What happened

Innovative Industrial Properties (IIPR 1.17%) stock jumped 14.4% in August, according to data from S&P Global Market Intelligence. The S&P 500 index returned 3% last month. 

This robust performance by shares of the cannabis-focused real estate investment trust (REIT) can be attributed to the company's release of strong second-quarter results and continued investor enthusiasm about its long-term growth prospects. 

Over the one-year period through Sept. 1, shares of IIPR have returned 104%, compared to the S&P 500's 30.2% return.

Marijuana leaf on white background.

Image source: Getty Images.

So what

On Aug. 4, Innovative Industrial released second-quarter results that comfortably beat Wall Street's estimates for both revenue and earnings. Shares popped 6.8% in the two days following the release, while the broader market was up less than 1% during this period.

In the second quarter, year-over-year revenue and earnings per share soared 101% and 60%, respectively. Analysts had been expecting the top and bottom lines to grow 89% and 52%, respectively. Moreover, adjusted funds from operations -- a key REIT metric that drives dividend changes -- increased a solid 38% year over year. 

On the topic of dividends, IIPR stock is yielding about 2.26%, as of the market close on Sept. 1. In the second quarter, the company raised its quarterly dividend 32% from the year-ago period.  

Innovative Industrial acquired four properties during the second quarter. Since the quarter ended through Sept. 1, the company made two more acquisitions bringing its property count to 74. (The company issues press releases when it acquires properties, so it's easy to keep a current count of the company's properties.)

Robust short-term performance is nice, of course, but powerful long-term performance is much better. IIPR has returned 1,570% over the last four years, which means that every $1,000 invested four years ago is now worth $16,700, assuming dividends were reinvested. One grand invested in the S&P 500 would now be worth just shy of $2,000. 

IIPR Total Return Price Chart

Data by YCharts. Canopy Growth (CGC) is included for context; it's the largest cannabis grower by market cap.

Now what

For the third quarter, Wall Street expects Innovative Industrial Properties' revenue to grow 72% and its EPS to increase 35% year over year.

All cannabis stocks have more risk than average, with most of them being quite risky, in my view. IIPR stock is probably the least risky pure play among the cannabis group.