Company: IIPR
Filing Date: 2025-02-21
Form Type: S-3ASR
Source: 0001104659-25-016184
Chunk: 96

Company: INNOVATIVE INDUSTRIAL PROPERTIES INC
Filing Date: 2025-02-21
Form: S-3ASR
Chunk 96
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 the
relevant series of preferred stock.

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Warrants

Upon the exercise of a warrant for common stock,
a holder will not recognize gain or loss and will have a tax basis in the common stock received equal to the tax basis in such stockholder’s
warrant plus the exercise price of the warrant. The holding period for the common stock purchased pursuant to the exercise of a warrant
will begin on the day following the date of exercise and will not include the period that the stockholder held the warrant.

Upon a sale or other disposition of a warrant,
a holder will recognize capital gain or loss in an amount equal to the difference between the amount realized and the holder’s
tax basis in the warrant. Such a gain or loss will be long term if the holding period is more than one year. In the event that a warrant
lapses unexercised, a holder will recognize a capital loss in an amount equal to his tax basis in the warrant. Such loss will be long
term if the warrant has been held for more than one year.

State, Local and Foreign Taxes

We and/or our subsidiaries and holders of securities
may be subject to taxation by various states, localities or foreign jurisdictions, including those in which we, our subsidiaries, or
holders of our securities transact business, own property or reside. We or our subsidiaries may own properties located in numerous jurisdictions
and may be required to file tax returns in some or all of those jurisdictions. The state, local and foreign tax treatment of us and holders
of our securities may differ from the U.S. federal income tax treatment of us and holders of our securities described above. Consequently,
holders of our securities should consult their tax advisors regarding the application and effect of state, local and foreign income and
other tax laws upon an investment in our securities.

Legislative or Other Actions Affecting REITs

The rules dealing with U.S. federal income
taxation are constantly under review by persons involved in the legislative process and by the Service and the U.S. Treasury Department
and may be changed at any time, possibly with retroactive effect. No assurance can be given as to whether, when, or in what form, the
U.S. federal income tax laws applicable to us and our shareholders may be enacted. Changes to the U.S. federal income tax laws and interpretations
of U.S. federal tax laws could adversely affect an investment in our shares.

Prospective investors are urged to consult with