Market Overview

Innovative Industrial Properties Acquires Michigan Property and Enters Into Long-Term Lease with Green Peak Industries

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Innovative Industrial Properties, Inc. (the "Company") (NYSE:IIPR), the
leading provider of creative real estate capital solutions to the
medical-use cannabis industry, announced today that it closed on the
acquisition of the property located at 10070 Harvest Park in Dimondale,
Michigan, which is currently under development and expected to comprise
approximately 56,000 square feet upon completion.

The initial purchase price for the property was approximately $5.5
million, and the seller is responsible for completing certain
development milestones, for which the seller is expected to be
reimbursed approximately $5.3 million (the "Additional Purchase Price").
Green Peak Industries, LLC (also known as Green Peak Innovations, or
"Green Peak"), the tenant at the property, is also expected to complete
tenant improvements for the building, for which the Company has agreed
to provide reimbursement of up to $2.2 million (the "TI Allowance").
Assuming full payment for each step of the development and reimbursement
for tenant improvements, the Company's total investment in the property
will be $13 million. The State of Michigan Medical Marihuana Licensing
Board unanimously voted in July to pre-qualify Green Peak for large
scale medical cannabis licenses for cultivation, processing and
provisioning centers (retail), including 12 class C cultivation
licenses, one processor license and 19 provisioning center licenses.
Green Peak's seasoned management team, led by its Chief Executive
Officer, Jeff Radway, has extensive experience in founding and operating
successful businesses across a number of industries.

Concurrent with the closing of the purchase, the Company entered into a
long-term, triple-net lease agreement with Green Peak, which intends to
utilize the facility for medical cannabis cultivation and processing
upon completion of development. The initial term of the lease is 15
years, with two options to extend the term for two additional five-year
periods. The lease provides for an initial annualized aggregate base
rent of 15% of the sum of the initial purchase price, Additional
Purchase Price and TI Allowance, subject to three months of rent
deferral at the beginning of the term. The aggregate base rent is
subject to 3.5% annual increases during the term of the lease, and Green
Peak is also responsible for paying the Company a property management
fee equal to 1.5% of the then-existing aggregate base rent.

Michigan, with nearly ten million residents, represents one of the
largest medical cannabis markets in the country, having originally
passed the Michigan Marijuana Act in 2008. In September 2016, Michigan
signed legislation to establish a licensing framework for medical
cannabis operators, with Green Peak being one of the very first
companies to receive pre-approval for vertical integration. ArcView
Research Group estimates 2018 spending on medical cannabis to reach
approximately $869 million, and total regulated cannabis sales to grow
to nearly $1.4 billion by 2022.

"We are very pleased to enter into this long-term relationship with
Green Peak and its strong management team, and to bring our platform to
Michigan, a state that we see as presenting a tremendous opportunity,"
said Paul Smithers, President and Chief Executive Officer of the
Company. "With this acquisition, we have acquired nine properties across
seven states, continuing our diversification and growth, while remaining
focused on executing in line with our rigorous underwriting standards."

"Partnering with IIP allows us to deploy our capital into our operations
and to ramp up our provisioning centers, to meet the tremendous existing
demand and anticipated growth of medical cannabis for the hundreds of
thousands of patients throughout the state of Michigan," said Mr.
Radway, Chief Executive Officer of Green Peak. "We look forward to
completing development of this property, which is being built to provide
medical cannabis of the highest standards and specifications for our
patients."

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland
corporation focused on the acquisition, ownership and management of
specialized industrial properties leased to experienced, state-licensed
operators for their regulated medical-use cannabis facilities.
Innovative Industrial Properties, Inc. intends to elect to be taxed as a
real estate investment trust. Additional information is available at www.innovativeindustrialproperties.com.

Innovative Industrial Properties Forward-Looking Statements

This press release contains statements that the Company believes to
be "forward-looking statements" within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. All
statements other than historical facts, including, without limitation,
statements regarding Green Peak, the development and lease of the
Michigan property and the Michigan medical-use cannabis market, are
forward-looking statements. When used in this press release, words such
as we "expect," "intend," "plan," "estimate," "anticipate," "believe" or
"should" or the negative thereof or similar terminology are generally
intended to identify forward-looking statements. Such forward-looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed in, or implied
by, such statements.
Investors should not place undue reliance
upon forward-looking statements. The Company disclaims any obligation to
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.

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