What happened 

Shares of Innovative Industrial Properties (NYSE:IIPR) jumped 16.7% on Thursday after the real estate investment trust (REIT) delivered strong third-quarter results.  

So what

IIP has steadily expanded its portfolio of medical-use cannabis facilities over the past year. In the third quarter, its revenue soared 197% to $34.3 million, while its net income and adjusted funds from operations (AFFO) -- an important cash flow metric for REITs -- climbed 205% and 192%, respectively, to $18.9 million and $27.9 million.

Rolls of dollar bills rising in a stair-step manner.

Innovative Industrial Properties delivered sizable gains to its investors on Thursday. Image source: Getty Images.

IIP's growth metrics were more modest on a per-share basis, as they were impacted by the stock offerings it conducted to raise the capital it needed to purchase properties. Yet they were impressive nonetheless. IIP's earnings and AFFO per share rose 56% and 49%, respectively, to $0.86 and $1.28.

The REIT invested $180 million to acquire five properties (in Florida, Michigan, and New Jersey) and upgrade several others during the quarter.

Now what

IIP has a massive growth opportunity before it -- one that's about to get even bigger. Marijuana legalization measures passed in five states during the recent U.S. elections. Each new state that legalizes cannabis expands the number of markets that IIP can purchase properties within. And with more than $600 million in cash and investments on its balance sheet, IIP has the capital it needs to continue to expand its cannabis-focused real estate empire in the year ahead.

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