State pension fund is (indirectly) funding Michigan's largest pot operations

Southwest of Lansing, in Dimondale, about 10,000 marijuana plants are growing in a 25-acre, 57,000-square-foot grow house — the largest in the state. Those plants, grown by Green Peak Innovations to supply Michigan’s medical marijuana dispensaries, hold a value approaching $4 million.

The success of Green Peak’s grow operation and the under-construction 47,000-square-foot Harrison Township operation of Emerald Growth Partners is supported by approximately 75,000 Michigan public employees, indirectly.

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The Municipal Employee’s Retirement System of Michigan, a statewide public employee retirement pension fund, is an investor in San Diego-based Innovative Industrial Properties. IIP is a publicly traded marijuana-focused real estate investment trust. IIP owns dozens of properties across the U.S., leasing them to marijuana growers and retail operations.

At least 16 public pension funds have invested in REIT through the S&P 600 Smallcap Index, a move local marijuana executives see as providing legitimacy to the fledgling industry.

“We’re obviously big believers in marijuana as a product and we subscribe to the thesis that it’s a strong investment and the growth opportunity of the future,” said Jim Radway, co-founder and CEO of Green Peak. “We think lots of institutional investors are looking at or are already in this space and it will continue to become more interesting for them.”

MERS representatives declined to discuss the investment, only pointing out that it did not directly invest in the marijuana industry.

“Innovative Industrial Properties is part of our S&P 600 Index, not an investment of our active portfolio,” said Carrie Lombardo, chief strategic and external affairs officer for the pension fund. “MERS does not actively pick stocks for our index funds which are designed to replicate the performance of a broad index.”

To that point, MERS also holds about 25,000 shares in Richmond, Va.-based Altria Group Inc., one of the largest producers of tobacco products including the maker of Marlboro cigarettes Philip Morris USA.

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