Invest Like a Gangster

Anyone watch Tulsa King?

The show just started its third season. I’ve been rewatching the first two seasons to make sure I’m up to speed. It follows the story of an exiled New York mafia capo played by Sylvester Stallone. Essentially, after serving 25 years in prison, Stallone’s character is released and then sent to Tulsa.  

He quickly figures out how to “earn” for the “family” back in New York. He goes into business with a local bar and a legal pot shop. He brings value to both with the addition of a gaming permit, and later wind turbines.

Well, apparently, I’m building a similar portfolio. I mean, think about it. Our goals are the same—generate streams of income. However, I’ll take mine without the car bombs and machine gun shootouts.

One of my favorite real estate investments is VICI Properties (VICI). The company owns 54 casinos and 40+ other experiential properties, including golf courses, bowling alleys, and indoor water parks. It’s a REIT (real estate investment trust), so it owns the real estate and collects rent every month from those businesses.

These tenants can’t just pack up and move like you or I could. They are high-quality, specialty tenants that have made long-term investments. Plus, millennials and Gen Z are inclined to spend their money on experiences over things. It’s a great Current Yield position with a 5.3% yield.

I also recently got interested in wind turbine investments. A few weeks ago, I talked about why I liked Alliant Energy Corp. (LNT). Its dividend is lower than I would like, but grabbing a 3% yield on a speculation on the future of AI energy needs works for me.

I found a company with a higher yield for my premium Yield Shark readers. You can get the company name, ticker, and all the details and our money back guarantee here.

Now I just need a cannabis stock to round out my gangster portfolio.

Optimism That Fizzled Out

In 2019, I wrote about speculative investments in pot stocks. I also covered startup pharmaceutical companies interested in cannabinoid drugs for FDA approval. The 2018 federal Farm Bill legalized low-THC hemp and derivatives, and many states had decriminalized cannabis.

I remember the excitement swirling around potential investments. Lacking legalization at the federal level, these companies were listed on the OTC market. I also looked for creative investments like dehydration equipment maker EnWave Corp. (NWVCF).

My favorite cannabis play was Innovative Industrial Properties Inc. (IIPR). Its strategy was pretty brilliant. Cannabis companies could not get bank loans, so IIPR stepped in with a niche business model. A company would buy land, sell it to IIPR, and then lease it back on a long-term contract. The cannabis company freed up cash and had a locked in lease, IIPR had a real estate business, and income investors enjoyed the fat payments from the REIT structure.

It worked for quite a while. Just like a casino, a weed farm isn’t likely to move locations without a really good reason. IIPR’s properties always had over 90% occupancy, and rents were paid in full and on time.

We managed to grab a 25% gain on our shares in Yield Shark before the company started having issues. We sold on July 9, 2024, right before the stock cratered. It was the right call.

Tenants started dropping like flies earlier this year. And unlike prior years, new tenants weren’t lining up to take their place. The cannabis market is still looking for its long-term equilibrium. But now might be the time to start looking for opportunities.

Better the Second Time Around

Cannabis is legal for medical use in 40 states and recreational use in 24 states. But it’s still classified as a Schedule 1 controlled substance. That might change under President Trump. He has said his administration is looking at reclassifying marijuana.

The real excitement came earlier this week when Trump touted the potential benefits of cannabidiol in senior healthcare. The cannabidiol in question is hemp derived, but the market didn’t seem to care.

The AdvisorShares Pure US Cannabis ETF (MSOS) was up 28% on Monday. Individual stocks saw excitement as well. Cronos Group (CRON) was up 12.9%, Planet 13 Holdings Inc. (PLNH) jumped 23.5%, and Trulieve Cannabis Corp. (TCNNF) added 21%.

Still, the only dividend exposure is IIPR. Shares were up less than 1% on Monday. That’s how you know it has glaring issues right now. The rumors have caused share prices to jump, but we need to see real improvement in its balance sheets to really get excited. Growth in the industry is the only way IIPR can fill its empty buildings.

IIPR’s dividend is in trouble, too. Its payout ratio is way over 100%, which is not sustainable.  Last month, it announced a $270 million investment in a life sciences real estate company. This is a major diversification… but I’m not yet sure if that’s good or bad.

Unfortunately, it looks like I’m one investment short to keep up with the Tulsa King, at least for now. I’m cycling IIPR back onto my watchlist because it could be a chance to lock in a double-digit yield.

For more income, now and in the future,

Kelly Green