AFC Gamma, Inc. (AFCG): History, Ownership, Mission, How It Works & Makes Money

AFC Gamma, Inc. (AFCG) operates in a complex, federally-prohibited market, so how does a specialty finance company with a loan portfolio of $327.7 million navigate a quarter where it reports $0.16 in distributable earnings per share but a GAAP net loss of $12.5 million? You're seeing the tension between their core mission-providing senior secured loans to established cannabis operators-and the strategic pivot toward a Business Development Company (BDC) structure, approved by shareholders in late 2025. This shift is defintely critical because it expands their mandate beyond real estate-secured cannabis loans, which is a big move when the Current Expected Credit Loss (CECL) reserve sits at $51.3 million; you need to understand the mechanics of how AFC Gamma, Inc. makes money to judge that risk.

AFC Gamma, Inc. (AFCG) History

AFC Gamma, Inc. was established to fill a critical gap in the cannabis industry: institutional debt capital. You see, since cannabis remains federally illegal, state-legal operators can't access traditional bank financing, which created a massive opportunity for a specialty finance company like AFC Gamma to step in and become a primary lender.

The company quickly positioned itself as a commercial mortgage real estate investment trust (REIT), offering senior secured loans to established, multi-state cannabis operators. This focus on real estate collateral and stringent underwriting is what has allowed them to grow rapidly in a capital-constrained market.

AFC Gamma's Founding Timeline

Year established

AFC Gamma, Inc. was established in July 2020, emerging right as the state-legal cannabis industry's need for institutional-grade financing was peaking.

Original location

The company is headquartered in West Palm Beach, Florida.

Founding team members

The company was founded by a veteran team of investment professionals, notably led by Leonard Tannenbaum, who served as the Chief Executive Officer. Key initial members included Jonathan Kalikow and Robyn Tannenbaum, bringing deep expertise in real estate and loan origination, defintely a necessary mix for this niche.

Initial capital/funding

AFC Gamma initially commenced operations privately on July 31, 2020. The major capital infusion came with its Initial Public Offering (IPO) on the Nasdaq in March 2021, raising gross proceeds of approximately $118.8 million before underwriting discounts and commissions.

AFC Gamma's Evolution Milestones

AFC Gamma's Transformative Moments

The company's history is defined by two major structural shifts that fundamentally changed its investment mandate and risk profile, allowing it to adapt to the evolving regulatory landscape.

The first major pivot was the 2024 spin-off. This move was about focus, allowing the company to operate solely as a cannabis-focused lender for a period. This specialization was a clear, tactical response to the unique opportunities in the cannabis debt market. For a deeper dive into who's investing in this specialized structure, you should check out Exploring AFC Gamma, Inc. (AFCG) Investor Profile: Who's Buying and Why?

The second, and most recent, is the planned conversion from a mortgage REIT to a Business Development Company (BDC). This is huge. Shareholders approved this on November 6, 2025, with the conversion expected in Q1 2026. This change is a direct response to market conditions and the need for greater flexibility.

• Expanded Investment Universe: The BDC structure will allow AFC Gamma to lend to operators with or without real estate collateral, which was a core requirement as a mortgage REIT.
• Non-Cannabis Lending: The Board approved an expanded investment mandate in August 2025 to include direct lending opportunities outside the cannabis industry, such as other private and public middle-market companies.
• Financial Context: This conversion comes as the company reported Q3 2025 revenue of $6.53 million and distributable earnings of $0.16 per basic weighted average share, indicating a need to broaden the lending base to sustain growth and returns.

This BDC conversion is a clear signal that the company is proactively managing risk and seeking to diversify its credit portfolio beyond the volatility of a single, federally restricted sector. It's a pragmatic move to unlock new pools of credit opportunities.

AFC Gamma, Inc. (AFCG) Ownership Structure

Advanced Flower Capital Inc., which operates under the ticker AFCG and was formerly known as AFC Gamma, Inc., is a publicly-traded commercial mortgage Real Estate Investment Trust (REIT) with a market capitalization of approximately $72.75 million as of November 2025. The company's ownership is a mix of institutional investors, company insiders, and the public, creating a governance structure where no single group holds an absolute majority, but insiders maintain a significant stake.

Given Company's Current Status

AFCG is a publicly-traded company listed on the NASDAQ, meaning its shares are freely bought and sold by the public. The company is currently navigating a significant strategic pivot, having received overwhelming shareholder support in November 2025 to transition from a REIT to a Business Development Company (BDC), a move expected to complete in 2026. This shift is designed to diversify its investment mandate beyond its traditional focus on cannabis-secured real estate and into broader ancillary and non-cannabis sectors, aiming to improve its risk-adjusted returns. The company is defintely focused on managing its portfolio, which had a principal outstanding of $332.8 million across 14 loans as of September 30, 2025.

Given Company's Ownership Breakdown

Ownership is relatively balanced between institutions, insiders, and the public float, which is important because it means institutional due diligence and insider alignment are both strong factors in company strategy. Insiders holding over a fifth of the shares suggests their interests are very closely tied to the stock's performance. You can dive deeper into who is buying and why by Exploring AFC Gamma, Inc. (AFCG) Investor Profile: Who's Buying and Why?

Given Company's Leadership

The company's strategy is steered by an experienced board and a relatively new, but focused, management team, with an average management tenure of about two years as of November 2025. A key leadership change in October 2024 saw a strategic reorganization to support the company's new BDC focus.

• Leonard Tannenbaum: Chairman (formerly Executive Chairman and CIO). He still serves on the Investment Committee.
• Daniel Neville (Dan Neville): CEO & Partner. He has been in the role since November 2023.
• Robyn Tannenbaum: Chief Investment Officer (CIO). Appointed in October 2024, she is a co-founder and has been with the company since its inception.
• Brandon Hetzel: CFO & Treasurer. He manages the company's financial operations, which reported a net loss of $12.5 million in Q3 2025.
• Gabriel Katz: Chief Legal Officer.

The leadership is actively managing a challenging environment, including a Q3 2025 net loss and the suspension of dividends, but they are focused on the long-term value creation promised by the BDC conversion. That's a clear map for action.

AFC Gamma, Inc. (AFCG) Mission and Values

AFC Gamma, Inc. operates with a clear mission to be the premier institutional capital provider for established cannabis operators, grounded in disciplined lending and a commitment to risk-adjusted returns for its shareholders. The company's core values center on rigorous underwriting and building reliable, long-term partnerships in a complex, regulated industry.

You can see this focus in the numbers: as of November 3, 2025, the company's loan portfolio had $327.7 million of principal outstanding across 14 loans, showing a concentrated, high-value lending approach.

AFC Gamma, Inc.'s Core Purpose

The company's purpose is to fill the critical capital gap for state-legal cannabis businesses, which are often locked out of traditional banking due to federal prohibition. This specialization is their entire business model, and it's built on a foundation of financial rigor.

Official mission statement

While a single, formal mission statement isn't always presented in one sentence, AFC Gamma, Inc.'s core objectives are clearly defined by its business activities and communications:

• Be the leading provider of institutional capital solutions to established cannabis operators across the United States.
• Originate, structure, underwrite, and manage senior secured loans to deliver attractive risk-adjusted returns.
• Maintain rigorous underwriting standards to ensure capital preservation and foster long-term, mutually successful partnerships with borrowers.

Here's the quick math: the company's Q3 2025 net interest income was $6.5 million, which is the direct result of executing this core lending mission.

Vision statement

The company's future vision is now explicitly tied to its strategic shift, moving beyond a pure-play real estate investment trust (REIT) to a business development company (BDC) structure, which shareholders approved in November 2025.

• Evolve into a diversified, lower-middle market specialty finance company (BDC) in Q1 2026.
• Expand the investment mandate beyond real estate-backed cannabis loans to include ancillary and non-cannabis sectors.
• Leverage deep credit and cannabis expertise to source a broader set of opportunities that generate consistent, superior risk-adjusted returns for shareholders.

This strategic move is defintely a big deal. The active pipeline as of November 2025 reflects this vision, with roughly $415 million in potential deals, about $350 million of which is already non-cannabis related.

AFC Gamma, Inc. slogan/tagline

The company's actions and focus suggest a tagline that emphasizes their role as a sophisticated, reliable financial partner in a high-growth, underserved market:

• Institutional Capital. Disciplined Growth.
• Financing the Future of Regulated Markets.

To be fair, the Q3 2025 GAAP net loss of $(12.5) million shows the difficulty of this market, but the focus on distributable earnings of $3.5 million highlights the underlying cash-flow objective. You can dive deeper into the financial mechanics here: Breaking Down AFC Gamma, Inc. (AFCG) Financial Health: Key Insights for Investors

AFC Gamma, Inc. (AFCG) How It Works

Advanced Flower Capital Inc., or AFC Gamma, operates as an institutional lender, primarily generating revenue by originating and managing senior secured loans to established operators in the cannabis industry, but it is now rapidly pivoting to become a diversified middle-market lender. This strategic shift, including a planned conversion to a Business Development Company (BDC), allows the firm to deliver risk-adjusted returns by providing capital where traditional banks can't or won't go, especially in the federally restricted cannabis space and beyond.

AFC Gamma's Product/Service Portfolio

The company's core business is providing customized debt solutions, typically for large-scale operations. Loans are structured to be senior secured, meaning they have the highest claim on the borrower's assets, which is a critical risk mitigator in a volatile market.

AFC Gamma's Operational Framework

The firm's operational process centers on disciplined, credit-focused underwriting, which is essential given the federal illegality of cannabis and the resulting lack of traditional financing. They don't just lend; they structure complex deals.

• Rigorous Underwriting: Evaluate borrowers based on strong track records, established market presence, and high-quality collateral, which typically includes real estate, licenses, and operational cash flows.
• Active Portfolio Management: Continuously manage the existing loan book, particularly addressing non-accrual positions to protect capital. For instance, the company is actively working to resolve credit issues, which drove a substantial Current Expected Credit Loss (CECL) reserve of $51.3 million as of September 30, 2025.
• Strategic Diversification: The board approved an expanded investment mandate in August 2025, moving beyond cannabis real estate loans. This is a defintely smart move.
• BDC Conversion: Shareholders approved the plan to convert from a commercial mortgage REIT to a Business Development Company (BDC) in November 2025, which is expected in Q1 2026. This conversion is the engine for the expanded investment strategy.

Here's the quick math on the portfolio: As of September 30, 2025, AFC Gamma had $332.8 million in principal outstanding across 14 loans, generating net interest income of $6.5 million in Q3 2025. You can see how the firm's financial health is evolving amid this transition by reading Breaking Down AFC Gamma, Inc. (AFCG) Financial Health: Key Insights for Investors.

AFC Gamma's Strategic Advantages

The company's market success, even with recent challenges-like the Q3 2025 GAAP net loss of $12.5 million-stems from its ability to navigate a complex regulatory environment and its forward-looking structural changes.

• Niche Expertise and Network: Deep, specialized knowledge in the cannabis industry's credit and regulatory landscape, which creates a high barrier to entry for new institutional lenders.
• BDC Structural Flexibility: The planned BDC conversion will allow the company to lend to operators with or without real estate collateral, expanding the universe of investable assets significantly and enabling the pursuit of higher-yield, non-cannabis opportunities.
• Strong Pipeline for Diversification: The company has a capital pipeline of approximately $350 million for 2026, with the majority of that capital targeted for non-cannabis lending.
• Access to Institutional Capital: As a publicly-traded entity, AFC Gamma can source capital more efficiently than many private lenders in the underserved markets it targets.

The move to a BDC and the focus on a $350 million non-cannabis pipeline is a clear action to mitigate the risks associated with an over-reliance on a single, federally restricted industry.

AFC Gamma, Inc. (AFCG) How It Makes Money

AFC Gamma, Inc., now operating as Advanced Flower Capital Inc., generates nearly all its revenue by acting as an institutional lender, providing capital primarily through senior secured loans to established, state-legal cannabis operators in the U.S. Essentially, the company is a specialty finance firm that earns interest income from the debt capital it lends out to an industry largely shut out of traditional banking. Exploring AFC Gamma, Inc. (AFCG) Investor Profile: Who's Buying and Why?

Advanced Flower Capital Inc.'s Revenue Breakdown

Following the mid-2024 spin-off of its traditional commercial real estate portfolio, Advanced Flower Capital Inc. is now a pure-play cannabis lender, meaning its revenue streams are highly concentrated. In the third quarter of 2025 (Q3 2025), the company reported total revenue of approximately $6.53 million, nearly all of which was derived from interest payments on its loan portfolio.

Here's the quick math: The net interest income for Q3 2025 was $6.5 million, which is the core earning engine. This figure reflects a decrease from the $8.9 million reported in the same quarter last year, which highlights the challenges in the current lending environment and the impact of managing underperforming credits.

Business Economics

The core business economics of Advanced Flower Capital Inc. hinge on the interest rate spread, which is the difference between the interest it earns on its loans and its own cost of capital. Because the cannabis industry is still federally illegal, traditional banks avoid it, allowing the company to charge premium interest rates for the risk it takes on. This is a very simple model.

• Pricing Strategy: Loans are typically senior secured, meaning they are prioritized for repayment and collateralized by valuable assets like real estate, licenses, or equipment. This senior position allows the company to aim for attractive risk-adjusted returns, often in the low double-digits, by mitigating default risk.
• Cost of Capital: As a former Real Estate Investment Trust (REIT), the company historically raised capital through equity and debt. The cost of this capital, including interest paid on credit facilities, must be significantly lower than the interest earned on its loans to generate a positive spread.
• Strategic Shift: Shareholders approved a conversion from a REIT to a Business Development Company (BDC), expected in the first quarter of 2026. This move is defintely a game-changer because it expands the investment mandate beyond real estate-backed loans, allowing the company to pursue a broader set of opportunities, including non-cannabis lending, to diversify risk and enhance returns.

Advanced Flower Capital Inc.'s Financial Performance

As of November 2025, the company's financial health shows the strain of managing credit risk in a specialized, high-yield sector, even as it pivots strategically. The Q3 2025 earnings report provides a clear picture of the near-term risks and opportunities.

• Net Loss: The company reported a Generally Accepted Accounting Principles (GAAP) net loss of $(12.5) million for Q3 2025, or a loss of $(0.57) per basic weighted average common share. This significant loss is primarily driven by provisions for credit losses.
• Distributable Earnings: Despite the GAAP loss, the non-GAAP Distributable Earnings-which strips out non-cash items like credit loss reserves-was positive at $3.5 million, or $0.16 per basic weighted average common share for the quarter. This is the figure management uses to assess the underlying cash flow performance.
• Credit Exposure: The company continues to actively manage legacy credit issues, evidenced by a substantial Current Expected Credit Loss (CECL) reserve of $51.3 million as of Q3 2025. What this estimate hides is the ongoing recovery risk from distressed positions.
• Portfolio Size: As of September 30, 2025, total assets stood at $288.7 million, with $327.7 million in principal outstanding across 14 loans as of early November 2025. The book value per share was $7.49.
• Dividend Action: Due to an anticipated taxable loss from a loan settlement, the board does not expect to pay a dividend in Q4 2025, a clear action signaling a focus on capital preservation and credit management.

AFC Gamma, Inc. (AFCG) Market Position & Future Outlook

AFC Gamma, Inc. is in a pivotal transition, moving from a specialized cannabis mortgage Real Estate Investment Trust (REIT) to a diversified Business Development Company (BDC) to expand its lending universe beyond real estate-backed cannabis loans. This strategic pivot, approved by shareholders in November 2025, is a direct response to credit challenges in the cannabis sector and aims to stabilize returns by tapping into the broader middle-market lending space. The company is actively managing its existing portfolio, which had $332.8 million in principal outstanding across 14 loans as of September 30, 2025.

The future outlook hinges on successfully executing the BDC conversion, expected in the first quarter of 2026, and deploying the new capital into a substantial pipeline of non-cannabis opportunities. Honestly, the near-term financial picture remains stressed, evidenced by a GAAP net loss of $12.5 million in the third quarter of 2025, but the long-term play is clear: diversification.

Competitive Landscape

In the specialized cannabis-focused finance sector, AFC Gamma competes primarily with other publicly traded REITs and lenders. We can visualize its market standing by comparing total assets with its closest, largest peers, which shows AFC Gamma holds a smaller, more focused position. Here's the quick math on relative market share based on total assets for the three largest publicly-traded, cannabis-focused entities, totaling approximately $3.32 billion in combined assets as of mid-to-late 2025.

Opportunities & Challenges

The planned BDC conversion is defintely the biggest opportunity, allowing the company to move beyond real estate collateral, which previously limited lending. But, still, the existing credit risk is a major headwind you need to watch closely.

Industry Position

AFC Gamma is positioned as a specialized, first-mover lender in the capital-starved U.S. cannabis market, but its industry standing is shifting. While historically a prominent commercial mortgage REIT in this niche, its total assets of $288.7 million place it well behind the market leader, Innovative Industrial Properties, Inc.

The move to a BDC structure is a pragmatic evolution, acknowledging that approximately two-thirds of potential cannabis lending opportunities lack the qualifying real estate collateral required for a REIT. This shift positions the company to become a more flexible specialty finance firm rather than a pure-play cannabis REIT, which should help mitigate the concentration risk that has plagued its portfolio. For a deeper dive into who is buying and why, you should check out Exploring AFC Gamma, Inc. (AFCG) Investor Profile: Who's Buying and Why?

• Maintain a high-yield focus, even with the Q4 2025 dividend suspension, due to its historical distributable earnings.
• Leverage its established network and underwriting expertise in the complex, federally-illegal cannabis space.
• Face a challenging valuation, trading near a 52-week low of $3.04 as of November 2025, reflecting market pessimism about legacy loan resolution.

The core action for management is clear: close the BDC conversion and deploy the $350 million non-cannabis pipeline to prove the new model works.