NewLake Capital Partners (OTCMKTS:NLCP) reported first-quarter 2026 results that management said were in line with expectations, as the cannabis-focused real estate investment trust continued to emphasize rent collection, dividend coverage and portfolio risk management amid ongoing stress in parts of the cannabis industry.
For the quarter, Chief Financial Officer Lisa Meyer said total revenue was $12.3 million, down from $13.2 million in the prior-year period. Net income attributable to common stockholders was $5.8 million, or $0.28 per share. Funds from operations totaled $9.7 million, or $0.46 per share, while adjusted funds from operations were $10.1 million, or $0.48 per share.
Dividend Coverage and Balance Sheet Remain Central Themes
Chairman Gordon DuGan said NewLake generated $0.48 of AFFO in the quarter and declared a first-quarter dividend of $0.43 per share, which was paid April 15. He said the company has paid cumulative dividends of $7.29 per share since its 2021 IPO.
President and Chief Executive Officer Anthony Coniglio said all contractual rent was received during the quarter and that the company’s AFFO payout ratio was 90%, providing coverage for the quarterly dividend.
Meyer said the dividend represents an annualized rate of $1.72 per share and an AFFO payout ratio of approximately 90%, which remains within the company’s target range of 80% to 90%.
As of March 31, Meyer said NewLake had $24.8 million of cash and total liquidity of approximately $107.2 million, including availability under its revolving credit facility. The company had $7.6 million outstanding under the facility, with $82.4 million of remaining capacity. Debt represented 1.6% of total gross assets, and Meyer said the company had a debt service coverage ratio of approximately 72 times and no debt maturities until May 2027.
Management Highlights Cannabis Rescheduling
Executives spent significant time discussing the rescheduling of medical cannabis to Schedule III, which DuGan described as a “historic moment” that begins to address the burden of 280E taxation, one of the industry’s most significant structural headwinds.
Coniglio said rescheduling is the most significant federal cannabis reform in more than 50 years and should improve tenant cash flow, enhance credit profiles and support broader access to capital across the sector. He said NewLake views the change as a positive credit development for all tenants.
Coniglio also said the company is monitoring guidance from the Treasury Department and IRS on implementation. If 280E relief is applied retroactively, he said it could meaningfully improve operator balance sheets by reducing uncertain tax position liabilities that have accumulated over time.
NewLake estimates that approximately 50% to 55% of its annualized base rent is derived from medical cannabis activities, which Coniglio said are now considered federally legal activities. He said that is meaningful for exchange listing eligibility, because the legal status of tenant activity remains a gating consideration for listing on the New York Stock Exchange or Nasdaq.
Coniglio said NewLake already meets other applicable listing requirements and views medical cannabis rescheduling as an important step toward normalization of the company’s business and potential future access to a major U.S. exchange. In response to an analyst question, he said the company cannot predict when exchanges may decide the company’s tenant activity is sufficiently legal for listing. DuGan added that exchange listing decisions are “a judgment call” and said NewLake continues to engage with major exchanges.
Portfolio Updates Include Cannabist Exposure
Management also addressed tenant risk, including exposure to The Cannabist Company, which recently announced bankruptcy proceedings in Canada under CCAA provisions.
DuGan said the Cannabist situation highlights financial and operational stress that continues across parts of the sector and underscores why NewLake has approached the market with discipline and caution.
Coniglio said NewLake leases four properties to The Cannabist: a dispensary and a cultivation facility in Illinois, and a dispensary and a cultivation facility in Massachusetts. He said The Cannabist remains current on rent and that NewLake holds approximately one month of security deposits across those properties.
Coniglio said The Cannabist has disclosed agreements to sell assets or businesses across several states, including Illinois and Massachusetts, where NewLake’s properties are located. He said the identity of potential buyers for the Illinois and Massachusetts assets has not yet been publicly disclosed.
NewLake is evaluating how the process may affect the leased properties and is developing interest in the assets in the event The Cannabist defaults and the company seeks to recover possession, Coniglio said.
More broadly, Coniglio said risk mitigation remains a central focus. During the quarter, NewLake re-tenanted its San Diego dispensary with what he described as a higher-quality operator, added Holistic Industries as an additional guarantor on one Pennsylvania cultivation facility and added Canopy USA to the guarantor structure on a Massachusetts cultivation facility leased to Acreage. He said those actions significantly enhance the credit profile of the assets.
Leasing Pipeline and Growth Outlook
Coniglio said NewLake is actively marketing available properties and has seen an uptick in activity. Massachusetts reforms have increased interest, and dialogue with prospective tenants picked up more broadly following the federal rescheduling announcement in April, he said.
In response to an analyst question about vacant assets in Nevada and Pennsylvania, Coniglio said interest has increased across the board, though he cautioned that increased dialogue does not guarantee signed leases. Meyer added that interest may be greater in Nevada and Pennsylvania than in Massachusetts.
Coniglio said rescheduling does not change NewLake’s acquisition approach. He said the company continues to focus on “four-wall coverage” and whether rent is supported by cash flow at a particular site. While the end of 280E for medical cannabis is a long-term positive, he said NewLake wants to see sustained change in property-level cash flow before modifying underwriting.
Asked about operator consolidation, Coniglio said NewLake has heard “significant chatter” regarding mergers and acquisitions, particularly among public companies. He said public company expenses could create potential efficiencies in merger scenarios, though state regulations and divestiture requirements can complicate transactions. He said management expects some deals to close over the next 18 to 24 months.
Coniglio identified four sources of AFFO growth for NewLake: built-in rent escalators, funding of tenant improvements, leasing available properties and new transactions. He said there are still “billions of dollars of real estate” on multi-state operator balance sheets and that future transactions may occur as NewLake’s cost of capital and operators’ yield targets become better aligned.
Management also pointed to potential future investment needs in emerging or expanding medical cannabis markets, including Texas, Georgia, Kentucky, Indiana and North Carolina. Coniglio said operators appear to be taking a prudent approach to capital allocation, particularly in Texas, where they are seeking durable reforms before making major expansion investments.
Coniglio closed the call by saying NewLake is positioned to benefit from federal cannabis reform while maintaining a conservative balance sheet, a supported dividend and a disciplined portfolio strategy.
About NewLake Capital Partners (OTCMKTS:NLCP)
NewLake Capital Partners, Inc is a publicly traded real estate investment trust that focuses on the acquisition, development and operation of self-storage properties across the United States. Established in the mid-2010s, the company seeks to generate stable, long-term cash flows through a portfolio of facilities that serve both individual and commercial customers. By structuring investments through its operating partnership, NewLake delivers a REIT structure to investors while maintaining operational flexibility on the ground.
The company’s core activities include identifying value-add or newly developed self-storage facilities in growth-oriented markets, negotiating acquisitions or ground leases, and overseeing construction or renovation.
