Advocates for medical and recreational marijuana in Texas said the state is hypocritical for opposing reforms while profiting off the industry.

The State’s Permanent School Fund Committee has an investment now worth more than $700,000 in a public company called Innovative Industrial Properties. It owns and leases land to marijuana businesses in 12 states.

Marijuana advocates would rather see those investments made in Texas.

The Lone Star State has one of the most restrictive medical marijuana programs in the country and recreational marijuana has never received a public hearing.

Robert Head is with the group Texas Veterans for Medical Marijuana. He said he was surprised to hear the state is invested in a company that makes money from cannabis.

“It’s very hypocritical for the Texas government to stand so much against cannabis, to hear that you are spending almost $1 million in taxpayer money into a fund that is going to have a majority of its revenue coming from the marijuana industry, it doesn’t sit well with us,” Head said.

Tom Maynard is chair of the Permanent School Fund Committee, which is the state’s public education K-12 endowment. He said the fund’s investment in this particular company is a drop in the bucket of the $34 billion fund.

“We’ve got a really top notch staff over there that works on that, and so the board itself doesn’t look through every individual stock,” Maynard said.

And Maynard said this particular investment has been lucrative.

“In many places the production of regulated medical cannabis has been made legal and as a result, the marketplace has responded and when the marketplace responds there are business opportunities and evidently this is a pretty good one,” Maynard said.

The company — Innovative Industrial Properties — primarily deals with the real estate end of the marijuana industry. It’s organized as a REIT or Real Estate Investment Trust.

And Christopher Reddick, an economist at the University of Texas at San Antonio said that has made it unique.

“A REIT would buy all these properties, then lease them out and collect the income. And the interesting thing about REITs, 90% of all income has to go back to investors,” Reddick said.

But Reddick said this particular REIT could be considered a risk for the State’s Permanent School Fund. He said the company is involved in an industry that is still illegal at the federal level.

“Basically if any kind of regulation or uncertainty were to come about it could pull them back quite a bit,” Reddick said.

Rober Head, with the group Texas Veterans for Medical Marijuana, said he has no issues with the investment.

“I got no problem with them using the fund, I think that is a phenomenal idea, but don’t profit off of another state when you could be using that in our own state,” Head said.

Tennessee and Alaska have also invested in Innovative Industrial Properties in addition to numerous pension funds.

At the close of market on Thursday, the stock was up more than 120% for the year.

Ryan Poppe can be reached at RPoppe@TPR.org and on Twitter at @RyanPoppe1.