The company's management team identifies states with stern approved medical-use laws, which is a majority of the states nationwide. Medical-use cannabis is now legal in 38 states and the District of Columbia. State policies that adopt either recreational or medical use have gained momentum and proved promising for the REIT in bulking up its market share.

Since IIPR went public at the end of 2016, 12 states have legalized either medical-use or recreational-use cannabis. In tandem, the company traded up by at least 20% in the 30 trading days immediately following four out of these six approval periods. The four periods that witnessed this strong performance involved states with large populations. In November 2018, the stock performed the best after states like Michigan, Utah, Massachusetts and Missouri adopted legalization, accounting for 8% of the U.S. population, and in mid-2019, when Illinois and Texas joined them, representing nearly 13% of the country's population, according to the analysis.

Policy tailwinds are expected to continue as marijuana-use for medical and recreational purposes become less taboo and more acceptable on a federal level.  Approximately 15% of the U.S. population resides in states where both medical and recreational cannabis use remains illegal, which is expected to change as demand increases and as younger generations age up, according to Aulabaugh.

Hanging over the whole cannabis industry is what will Congress do. There are at least a half a dozen bills pending before Congress, according to Stanley Jutkowitz, senior counsel at Seyfarth Shaw and head of the firm's cannabis practice. "These bills that will legalize marijuana, will obliviate all of these problems and the need for caution and anxiety, propelling investors off the sidelines. The potential for growth is innumerable."

And with IIPR as an early mover in the space and its posted strong historical performance without any federal policy support, the REIT is expected to continue to outperform over the next several years.