Good morning, but it's actually good afternoon now. My name is Anthony Coniglio. I'm the CEO of NewLake Capital Partners. My challenge here today is twofold. One is I have to stand still for the microphone. I like to move around. If I stray, just remind me to come back. Number two, I'm fighting that post-lunch lull and sleepiness that you're going to have. I'm going to try to bring the energy. I had the nods in the front. I'm going to try to bring the energy for this. Again, my name is Anthony Coniglio, founder and CEO of NewLake Capital Partners. We are the second largest owner of cannabis real estate in the United States. I'm going to walk you through our business today. First, I'm going to read you our safe harbor statement. I'm just kidding. I'm not. You can read it on your own.
We'll use up the entire half hour. I'll talk about our team, what we're focused on, the growth dynamics of the industry, and our financial position. Hopefully, at the end of the presentation, you'll have a better sense for our business, a better sense for the strength of our profit and the free cash flow that we generate, and the quality of the dividend that we pay to our investors on a quarterly basis. Some numbers. As I said, second largest in the United States focused on cannabis. We have 34 properties across 12 states, with 12 tenants. When I say cannabis real estate, I want you to think about industrial buildings on the cultivation side. We don't own any fields. We don't own any farms on the cultivation side.
We have 15 properties that are typically 50,000 - 100,000 square foot industrial buildings that have been retrofitted with security, HVAC, and water capacity for indoor cultivation. We also have a significant number of dispensaries. We have 19 dispensaries in our portfolio. Those are the retail outlets for cannabis distribution in the United States. We've deployed just short of $500 million into those 34 properties. We have a long duration. We're a real estate investment trust. I should pause there. As a real estate investment trust, we're required to pay out a dividend. There are a number of different types of REITs you can have. You could have a mortgage REIT. You could have an equity REIT. We are a triple-net lease equity REIT.
What that means is we own our properties and we lease them out on a long-term basis, different than some mortgage REITs where they're shorter duration, where they lend against the value of the real estate. Typically, it's a loan term. It's two to three-year duration. For us, as you could see, the weighted average, I love that they gave a pointer. There we go. I'm going to have fun with this one. Weighted average yield of nearly 13%, but you have nearly 13 years of duration. This yield of 12.7%, think of that as the cap rate. That's the average cap rate we're getting today on our investments. Whereas the typical real estate in the United States, the cap rate for retail could be anywhere from 4% to 6% and for industrial could be anywhere from 6% to 8%.
We are definitely getting a 400 - 500 basis point premium to what you'd see for non-cannabis real estate, and we're getting that premium for a very long period of time. I'd also point out our very low expense ratios. We're a small team. These transactions are in some form set it and forget it. We don't operate the properties as a triple-net lease REIT. What triple-net means is that all of the operational expenses and responsibilities are borne by the operator themselves or the tenant themselves. We don't need a large team to service the properties, to clean the properties, plow the parking lots. That's taken care of entirely by the tenant base. We've grown our dividend aggressively since our IPO. We'll show you a slide where we've stabilized a bit, but significant growth in the dividend and significant coverage for a dividend, which I'll get into.
Everybody talks about their management teams. What I want to impress upon you here is that it's a complementary mix of what I would call table stakes capabilities, right? Obviously, you need to have people who understand real estate. It's the business we're in, but it's a complementary set of real estate, cannabis, regulatory, and financial services, most importantly, restructuring. I want to point out a couple of people on our board. Gordon DuGan, our Chairman, has over three decades in commercial real estate. He used to be the CEO of WP Carey, WP Carey being one of the largest net lease REITs in the world. He took over Gramercy Property Trust when it was about $300 million, scaled it up to $7.6 billion, and sold it to Blackstone back in 2018. Decades of commercial real estate experience.
Alan Carr and Joyce Johnson bring decades of not only financial services, but also restructuring and workout experience. Why that was important when we were constructing our board is because we knew that the United States cannabis industry was not going to be on a straight line to success, that it was going to have to have inevitable ebbs and flows, and we were going to find that the tenant base would be in difficulty. As that's come true, unfortunately, over the last two years, we've really called upon their expertise. Dina Roman in the middle here worked for a decade, was one of the co-founders, originally at Green Thumb Industries, one of the leading cannabis companies in the world, also the U.S., obviously, but in the world, and a lot of regulatory experience.
That's really important as we look at navigating the evolution of the regulatory environment in the U.S., where I should just level set us all and say it is still a Schedule I drug in the U.S. It is still federally illegal, and we still have this construct of a myriad of state licensing requirements and regulatory requirements to navigate. Let's talk a little bit about the industry. It has been a significant grower over the last five years. When we think about the cannabis industry in the United States, we think of it as over a $100 billion industry. Let me just say that again, a $100 billion industry, but only roughly a third is in what we call the state legal industry. That is the market that we focus on, and over two thirds is in the illicit industry.
The play in the United States, much like you've had here in Canada, is transitioning the consumer from the illicit market into the legal market. We've seen significant growth to date, but we also think we're going to continue to see, whoops, we're going to continue to see growth from new states issuing medical marijuana licenses. As an example, Kentucky only last year approved medical marijuana. Earlier this year, they started issuing licenses, and that industry is expected to see their first sales later this year. We'll also see limited medical states expanding their program. An example there is Texas. 33 million, population in Texas, only about 17,000 - 20,000 patients. That is a minuscule portion because that program was very restrictive. This past summer, the state passed a revision to the medical marijuana laws. They're issuing 15 more licenses and expanding the program significantly.
We expect to see growth out of Texas. There is this conversion of medical markets into adult use. We have Pennsylvania right now debating converting from a medical market to adult use. Same thing for Florida. Unfortunately, it failed at the ballot box in November by just three points. They needed 60% approval. They only achieved 57%. That'll come back up again. We've had an industry that's been growing, and we see catalysts for continued growth in the industry. Part of what's fueling that growth, and since you're in Canada, many of you may have seen this story before play out in your country. What's fueling that growth is what we call the replacement trade. We're seeing a younger cohort replace alcohol with cannabis-related products.
When you listen to the earnings calls of a number of the alcohol and beer companies, you'll actually see that not only are sales coming down, but they're talking about alternative form factors, and you're seeing a number of alcohol companies take a look hard at some of the drink business in the United States. Give you some other numbers about the proliferation of cannabis programs in the U.S. Over half of our country in the U.S. lives in a state that has an adult use program. If you think about that, over half the country lives where you have an adult use program, and yet it's still federally illegal on the same schedule as fentanyl and cocaine.
You have polls that come out regularly from Pew and Gallup, which both demonstrate nearly 90% support for some level of legalization, medical or adult use, and over two thirds support, or roughly two thirds support, for adult use. Those are significant numbers in a country where we fight just about over everything in the polls. When you look at those pollings, even down into some of the specific demographics, just about every group has majority support for legalization in cannabis. Let's talk about some of the catalysts. You've heard me mention that it continues to be federally illegal in the U.S. Across all three branches of our government, we have action. At the administrative level, the DEA has on file in the Federal Register a proposed rule to complete that rescheduling to Schedule III.
It was initiated by the Biden administration, and we're waiting for the Trump administration to complete that process. Many people ask me, where does President Trump stand on this topic? As a candidate last September, he posted on Truth Social that he supported four things. Number one, rescheduling to Schedule III. Number two, he supported the STATES Act that is allowing the states to decide if they want to have a medical cannabis program or an adult use program and getting the federal government out of their way. Number three, he supports the SAFE Banking Act, which is an act that would provide greater access to the cannabis industry to the U.S. banking system. Number four, he supported adult use on the ballot in Florida. He was a Florida resident.
He had the opportunity to vote to allow adult use in Florida, and he believes that Floridians should have a choice. He said he was voting yes. Most recently, he posted to Truth Social a video talking about the health benefits of the endocannabinoid system and espousing the benefits for seniors and then actually saying that perhaps Medicare should cover. That's pretty significant to have a U.S. president talking positively about the industry. We do expect that at some point we'll see follow-through from the DEA or the DOJ to get this done to Schedule III. On the legislative side, every legislative session, we see introduction of numerous bills like the SAFER Banking Bill and the STATES Act that I talked about. Also recently, a few weeks ago, the MORE Act was introduced by the Democrats.
Finally, on the legal side, very interestingly, we all know around the world how Americans love their guns. An issue has cropped up, crop pun intended, over the last—come on, we got energy. Where's the energy? That was a good joke. I had a lot of puns. This issue has come up where the federal government says it's illegal to consume or possess cannabis, and so therefore they could take your Second Amendment right away from you and confiscate your gun. There have been a number of cases around the country with conflicting rulings out of federal circuit courts, and just Monday, the Supreme Court in the U.S. said that they will hear a case and weigh in on this issue of can a cannabis consumer, somebody that's complying with a state medical program, as an example, be stripped of their Second Amendment rights.
That could be a landmark decision for the U.S. cannabis industry. You know, our portfolio, as I said, we're in 12 states. I'd point you to our top three. We have some concentration. I'd point you to our top three tenants: Curaleaf, Cresco, and Trulieve. These are some of the leading cannabis companies in the U.S. and in some cases the world. Curaleaf having a multinational presence, Trulieve posting $80 million of profit in the first quarter, in the second quarter, Cresco continuing to post profitability and free cash flow. Some of the lesser-known names in our portfolio that you may not be familiar with, like a Mint or a Calypso, or a C3. Again, these are companies that are doing really well in the U.S. cannabis industry. Let's talk about our portfolio for a moment and how we approach underwriting.
I think if you were to compare us to, there's one other net lease REIT that's out there. If you were to compare us to them or some of the mortgage REITs, or for that matter, any lender that focuses on the sector, I think what you'd find is that our portfolios perform better than anybody else. That's not just a qualitative assessment. I think you could also look at it quantitatively and you come with the same answer. People keep asking me, why is your portfolio holding up better during a difficult period for the U.S. cannabis market than others? I think it really comes down to these three tenants, and we do it a little differently. We're obviously looking at tenant quality. It's a real estate business. You have to get paid rent.
You need to know they'll be there for the 15 years of the lease to pay you rent. When we look at tenant quality, it's not just the financials. It's looking at the management team, understanding their ability to raise capital, their ability to manage a growth business in a highly regulated market. Again, this isn't just federal regulation because that doesn't exist. It's different regulations on a state-by-state business. If you're in five states, you have five different regulators that approach the industry very differently. Understanding their ability to navigate that, navigate it well, and drive profitability and cash flow. Cannabis market, another key aspect. We're not just looking at the market. We're deconstructing where it is in its evolution because we know as more competition comes into play, there'll be continued price compression, which squeezes margins. In particular, we focus on what's called limited-license states.
As an example, if you were in California and you wanted to buy a bottle of vodka, you could go to a supermarket and buy wine or vodka. If you're in Pennsylvania, you have to go to a state-run package store, and you can only buy it at a limited number of locations. It's states like that that limit the number of licenses that we focus on. Think Pennsylvania, Illinois, Ohio, to name a few. In these states, if you just think about it for a moment, if you have less competition, you should have better margin. You have better margin, you have better cash flow, it's a better credit profile for us to have the tenant. Number two, if you have a limited number of licenses, those licenses tend to have intrinsic value.
If the operator is having difficulty, they're unlikely to throw you the keys the way they wouldn't, say, in California. We've seen a lot of defaults in the industry in California. Rather, they sell that business to be able to monetize the value of that license. Depending on the state, that license could have a value of anywhere from $1 million to $10 million. We saw a license a few years ago in New York State sell for $230 million for just a license. Granted, that was the peak. Lastly on this page, our full wall coverage. We focus on underwriting cash flow. I used to be a banker at JP Morgan, and going into the great financial crisis, the team I ran, we had over $9 billion of credit risk on the books. I spent the next two years with the workout people.
We didn't lose a penny on our book, but what I really learned is that the go-to move in financial distress for a CFO, rightly, is to cut off anything that's not generating free cash flow. We've seen that in spades here in the cannabis industry. We really focus on underwriting the properties we're investing in to make sure that they'll be able to persist in providing cash flow to the tenants. If they're providing free cash flow to the tenants, there should be no reason for them to want to turn back the facility. I am going to skip over a couple of points I'd like to make here. Our dividend yield, I haven't seen where we're trading in the last 48 hours. I've been traveling, but our dividend yield is running, this was 12/3, we're around 13%. Typical REITs trade at a 6% dividend yield.
A lot of people say, wait a minute, why are you trading at such a yield premium? Why are you at a 13% yield, nearly two times what non-cannabis REITs are trading at? Typically, the investors say it means one of two problems. Either you have a leverage problem or you have a terrible portfolio. Let's talk about leverage. We have $7.6 million of debt outstanding on a $446 million invested capital. We have a net cash position, $22 million of cash at the end of the last quarter, minus the $7 million. We have a net cash position. We could pay off the debt tomorrow if we wanted to and still have cash left over. We're generating free cash flow every quarter by having a 79% payout ratio. Our payout ratio is the measure of our free cash flow that's used to cover our dividend.
Said differently, on a 79% payout ratio, it means 21% of our revenue can go away and we can still cover paying the dividend of $0.43 a quarter. It's not a debt problem on our business. Maybe it's a portfolio problem. I just talked about our top three investors. I talked about the fact that we have a 79% payout ratio. One of our competitors is well over 100%. Now your dividend's really at risk. We could lose 20% of our portfolio and still cover the dividend. Anthony, if it's not the yield, excuse me, if it's not your debt and it's not your portfolio, then why the heck are you trading like this? We trade on the OTC. We comply in all respects to qualify for New York or NASDAQ listing, but we focus on the cannabis sector so they won't list us.
One of our competitors is grandfathered on the stock exchange. They were listed before the rules changed. It's a meaningful disadvantage. If you're not on New York or NASDAQ and you focus on the cannabis sector, custody restrictions exist in the U.S. Prime brokers for the hedge funds and all the long-only investors, think JP Morgan, Goldman Sachs, Pershing, Bank of New York, they will not custody our stocks. That really puts a limit on the institutional bid for our stock, but therein lies the opportunity for those that can solve custody. We think you get paid a very handsome yield while you're waiting for the catalyst of federal reform to really allow us to get the uplifting and resume the very rapid growth pace that we experienced up until 2023. Let me pause there and open it up for questions. That's the most fun part of it.
I see a hand moving. Yes. Can you say that again? Just buildings. It's the, we're not doing any farmland. All of our buildings are industrial-grade buildings. In the back. Yeah, that's one of the difficulties. We have no statements out of the new DEA Administrator. For those that don't know, the new DEA Administrator was confirmed by the Senate in late July and started his job in late July. He's not come out and said anything or any position. In his testimony to the Senate in May, he said it would be one of his top priorities, but he's not made a statement on it yet. Our deals are primarily, thank you, our deals are primarily three types. Number one, we'll do a build-to-suit.
We'll acquire the property for a tenant, we enter into a long-term lease immediately, and then we provide the funding for the construction of the building. We did that on a facility in Arizona, in Phoenix, where we completed a $15 million project about a year ago. The second way we do it is we'll buy an existing building and we'll provide TI for a retrofit. We've done that before. We're doing two deals right now for dispensaries where there are existing buildings and they're being retrofitted to dispensaries. The third way is we'll buy a fully complete and operational building, one that's been up and running. We're seeing fewer of those today because most of the operators monetized their existing portfolio back in the 2021 to 2023 range. Not it, but what I call the domino effect will. All rescheduling, rescheduling does two things.
Let me start with what it doesn't do. It does not legalize it in the U.S. In the U.S., we have a schedule of controlled substances. Number one, as I said, is fentanyl, cocaine. Number three would be Tylenol with codeine. It doesn't mean anybody could just manufacture and sell Tylenol with codeine. It means you have to have a DEA license to do that. Will operators in the industry apply for a DEA license? I think that's going to be really difficult because very few are medical-only. Most of them operate in states that also have adult use. Now you're on Schedule III. It also eliminates 280(e) within the Internal Revenue Code in the U.S. We actually say that you could sell fentanyl. You can, we don't say you could sell.
If you sell illegal drugs, or if you sell drugs on a schedule illegally, and it's on Schedule I and II, it doesn't say anything about below, just I and II, you can only deduct cost of goods sold. You can't deduct interest, expense, and everything else. As a result, the U.S. industry is paying effective tax rates of 50% - 60% depending on how you've organized your business. Moving to Schedule III improves the future cash flow profile of the entire industry and improves the credit quality of our entire book of business because all of our tenants get that improved cash flow. Let's get to your question about uplifting. What I think it does from a domino effect, you get rescheduling to III. I think the SAFE Banking Act is likely to then happen.
Within the SAFE Banking Act, there'll be safe harbors for not just banks, but also for exchanges. Once that safe harbor is in place, that'll be the application we'll put in to uplift. Since we already operate the business to qualify, it'll be a matter of weeks, would be the expectation. You do need to circle back. You do need the domino default to get SAFE Banking passed. I'm not giving up any time here. Let's talk a little bit about, if you think of a question, please raise your hand. This is my favorite, but my most depressing slide, and it's how we are against our peers, both our equity REIT peer as well as our mortgage REIT peers. This is a little bit dated now, but I think we're very undervalued.
Again, when I think about a 13% dividend yield with significant coverage, and the opportunity to manage through any sort of additional issues that are in the portfolio, and at a 12.7% top line yield, we're not getting paid 400 - 500 basis points of premium over non-cannabis real estate because we're not taking risk. We will have issues in the portfolio. I think we're well paid for it. I think we've got the cushion in our AFFO to be able to maintain that dividend and get that catalyst, since we're trading so far below book, really get that catalyst passed in terms of rescheduling and then SAFE Banking and uplifting and be able to ride the wave back up. In the back, I would love to, and you probably don't hear a lot of people say, I'd love to put debt on. We're unlevered.
We're under, you know, putting my banker hat on. We're underutilizing debt. We're overcapitalized. From a capital efficiency perspective, we should be using the lower cost capital debt to scale up the business and get better yield to our investors. I just need the quality opportunities to invest in. Anybody wants to go back and look at what I've been saying since we IPO'd in 2021, we're going to grow for quality growth, not for growth's sake. Our largest competitor has, I think, over 30% of their portfolio was defaulted. It's because, in my opinion, they reached for growth, and we were getting hit for it two, three years ago, but I think the quality of our portfolio proves out that thesis.
I have opportunities to present myself on that to fund it? Yes, yes. Zero interest in issuing equity. I'm serious. Zero. Way too dilute.
Would not do that. I'm a fairly large shareholder myself. Our Board and our management team represent about 6% of the shares, and if you include some of the inside foundational shareholders, we're over a third of the shares. Thank you, everybody. Have a great day.