What happened

Shares of Innovative Industrial Properties (NYSE:IIPR) are already up more than 70% this year, according to data provided by S&P Global Market Intelligence. The real estate investment trust provides capital to businesses operating in the medical cannabis field -- a booming industry that's produced strong gains for investors in 2019.

So what 

Pot stocks started the year strong following the passage of the U.S. Farm Bill in December, which legalizes the production and sale of hemp and hemp-derived cannabidiol (CBD). Innovative Industrial Properties partook in the gains, with a 36% surge of its own in January. 

The stock's momentum continued in February after Innovative Industrial Properties announced that it was entering California -- the United States' most lucrative cannabis market.

The REIT's gains accelerated when news broke that Innovative Industrial Properties would be joining the S&P SmallCap 600 -- a popular small-company stock index. In turn, investment fund titans such as Vanguard and BlackRock that manage funds that track the S&P SmallCap 600 index began taking sizable stakes in Innovative Industrial Properties. This increased demand for its stock no doubt helped drive the REIT's stock price higher.

Innovative Industrial Properties used the opportunity to raise cash via an exchangeable bond offering. The capital it raised during this debt issuance should help the REIT acquire new properties and boost its cash flow generation in the years ahead.

Check out the latest earnings call transcript for Innovative Industrial Properties.

Green toy houses on top of rising stacks of gold coins

More acquisitions could mean more cash for Innovative Industrial Properties' investors. Image source: Getty Images.

Now what 

Whether the REIT's impressive gains continue in March will likely be determined by what Innovative Industrial Properties has to say when it reports fourth-quarter earnings after the market closes on March 13, as well as during its subsequent conference call on March 14 at 1 p.m. ET. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.