The staunchly anti-cannabis Republican leadership of Tennessee was recently shocked to discover that the state's pension program has been investing in the legal weed industry.
Last month, the Chicago Sun-Times broke the news that Tennessee, Texas, and Alaska had all invested in Innovative Industrial Properties (IIP), a San Diego-based publicly-traded investment firm. This company, which refers to itself as the “leading provider of real estate capital for the medical-use cannabis industry,” buys up state-legal medical cannabis grow-ops and then leases them out to companies who have acquired state licenses to produce medical marijuana.
The Tennessee Consolidated Retirement System (TCRS), a $52 billion retirement program for state employees and their beneficiaries, bought up 7,009 shares of IIP, a total investment of $720,000. The TCRS purchased this stock as part of a passively managed small-company stock index based on Standard and Poor's S&P Smallcap 600 index. As it was included in a package of high-performing small-company stocks, state officials did not realize that IIP was a major player in the legal weed industry.
Even though 33 states have legalized cannabis in some form, Tennessee remains committed to prohibition. Governor Bill Lee is firmly opposed to even legalizing medical marijuana, and the state's Republican-dominated General Assembly has repeatedly shot down numerous bills trying to bring a medical marijuana program to the Volunteer State. Given this extreme opposition to cannabis, the news that the state pension had invested in the legal weed industry was quite a surprise.
State officials were just as surprised to learn of this investment as anyone else. "I didn't know we had this investment until the Chicago Sun-Times called up and we began digging around to find it," State Treasurer David Lillard said, according to the Times Free Press. "There are policy implications to this." Lillard has demanded that the TCRS sell off all of its shares of IIP as soon as possible, despite the fact that the value of the company's shares have been steadily increasing.
"I don't think any of us knew we had that investment,” said state Senate Finance Chairman Bo Watson to the Free Press. “You understand the mechanics of that. I think it's appropriate that the treasurer is selling the stock. Our policy position has been that we have not supported medical marijuana at this point. It's contradictory and confusing to the public for the state to be invested in a marijuana company when we haven't expounded a position that we currently support it."
The irony of the investment was not lost on state Rep. Jeremy Faison (R-District 11), who sponsored a medical marijuana bill last year, which unfortunately stalled in the House. "I want our state employees and the people invested in the TCRS to be able to get an excellent return on their investment," he told the Free Press. "If we're getting in the game, why would we stop if there's a way our state employees can get a better return on investment?"
The state likely did get a decent return on their investment after all, as the value of IIP's stock increased significantly since the TCRS purchased it in May. Lillard, who also serves as chairman of the TCRS, said he will also review the agency's investment procedures to ensure that the state steers clear of the legal weed industry for the foreseeable future.