If increases in tenants’ expenses outpace their revenue growth, their ability to pay rent may be impaired, which would in turn negatively impact our cash flows and overall financial performance.
Natural and Human Disruptions1 | 1.3%
Natural and Human Disruptions - Risk 1
Risks related to events not discussed herein
Additional risks and uncertainties not presently known to us or that may arise in the future could materially and adversely affect our business, financial condition, or results of operations. These unforeseen risks may not be captured in our filings and could further negatively impact our overall performance.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky.
    The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.
      They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.
        It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
          How do companies disclose their risk factors?
          Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.
            Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.
              Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.
                According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
                  How can I use TipRanks risk factors in my stock research?
                  Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.
                    You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.
                      Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.
                        A simplified analysis of risk factors is unique to TipRanks.
                          What are all the risk factor categories?
                          TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.
                          1. Financial & Corporate
                          • Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
                          • Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
                          • Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
                          • Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.
                          2. Legal & Regulatory
                          • Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
                          • Regulation – risks related to compliance, GDPR, and new legislation.
                          • Environmental / Social – risks related to environmental regulation and to data privacy.
                          • Taxation & Government Incentives – risks related to taxation and changes in government incentives.
                          3. Production
                          • Costs – risks related to costs of production including commodity prices, future contracts, inventory.
                          • Supply Chain – risks related to the company’s suppliers.
                          • Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
                          • Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.
                          4. Technology & Innovation
                          • Innovation / R&D – risks related to innovation and new product development.
                          • Technology – risks related to the company’s reliance on technology.
                          • Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
                          • Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.
                          5. Ability to Sell
                          • Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
                          • Competition – risks related to the company’s competition including substitutes.
                          • Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
                          • Brand & Reputation – risks related to the company’s brand and reputation.
                          6. Macro & Political
                          • Economy & Political Environment – risks related to changes in economic and political conditions.
                          • Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
                          • International Operations – risks related to the global nature of the company.
                          • Capital Markets – risks related to exchange rates and trade, cryptocurrency.