Company: IIPR
Filing Date: 2025-02-26
Form Type: 424B5
Source: 0001104659-25-017454
Chunk: 20

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-26
Form: 424B5
Chunk 20
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 sale price per share in respect of those shares
of our common stock.

The U.S. federal income tax treatment of the cash that we might receive from cash settlement of a forward sale agreement is unclear and could jeopardize our ability to meet the REIT qualification requirements.

In the event that we
elect to settle any forward sale agreement for cash and the settlement price is below the applicable forward sale price, we would be entitled
to receive a cash payment from the relevant Forward Purchaser. Under Section 1032 of the Code, generally, no gains and losses are
recognized by a corporation in dealing in its own shares, including pursuant to a “securities futures contract,” as defined
in the Code by reference to the Exchange Act. Although we believe that any amount received by us in exchange for our stock would qualify
for the exemption under Section 1032 of the Code, because it is not entirely clear whether a forward sale agreement qualifies as
a “securities futures contract,” the U.S. federal income tax treatment of any cash settlement payment we receive is uncertain.
In the event that we recognize a significant gain from the cash settlement of a forward sale agreement, or the Internal Revenue Service
otherwise re-characterizes the tax treatment of the forward sale agreement in a manner that results in the recognition of income by us,
we might not be able to satisfy the gross income requirements applicable to REITs under the Code. In that case, we may be able to rely
upon the relief provisions under the Code in order to avoid the loss of our REIT status. Even if the relief provisions apply, we will
be subject to a 100% tax on the greater of (i) the excess of 75% of our gross income (excluding gross income from prohibited transactions)
over the amount of such income attributable to sources that qualify under the 75% test or (ii) the excess of 95% of our gross income
(excluding gross income from prohibited transactions) over the amount of such gross income attributable to sources that qualify under
the 95% test, as discussed in the accompanying prospectus under “Material U.S. Federal Income Tax Considerations — Taxation
of Our Company,” multiplied in either case by a fraction intended to reflect our profitability. In the event that these relief provisions
were not available, we could lose our REIT status under the Code.

| S-14 |

<div align='center'>FORWARD-LOOKING STATEMENTS</div>

This prospectus supplement,
the accompanying prospectus and