That’s the good news. It will still be a challenge in the House because a speaker has said he’s not a fan. So it probably won’t get a vote on the House. But why there’s reason for optimism is it could be part of a negotiated bigger bill, and that’s why there is some renewed energy. But in its current form, SAFER does not address any capital market access. It’s purely getting the cash out of the banking system. So if SAFER passes as is, we don’t see it affecting our business. To the contrary, it would be better for operators to take the cash out. So to answer your question, we just see very minimal risk, if not at all, should the rescheduling occur and/or SAFER.
Operator: The next question comes from Scott Fortune with Roth MKM.
Scott Fortune: Yes, and thank you for the question. Just a follow up on that and the risk side of things. You guys have mentioned strong and sophisticated operators. And we’re now seeing the top MSOs with significant cash levels, and that could be additional cash flow if we get a rescheduling there. So just wanted to get a sense for the tenants with those strong cash levels on the balance sheet and those discussions. I’m not sure if rescheduling progress now has opened up more discussions with them. But the opportunity for them to really tap into markets for lower cost of capital, obviously, there’s a spread here. But just going forward with some of these bigger operators who want to expand the sales lease model regarding the cap rates and working with IIP and what you can offer the top MSOs versus their now lower cost of capital. Just how you look at that risk of lower cap rates and the spread going forward, address that a little bit. That would be great.
Alan Gold: So before I turn it over to Ben to talk about our pipeline and how strong the pipeline is, I would just ask you to really think through. Just because they have more capital on their balance sheet does not necessarily mean that their cost of capital has gone down. I think that their cost of capital remains elevated because they’re still struggling with accessing the broader capital markets. Clearly, here in the US, maybe not so much. Or maybe they had better access up in Canada, where you all have operations also. But here in the US, their access to capital remains limited, which — it goes to the quality and size of our pipeline, which I’ll let Ben discuss.
Ben Regin: Yeah. Hey, Scott. This is Ben. So just to follow up on Alan’s comments, we noted the real uptick in activity we’re seeing in the pipeline, which has been great to see. It’s very active across multiple markets, and these are at the same cap rates that we’ve been seeing for the last few years. So we have not seen any downward pressure on those rates. And I think if cost of capital generally is going down, that typically impacts us as well. And we can maintain our same spread, potentially, at lower cap rates in that environment. But as of today, with the increased activity in the pipeline, we have not seen any downward movement in any material way on our cap rates.
Scott Fortune: Thank you. Real quick, then. Have you seen a pick-up in discussions since the rescheduling news has hit a week and a half ago here?
Ben Regin: Yeah. I mean, I wouldn’t say necessarily just rescheduling, though that certainly has, I think, improved some sentiment in the in the industry. In general, we’re seeing a lot of state level dynamics driving activity in the pipeline. So that could be potential adult use rollouts in Ohio, Pennsylvania, Florida. And also just the industry overall continues to grow even in more established markets. So we’re seeing activity in states like Arizona, states like California and Michigan. So it’s really varied. And I think the strength and the health that we’re seeing in the industry overall, the recovery and wholesale pricing in many markets, the optimism around rescheduling, and a potential adult use market rolling out all contributes to the strength of the pipeline that we’re seeing.
Scott Fortune: Appreciate that color. And then one more quick one for me. Just provide a little color on that Los Angeles property. I know it wasn’t fully built out. But the disposition there, how that came about with holistic, and what type of buyer of the property, just a little bit more color on that. And do you guys do you disclose what the net carrying value was of that property?
Paul Smithers: Yeah. I mean, I think our supplement has some of these information. But we’re pretty excited about our ability to continue to recycle capital. Ben, why don’t you — Ben or Cat, do you guys want to elaborate?
Ben Regin: Sure. Yeah, I can give a little more color. As we mentioned, that was not built out for cannabis. And I think it really showed our ability to work positively with our tenant partners on a solution that we felt was a win-win. We’re able to take that capital and recycle it into other opportunities that we’ve been describing in our pipeline that we think will provide superior risk-adjusted returns. And so we are very, very happy, I think, on both sides on that deal with the execution, the ability to recycle that capital into other deals.
Operator: The next question comes from Alexander Goldfarb with Piper Sandler.
Alexander Goldfarb: Hey. Good morning out there. So first question is your comment about a top 20 bank getting involved in cannabis leads to — continues the, I guess, support for some — for the courts to get involved. What’s an update on there? I mean, it seems like the government’s in a pretty indefensible position of, on one hand, continuing to make cannabis federally legal, but obviously allowing larger banks to get involved, letting the states get involved and participate. So what is the — I think, Paul, a while back, you mentioned about potential court cases. Just wanted to get an update there.
