Innovative Industrial Properties (IIPR -2.99%) is growing its weed-fueled empire.

The cannabis-focused real estate investment trust (REIT) announced a new sale-leaseback deal with marijuana grower, processor, and retailer Green Thumb Industries (GTBIF -2.57%) on Monday. IIP is purchasing a licensed cannabis processing facility in Ohio from GTI for $2.9 million plus transaction costs. IIP will then lease the property back to GTI, and pay for up to $4.3 million in tenant improvements.

A person holding a cannabis plant

Image source: Getty Images.

By acquiring properties from licensed cannabis companies and then leasing them back to the sellers, IIP serves as a valuable source of difficult-to-obtain growth funding for participants in the marijuana industry.

"IIP provides a flexible real estate capital solution that effectively addresses our expansion needs at the processing facility in Toledo," GTI founder and CEO Ben Kovler said in a press release. "We plan to use the proceeds for strategic initiatives and capacity expansion projects."

The deal is the second sale-leaseback transaction between IIP and GTI. The first occurred in November, when IIP acquired GTI's cannabis processing facility in Pennsylvania.

"We are proud to team again with Green Thumb as its real estate capital partner," IIP CEP Paul Smithers said. "GTI continues to distinguish itself with its cannabis product offerings and dedication to patient experience and right to well-being, providing safe, high-quality cannabis products in a compassionate environment."

This deal is unlikely to be the last between the two companies. GTI has several other cannabis manufacturing facilities that could provide the real estate for additional sale-leaseback transactions -- and the fast-growing marijuana company is likely to require more capital to fuel its expansion initiatives.