I have a recommendation that pays a dividend and works in the marijuana industry. But they don't actually "touch the plant" which makes it a safer bet for long term investors, asserts Jimmy Mengel, growth and income expert and editor of The Crow's Nest.

Innovative Industrial Properties (IIPR) was the first marijuana REIT listed on the NYSE — and one of the only cannabis-based companies that has been allowed such a prestigious listing.

The company has a pretty simple premise: it acquires cannabis facilities and rents them out to licensed growers and producers. These are industrial real estate properties that can allow their tenants to meet the quality standards for medical-use cannabis and provide the space and technology needed to run a successful cannabis company.

Once it sets up its properties, it lands tenants who pay huge premiums for the space. One of its clients is PharmaCann, a medical marijuana company that currently pays $319,580 a month in rent and $105,477 per month in property management fees.

Here in Maryland, Innovative Industrial Properties owns a property that it rents to another medical marijuana producer, Holistic Industries. It pays over a million bucks a month to lease the property to grow its medical plants.

As a landlord, you can get much better returns than you can in the marijuana space. There simply aren't many other options. Unless they come up with millions in funding and have deep enough pockets to stay afloat during the years it takes to get a new facility up and running, most companies are best off paying a premium for a space that is ready to roll.

As the demand for marijuana grows with each new state that legalizes both recreational and medical marijuana, the list of prospective tenants grows for Innovative Industrial Properties. It continues to acquire new facilities to bolster its portfolio of properties.

Marijuana needs to be grown somewhere. The problem is that setting up a large-scale growing operation can cost millions and millions of dollars. Upstart companies can’t always afford to do that — especially in the U.S., where financing from traditional banks can be all but impossible.

That’s why REITs could be such an important factor in the industry going forward. Basically, these companies act as landlords who charge rent to businesses to occupy these properties. Those businesses could be shopping malls, restaurants, even self-storage facilities and apartment buildings. Or, for our purposes today, marijuana warehouse operations.

REITs, by law, have to pay at least 90% of their pre-tax income as dividends to their shareholders. That can lead to some really great returns for long-term investors.

In fact, today, the only real way to invest in the marijuana industry and receive a decent dividend payout is to invest in a REIT. Right now there is really only one serious option in the space. This is going to be a great growth stock — though it may take some time.

But here’s the best part. Innovative Industrial Properties currently pays a meaty dividend of around 3%, which is unheard of in this industry. So you get some great yield while we watch the industry grow. It’s the best of both worlds.

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