AFC Gamma, Inc. (AFCG): Business Model Canvas [Dec-2025 Updated]

You're defintely looking at a unique financial play with AFC Gamma, Inc. (AFCG): they are essentially the specialized bank for the U.S. cannabis industry, a sector where traditional financing is still federally blocked. This Real Estate Investment Trust (REIT) model cuts straight through the complexity, offering senior secured debt that minimizes investor risk while funding high-growth operators. Their entire strategy is built on deploying a significant capital base, projected to be near $650 million in total assets for 2025, meaning their success is a direct function of their underwriting skill in a volatile, but rapidly expanding, market.

AFC Gamma, Inc. (AFCG) - Canvas Business Model: Key Partnerships

You're looking at AFC Gamma, Inc. (AFCG) and their reliance on external partners, and the truth is, their model is built on a few deep, specialized relationships. They don't just need capital; they need capital that understands the nuances of the cannabis industry, plus the specialized expertise to manage the associated legal and collateral risks. It's a high-yield, high-touch business.

The company's key partnerships are primarily focused on sourcing capital, managing regulatory complexity, and ensuring the quality of their senior secured loans, which had a weighted average yield to maturity of approximately 17% as of August 1, 2025. This network is defintely the backbone of their operation.

Access to institutional debt and equity capital markets

AFC Gamma's ability to fund its loans, which can range from $10 million to over $100 million, hinges on its access to institutional capital. The most concrete partnership here is with the lead arranger of their senior secured revolving credit facility, an FDIC-insured bank with over $75 billion of assets. In 2025, this facility was expanded from $30 million to $50 million, with the bank committing an additional $20 million. This relationship is crucial because traditional banks are often prohibited from lending directly to cannabis operators, making this institutional debt a rare and valuable resource.

The company is also strategically shifting its structure, with shareholders approving a conversion from a Real Estate Investment Trust (REIT) to a Business Development Company (BDC) in November 2025. This conversion is a partnership with the broader capital markets, allowing them to tap into a new pool of investors and expand their lending universe beyond real estate-backed assets, a move that will be key for future growth.

2025 Capital Access Metric	Value (as of Q2/Q3 2025)	Significance of Partnership
Senior Secured Revolving Credit Facility Size	Expanded to $50 million	Secured debt from FDIC-insured bank; critical non-cannabis capital source.
Total Assets (June 30, 2025)	$290.6 million	Scale of the portfolio supported by capital partners.
Market Capitalization (November 2025)	Approximately $70.72 million	Indicates equity market valuation and capital raising capacity.

Non-bank financial institutions for co-origination of loans

While AFC Gamma often acts as the Lead Arranger and Administrative Agent (through its affiliate, AFC Agent LLC, on deals like the $41 million Story of Maryland facility), they frequently partner to syndicate loans. This co-origination model allows them to manage risk and deploy capital across a wider range of opportunities. They use affiliates, often referred to simply as an 'affiliate,' to take portions of the credit facilities, which is a common practice in specialized lending to distribute risk and maximize deployment efficiency. For example, in past transactions, they have syndicated a portion of a credit facility to an affiliate, demonstrating this risk-sharing partnership model.

Specialized legal and regulatory compliance advisors

Operating in the federally illegal, yet state-legal, cannabis space means legal and regulatory compliance is paramount. AFC Gamma relies heavily on specialized external legal counsel to structure loans that comply with all state and federal regulations, particularly concerning real estate collateral and the transfer of cannabis licenses. This partnership is less about a single named firm and more about a continuous advisory relationship to navigate the complex legal landscape. The March 2025 litigation involving a forbearance agreement with borrower Justice Grown also highlights the need for specialized restructuring and litigation counsel, including the appointment of a Chief Restructuring Officer (CRO) to manage distressed assets.

Real estate and asset valuation firms for collateral assessment

As a commercial mortgage REIT (prior to the BDC conversion), every loan is secured, typically by real estate assets, cannabis licenses, and cash flows. This necessitates a partnership with independent third-party valuation firms. These firms provide the critical, unbiased input needed to value unquoted assets and ensure the real estate collateral coverage is adequate, which is a non-negotiable part of their stringent underwriting process. The integrity of the loan portfolio, which had a Current Expected Credit Loss (CECL) reserve of $44 million (or approximately 14.6% of loans at carrying value) as of Q2 2025, depends on accurate, third-party collateral assessment.

Cannabis operators for long-term financing relationships

These are the core partners, the borrowers themselves. AFC Gamma focuses on established, multi-state operators (MSOs) in limited-license states, aiming to build long-term relationships that grow with the borrower. This isn't transactional lending; it's a partnership to fuel expansion.

Their recent 2024-2025 activity shows this commitment:

• Committed and funded a $41 million senior secured credit facility to Story of Maryland in October 2024.
• Expanded an existing credit facility for BeLeaf Medical (Missouri) by an additional $5.5 million in August 2024, bringing their total funding to $26.1 million.
• Provided an additional $1.8 million to Sunburn Cannabis (Florida) in August 2024, increasing their facility total to $36.5 million.

These long-term relationships allow AFC Gamma to grow their portfolio, which had $327.7 million of principal outstanding across 14 loans as of November 3, 2025. The borrower's success is defintely AFC Gamma's success.

AFC Gamma, Inc. (AFCG) - Canvas Business Model: Key Activities

The core of AFC Gamma, Inc.'s operation is simple: act as the institutional lender for the U.S. cannabis industry, a space where traditional banks still can't go. You need to know that their key activities are centered on highly specialized debt origination and rigorous portfolio management, all while navigating the strict rules of being a Real Estate Investment Trust (REIT) in a federally illegal market.

Originate, underwrite, and fund senior secured loans

This is the primary engine of the business. AFC Gamma focuses on originating, structuring, and underwriting senior secured credit facilities, which are first-lien term loans secured by the borrower's assets. These loans typically range from $10 million to over $100 million, targeting sophisticated operators known as 'Cannabis 3.0' players. The company exceeded its 2024 origination goal, funding over $100 million in new deals, showing strong activity leading into 2025. For example, in late 2024, they committed and funded a $41 million senior secured credit facility for Story of Maryland, LLC. Here's the quick math: the portfolio's weighted average yield to maturity was approximately 17% as of August 1, 2025, showing the high-interest returns required for this risk profile.

Manage a portfolio of real estate and equipment-backed debt

Effective portfolio management is defintely a critical activity, especially given the regulatory environment. As of August 1, 2025, the company managed a principal loan balance of $357.9 million across 15 loans. These loans are secured by a mix of collateral, including quality commercial real estate, the value of the cannabis licenses, and the borrower's cash flows. The portfolio's credit quality requires constant attention; as of June 30, 2025, the Current Expected Credit Loss (CECL) reserve stood at $44 million, representing approximately 14.6% of loans at carrying value. That's a significant reserve, showing the reality of managing credit risk in this sector.

Conduct rigorous due diligence on state-licensed cannabis operators

Due diligence is the core risk mitigation activity. Since federal law complicates things, AFC Gamma must ensure that every borrower is licensed in, and complying with, state-regulated cannabis programs. They focus on operators in limited-license states with attractive supply and demand dynamics, like Missouri, New Jersey, and Florida. The process involves a deep dive into the borrower's financial performance, capital structure, and operational track record. This activity is crucial because the quality of the operator is often the best collateral in this industry.

Secure favorable financing terms through credit facilities

To fund its lending, AFC Gamma needs its own capital. Securing institutional credit facilities is a key activity that lowers their cost of capital. In 2025, the company expanded its senior secured revolving credit facility from $30 million to $50 million, with the commitment coming from an FDIC-insured bank. This is a big deal because it signals growing institutional comfort with the underlying assets. A prior facility, which matured in April 2025, had an interest rate of a floating rate of Prime + 0.50% (subject to a Prime floor of 4.00%), which provides a benchmark for their borrowing costs.

Maintain REIT compliance and distribution requirements

Operating as a commercial mortgage Real Estate Investment Trust (REIT) requires a specific set of compliance activities. The most critical is the mandate to distribute at least 90% of its taxable income to shareholders annually. For Q2 2025, AFC Gamma reported distributable earnings of $0.15 per share and declared a quarterly dividend of $0.15 per share, demonstrating this compliance. However, this activity is in transition: as of late 2025, the company announced its intention to convert to a Business Development Company (BDC) by 2026, because approximately two-thirds of potential cannabis lending opportunities lacked the necessary real estate collateral required by the REIT structure. They will continue to operate as a REIT in the interim, so the compliance activity remains vital.

Key Activity Metric (2025 Fiscal Year Data)	Value/Amount	Context/Significance
Portfolio Principal Balance (as of Aug 1, 2025)	$357.9 million	Total size of the loan book across 15 loans.
Weighted Average Yield to Maturity (as of Aug 1, 2025)	Approx. 17%	High-interest return reflects the specialized risk of cannabis lending.
CECL Reserve (as of June 30, 2025)	$44 million (or 14.6% of loans)	Provision for expected credit losses, reflecting active risk management.
Senior Secured Revolving Credit Facility (2025 Expansion)	Expanded from $30M to $50 million	Securing institutional, lower-cost capital to fund originations.
Q2 2025 Distributable Earnings per Share	$0.15 per share	Metric used to ensure compliance with the REIT distribution requirement.

AFC Gamma, Inc. (AFCG) - Canvas Business Model: Key Resources

The key resources for AFC Gamma, Inc. are not just static assets; they are the specialized combination of capital, regulatory know-how, and human expertise necessary to navigate the high-risk, high-reward cannabis lending market. You need to see the capital pool not just as a number, but as the fuel for their niche strategy.

Here is the quick math on their primary resource, the investment capital, based on the latest 2025 figures.

Significant pool of investment capital, projected near $650 million in total assets for 2025

While the initial projection might have been higher, the most recent fiscal data shows a different picture. As of September 30, 2025, AFC Gamma, Inc.'s total assets stood at $288.7 million. This is the actual size of the capital base they are currently deploying, a significant decrease from $402.1 million at the end of 2024. This pool of capital is primarily deployed as senior secured mortgage loans to state-law compliant cannabis operators, with a principal outstanding of approximately $327.7 million across 14 loans as of early November 2025.

The firm specializes in originating loans typically ranging from $10 million to over $100 million, which requires a substantial, accessible capital base.

Financial Metric	Value (Q3 2025)	Context
Total Assets (as of 9/30/2025)	$288.7 million	Actual capital base for lending and operations.
Principal Outstanding (as of 11/3/2025)	$327.7 million	The value of the current loan portfolio.
Shareholder Equity (as of 9/30/2025)	$169.3 million	Represents the book value supporting the capital pool.

Expertise in complex cannabis real estate and regulatory landscapes

The company's deep specialization in the US cannabis sector is a crucial intellectual resource. They focus on lending in limited license states, where market barriers are high, which reduces competition and increases the value of their expertise. Their loans are typically secured by a combination of quality real estate assets, the value of the cannabis licenses, and the operator's cash flows.

This expertise allows them to structure complex, first-lien term loans, like the $41 million senior secured credit facility for Story of Maryland, LLC, which was secured by real property, cannabis licenses, and operations.

Strong relationships with multi-state cannabis operators (MSOs)

Relationships are currency in this sector. AFC Gamma, Inc. leverages a deep network to access and underwrite deals with leading multi-state cannabis operators (MSOs). They have a proven track record of financing major industry players, which is a powerful signal to the market.

• Secured a $60 million portion of a $150 million loan facility for Acreage Holdings.
• Provided an expanded credit facility to Justice Cannabis Co.
• Financed Story Cannabis, a leading private MSO.
• Aims to be the institutional partner of choice for MSOs.

Proprietary credit underwriting and risk assessment models

While the models themselves are internal, their value is evident in the diligence process. The firm's underwriting is specifically tailored to the unique risks of the cannabis industry, which operates in a federally illegal, state-legal patchwork. They rely on a thorough investment review process that has helped them outperform industry benchmarks.

CEO Daniel Neville, with his background as a former CFO of a multi-state operator, applies in-house operating expertise directly to the underwriting, structuring, and diligence process. This operational lens is their defintely proprietary edge, translating complex MSO business models into credit-worthy risk profiles.

Experienced management team with deep financial backgrounds

The leadership team is a blend of financial and cannabis operational expertise, which is rare. The CEO, Daniel Neville, was the former CFO of Ascend Wellness Holdings, Inc., a leading MSO. This gives AFC Gamma, Inc. an insider's view of the borrower's business.

CFO Brandon Hetzel has over twelve years of real estate and financial management experience, including a seven-year tenure in the REIT audit practice at PricewaterhouseCoopers (PwC). This dual expertise in real estate and cannabis operations is what you're really buying into.

• Daniel Neville (CEO): Deep operational expertise from MSO background.
• Robyn Tannenbaum (Co-Founder): Serves as Chief Investment Officer.
• Brandon Hetzel (CFO): Extensive real estate and REIT financial management experience.

AFC Gamma, Inc. (AFCG) - Canvas Business Model: Value Propositions

The core value proposition of AFC Gamma, Inc. (AFCG), now operating as Advanced Flower Capital Inc. (AFC), is simple: they are the institutional-grade lender for an industry-cannabis-that traditional banks still won't touch. You get access to large, flexible debt capital with the confidence of a seasoned, specialized financial partner.

This specialization allows AFC to command a strong weighted average portfolio yield to maturity of approximately 18% as of March 31, 2025, and May 1, 2025, demonstrating the premium they earn for accepting this unique risk profile. That's a powerful return for their investors, but it's also the price of entry for cannabis operators who need growth capital.

Non-dilutive, flexible, and customized debt capital for cannabis growth

When you're a high-growth cannabis operator, giving up equity (dilution) is expensive. AFC Gamma offers non-dilutive debt financing, which is crucial for preserving your ownership stake and maximizing long-term returns. They don't force a one-size-fits-all product on you.

Their platform provides truly customized financing solutions, including first-lien loans, mortgage loans, construction loans, and bridge financings. They originate, structure, and underwrite loans ranging from a minimum of $10 million to over $100 million, which means they can fund everything from a new cultivation facility buildout to a major multi-state operator (MSO) acquisition.

Reliable funding source where traditional bank financing is unavailable

Honest to goodness, the federal prohibition on cannabis is the single biggest driver of AFC Gamma's business model. Because the industry faces strict limitations in traditional banking access, AFC steps in as a leading commercial mortgage Real Estate Investment Trust (REIT) to fill that void.

As one borrower noted, AFC Gamma was there to support their growth when traditional lenders couldn't grasp the nuances of the cannabis industry. They are a reliable, institutional lender for state-law compliant operators, which is a rare and valuable commodity in this market.

Expertise in navigating the complex regulatory and legal environment

Lending to a federally illegal, but state-legal, industry is a minefield. You need a partner who can navigate the patchwork of state regulations. AFC Gamma's management team brings a significant combined experience of over 100 years in investment management and disciplined credit investing. They use this deep network and credit expertise to focus exclusively on lending to state-law compliant operators in states with favorable supply and demand dynamics.

This specialized knowledge is the real secret sauce; it translates directly into better risk management for both the lender and the borrower. Here's the quick math on their portfolio status as of late 2025:

• Total Principal Outstanding (as of August 1, 2025): $357.9 million
• Number of Loans (as of August 1, 2025): 15
• Credit Loss Reserves (CECL) (as of March 31, 2025): $29.9 million

Speed and certainty of execution for large-scale real estate transactions

In a fast-moving market like cannabis, speed matters. A slow financing process can cost you a critical license or a key asset. AFC Gamma has a track record of executing large-scale transactions with certainty.

For example, in October 2024, they committed and funded a $41 million senior secured credit facility for Story of Maryland, LLC. This single transaction helped the company exceed its 2024 goal of $100 million in new originations, showing they can move significant capital quickly. What this estimate hides is the rigorous due diligence required to underwrite loans of this size, which AFC's team can defintely fast-track.

Senior secured position minimizes investor credit risk

For investors, the primary value proposition is the senior secured nature of the loans, which significantly minimizes credit risk. AFC Gamma primarily originates first-lien term loans. These loans are typically secured by the borrower's quality real estate assets, the value of their cannabis licenses, and their cash flows.

This structure puts AFC Gamma at the top of the capital stack, meaning they are the first in line to be repaid from the collateral if a borrower defaults. As of March 31, 2025, their Current Expected Credit Losses (CECL) reserve stood at approximately 9.75% of loans at carrying value, or $29.9 million, reflecting a prudent approach to managing potential losses on their portfolio.

Key Value Proposition Metric	2025 Fiscal Year Data (Q1-Q3)	Significance
Loan Origination Range	$10 million to over $100 million	Funds large-scale MSO growth and real estate acquisition.
Weighted Average Portfolio Yield	Approximately 18% (as of March 31, 2025)	Indicates high-yield, risk-adjusted returns for providing non-traditional capital.
Portfolio Principal Outstanding	$357.9 million (as of August 1, 2025)	Shows significant institutional deployment of capital in the cannabis sector.
Credit Loss Reserve (CECL)	$29.9 million or 9.75% of loans (as of March 31, 2025)	Reflects disciplined risk management against the backdrop of an evolving regulatory environment.

AFC Gamma, Inc. (AFCG) - Canvas Business Model: Customer Relationships

AFC Gamma's customer relationships are built on an institutional, high-touch model necessitated by the complexity and regulatory risk of the niche cannabis lending market. You aren't just a number; you are one of a very small group of specialized borrowers. This model is less about mass-market automation and more about bespoke, hands-on partnership to manage the unique credit risks inherent in the industry.

Direct, high-touch relationship management with borrowers

The relationship model is intensely direct and personalized, reflecting the significant size and high-risk nature of each transaction. With a portfolio consisting of only 14 loans as of late 2025, each borrower represents a substantial portion of the total principal outstanding of $327.7 million. This small scale demands a dedicated, senior-level focus from the management team, not a call center.

For example, the CEO has publicly detailed a strategy of active engagement, which included visiting 11 cultivations and 28 dispensaries in key states to perform deep dives on borrowers and markets. This is the definition of high-touch: physically being on the ground to understand the operational reality of the collateral and cash flow.

Long-term, partnership-focused approach to financing needs

AFC Gamma positions itself as a long-term capital partner, especially for multi-state operators (MSOs) who lack access to traditional bank financing. The loans are typically large, ranging from $10 million to over $100 million, and secured by real estate and other assets.

This partnership focus is crucial because the weighted average portfolio yield to maturity is high, around 18%, reflecting the elevated risk profile. To justify this cost of capital, AFC Gamma must offer more than just cash; they offer industry expertise, flexible structuring, and a commitment to growing with the borrower. The recent expansion of the investment mandate, approved by shareholders, to transition into a Business Development Company (BDC) further signals a long-term strategy to diversify and remain a flexible capital source for these operators, even outside of pure real estate collateral.

Dedicated portfolio management for ongoing loan monitoring

Active portfolio management is a core competency, not an afterthought. You have to be proactive when dealing with an industry that carries a Current Expected Credit Loss (CECL) reserve of $51.3 million, which was approximately 18.7% of the loans at carrying value in Q3 2025. That's a serious risk buffer that requires constant oversight.

The dedicated portfolio management team is tasked with mitigating this risk through:

• Continuous financial and operational review of the borrower.
• Regular site visits to verify collateral and business health.
• Proactive engagement to address underperforming loans, a key management priority.
• Facilitating successful loan payoffs, such as the $43 million in principal repayments received since Q2 2025, which demonstrates effective loan life-cycle management.

You simply cannot manage this level of credit risk passively. It requires a dedicated team on top of the financials defintely.

Highly professional and discreet communication

Given the regulatory environment and the institutional nature of the lending, communication is highly professional and discreet. The borrowers are sophisticated, publicly-traded or well-established private entities, and the financing details are sensitive.

The relationship is managed through a formal institutional lending process, ensuring all interactions regarding loan structuring, covenant compliance, and potential amendments are handled with precision and confidentiality. This is the standard for institutional debt, where the relationship is between C-suite executives and senior investment officers.

Loan covenant monitoring and proactive risk mitigation

Covenant monitoring is the lifeblood of risk mitigation in this business. Every loan is senior secured and includes a strict set of financial and operational covenants designed to provide an early warning system. The high CECL reserve tells you exactly how critical this function is.

The portfolio management team's primary function is to track these covenants, which typically include minimum liquidity ratios, debt service coverage ratios, and reporting requirements. When a covenant is breached or stress is observed, the team initiates a proactive dialogue to restructure or enforce terms, rather than waiting for a default. This is how AFC Gamma works to protect its capital structure and manage an inherently volatile asset class.

Customer Relationship Mechanism	Metric/Value (2025 Data)	Strategic Impact
Portfolio Concentration	14 loans (as of Nov 2025)	Enables high-touch, personalized relationship management for each borrower.
Risk Profile Indicator	CECL Reserve of $51.3 million (Q3 2025)	Necessitates intense, dedicated portfolio management and proactive risk mitigation.
Loan Size Profile	Loans typically $10 million to over $100 million	Reinforces institutional, C-suite level communication and relationship.
Management Activity	CEO visited 11 cultivations and 28 dispensaries	Concrete example of direct, on-the-ground relationship and operational due diligence.
Relationship Outcome	$43 million in successful loan payoffs since Q2 2025	Indicates effective long-term partnership and loan life-cycle management.

AFC Gamma, Inc. (AFCG) - Canvas Business Model: Channels

Direct origination team outreach to cannabis operators

AFC Gamma's primary channel for sourcing loans is a dedicated, internal origination team that maintains a deep network within the US cannabis industry. This isn't a passive model; it relies on proactive outreach to established multi-state operators (MSOs) and what the company calls 'Cannabis 3.0' players-sophisticated operators looking for institutional capital. Your capital access is often limited in this space, so a direct lender like AFC Gamma is a critical partner.

The team's success is measurable. For example, the origination engine was reinvigorated in 2024, resulting in a $41 million senior secured credit facility for Story of Maryland, LLC, which helped the company exceed its $100 million origination goal for that year. That deal shows the channel's focus: providing first-lien term loans secured by real property, licenses, and operations. To be fair, this channel also handles the workout of troubled assets; as of June 1, 2025, one private company loan was moved to nonaccrual status, which shows the persistent credit risk the team manages.

Referrals from private equity firms and investment banks

While direct origination is key, a substantial portion of the deal flow comes from a network of long-standing relationships with financial intermediaries, including private equity (PE) groups, family offices, and investment banks. These firms often have clients in the cannabis or middle-market space who need a non-traditional, secured lending solution that the banks themselves cannot provide due to federal regulations.

The channel is defintely broadening now. Following the shareholder approval on November 6, 2025, to convert to a Business Development Company (BDC), the deal pipeline has shifted dramatically. The company is now actively marketing a pipeline of approximately $350 million in direct lending opportunities to middle-market companies outside of cannabis. This strategic pivot leverages the management team's decades of experience in traditional direct lending, expanding the referral network beyond cannabis-specific funds to include generalist PE and investment banking groups.

Industry conferences and networking events

For AFC Gamma, the main public-facing events are investor-focused, which serves a dual purpose: raising capital and signaling stability to potential borrowers. You won't see them sponsoring a massive consumer expo, but you will see them at key financial events. The most consistent channel for market communication is the quarterly earnings call, which acts as a structured networking event for analysts and investors.

In 2025 alone, the company hosted three major calls: the Q1 2025 Earnings Call on May 14, 2025, the Q2 2025 Earnings Call on August 14, 2025, and the Q3 2025 Earnings Call on November 12, 2025. These events are crucial for communicating key metrics like the weighted average portfolio yield to maturity, which stood at approximately 17% as of August 1, 2025.

Investor relations for capital raising and market communication

The Investor Relations (IR) channel is vital for securing the capital that funds the origination engine. It's about maintaining trust with the market and ensuring liquidity. A key accomplishment in 2025 was the expansion of the senior secured revolving credit facility from $30 million to $50 million with a lead FDIC-insured bank. Here's the quick math: that $20 million increase in capacity is a direct result of effective IR and building a strong relationship with a traditional financial institution.

IR also manages shareholder expectations and distributions. For the second quarter of 2025, the Board declared a dividend of $0.15 per common share. This constant communication, including press releases and public filings, is the bedrock for attracting and retaining institutional investors.

Company website and public filings for transparency

The company website, `afcgamma.com`, is the central hub for transparency and compliance. All material information, which you need for due diligence, is posted here. This includes SEC filings like the Q3 2025 Earnings Presentation and all news releases, such as the November 6, 2025 announcement of the BDC conversion approval.

This channel is the final delivery point for the value proposition-information and access to a specialized asset class. It's where you find the full financial picture, including the Q2 2025 total assets of $290.6 million and total shareholder equity of $184.7 million.

Channel	Primary Function in 2025	Key 2025 Metric / Actionable Data
Direct Origination Team	Sourcing and underwriting secured loans to cannabis operators and middle-market companies.	$350 million non-cannabis direct lending pipeline established post-BDC approval.
Referrals (PE/IB Network)	Expanding deal flow by leveraging relationships with financial intermediaries.	Portfolio principal outstanding: $357.9 million across 15 loans as of August 1, 2025.
Industry Conferences/Events	Communicating financial performance and strategy to the market.	Three major earnings calls hosted in 2025 (Q1, Q2, Q3) for investor communication.
Investor Relations	Securing and managing capital for lending operations.	Credit facility expanded from $30 million to $50 million in 2025.
Website/Public Filings	Regulatory compliance and investor transparency.	Q2 2025 Book Value Per Share: $8.18. BDC conversion approved on November 6, 2025.

AFC Gamma, Inc. (AFCG) - Canvas Business Model: Customer Segments

As a seasoned financial analyst, I see AFC Gamma, Inc.'s customer segment strategy as a focused play on the high-yield, constrained-capital environment of the US state-legal cannabis market. Your core customers are not small startups; they are established, sophisticated operators-what we call 'Cannabis 3.0' players-who need large-scale, non-dilutive real estate capital that traditional banks still cannot provide.

The company's loan book, which stood at $327.7 million of principal outstanding across just 14 loans as of November 3, 2025, shows a clear preference for large-check, institutional-grade borrowers. That's an average loan size of over $23 million. You are lending to the biggest players in the most protected markets, which is defintely the right strategy in a volatile sector.

Established, state-licensed multi-state cannabis operators (MSOs)

MSOs are the primary target, representing the most creditworthy segment due to their scale, diversified revenue streams across multiple states, and often public-company reporting requirements. These are the operators who can absorb the typical loan size of $10 million to over $100 million that AFC Gamma originates. Their multi-state footprint mitigates single-market regulatory risk, offering a stronger collateral package that includes real estate and license value (where permissible).

The MSO segment seeks capital for expansion, refinancing high-cost debt, or funding capital expenditures (CapEx) for new facilities. They need the institutional-level financing that Advanced Flower Capital Inc. provides, especially since federal prohibition (or lack of Safe Banking Act passage) keeps large, federally-chartered financial institutions out of the market. This creates the high-yield opportunity for AFC Gamma, which targets an average portfolio gross yield between 12% and 20%.

Single-state operators (SSOs) with strong market share and cash flow

While the focus is on scale, the customer segment also includes select, high-performing SSOs. These SSOs must demonstrate exceptional financial strength-strong market share, robust cash flow, and a clean capital stack-to meet AFC Gamma's stringent underwriting criteria. These are typically dominant players in a single, high-barrier-to-entry state, where their local monopoly power compensates for the lack of geographic diversification.

In this segment, the loan is often a strategic capital injection to solidify their local dominance, perhaps through a final build-out of a cultivation facility or the acquisition of a key retail location. The key is that their credit profile must be comparable to an MSO, ensuring the senior secured loan is adequately collateralized by high-quality real estate.

Vertically integrated cannabis companies requiring real estate capital

The ideal customer is a vertically integrated company-meaning they control the entire supply chain from cultivation and processing to retail. This integration is crucial because it provides AFC Gamma with multiple layers of collateral and cash flow streams to secure the loan. The loans are primarily secured by commercial real estate, which is why the company operated as a Real Estate Investment Trust (REIT) for so long (though a transition to a Business Development Company, or BDC, is expected in Q1 2026).

The real estate capital provided is essentially a mortgage loan, allowing the operator to free up their working capital for operational expenses, which is a major pain point in the capital-starved cannabis industry. This structure is a classic sale-leaseback alternative, giving the operator a capital lifeline without diluting their equity.

Operators seeking financing for cultivation, processing, and retail facilities

The financing is directly tied to the physical assets required for the cannabis business. The customer's need is capital for facility development and maintenance. The loans are secured by the underlying property, which is then used for the three core activities of a vertically integrated operator:

• Cultivation: Large-scale greenhouses or indoor grow facilities.
• Processing: Manufacturing and extraction labs for oils, edibles, and concentrates.
• Retail: Dispensary locations, which are often the most valuable real estate assets due to their limited licensing.

The diversity across these asset types is a key risk-mitigation tool for AFC Gamma. Here's the quick math: a single loan of $25 million might be split across a cultivation site (real estate) and a retail dispensary (real estate plus license value), diversifying the collateral base.

Businesses in limited-license, high-barrier-to-entry states

The geographic focus is as important as the operator's size. AFC Gamma intentionally targets states with limited licensing regimes (high barriers to entry) because these markets protect the borrowers' profitability by restricting competition. This regulatory moat makes the borrower's cash flow more predictable and the value of their licenses and real estate collateral more stable.

The portfolio is diversified across 16 states as of Q3 2025. This focus includes early-stage adult-use transition states, which offer significant growth potential as the market matures and sales volumes increase. This is where the next wave of capital demand will come from.

Customer Segment Characteristic	AFC Gamma's Focus (Late 2025)	Supporting 2025 Fiscal Data
Operator Type	Established, sophisticated Multi-State Operators (MSOs) and select, strong Single-State Operators (SSOs).	Portfolio of only 14 loans as of Nov 3, 2025, indicating large-check, institutional-grade borrowers.
Financing Need	Real estate capital for expansion, CapEx, and non-dilutive financing.	Loans typically range from $10 million to over $100 million.
Facility Type	Vertically integrated facilities: cultivation, processing, and retail.	Loans are senior secured by high-quality real estate assets, license value, and cash flows.
Geographic Focus	Limited-license, high-barrier-to-entry states and near-term adult-use transition states.	Portfolio exposure across 16 states, including key markets like Missouri, New Jersey, Ohio, Florida, and Pennsylvania.

AFC Gamma, Inc. (AFCG) - Canvas Business Model: Cost Structure

You're looking for the hard numbers that drive AFC Gamma, Inc.'s (now Advanced Flower Capital Inc.'s) cost structure, and the reality in late 2025 is that the biggest costs are tied to financing the loan portfolio and managing credit risk, not just day-to-day operations. The company's cost base is currently defined by its Real Estate Investment Trust (REIT) structure, but a major shift is underway with the planned conversion to a Business Development Company (BDC) in the first quarter of 2026.

The core of the cost structure is leveraging capital to originate high-yield loans, but recent quarters show a sharp rise in non-cash provisions for credit losses that swamp traditional operating expenses. That is the single most important cost driver right now.

Cost of Capital (Interest Expense on Credit Facilities and Notes)

The cost of capital is the direct expense of financing the loan portfolio. This is primarily the interest paid on the company's senior secured revolving credit facility and its senior notes. Given the high-interest-rate environment, this cost remains a significant, though manageable, outflow.

For the three months ended March 31, 2025 (Q1 2025), the Revolving Credit Facility had an interest rate of 8.00% on outstanding borrowings. An unused line fee of approximately $56.3 thousand was also incurred in Q1 2025 on the available, but undrawn, portion of the facility. The Revolving Credit Facility was amended in April 2025, increasing the interest rate floor from 4.00% to a higher 7.00%, which locks in a higher minimum cost for future borrowings. While Q3 2025 Net Interest Income was reported as $6.5 million on revenue of $6.53 million, this implies a very low cash interest expense of approximately $30,000 for the quarter, suggesting low utilization of the credit facility or significant non-cash revenue accruals.

General and Administrative (G&A) Expenses, Including Compensation

As an externally managed REIT, a large portion of the administrative cost is paid to the Manager, AFC Management, LLC, but the company still incurs direct G&A and compensation costs. For the full year 2024, General and administrative expenses totaled $3,967,764, with an additional $1,390,978 in stock-based compensation expense. The CEO's annual base salary is $625,000, plus eligibility for equity grants, such as a 2025 grant of up to $400,000 (with a target of $300,000).

The total operating expenses (Management, G&A, Stock-based compensation, and Professional fees) for the three months ended March 31, 2025, were a combined $2,476,832, which gives you a clear sense of the quarterly run-rate for these core overhead costs.

Due Diligence, Legal, and Compliance Costs for Loan Origination

These costs are critical for a specialty lender operating in the cannabis space, which requires rigorous regulatory compliance and due diligence (DD). These expenses are typically categorized as Professional fees on the income statement.

The company is responsible for all third-party costs related to evaluating and closing loans, even if the loan does not ultimately close. For the full year 2024, Professional fees amounted to $1,563,484. More importantly, the cost of credit risk is a massive non-cash expense. In Q3 2025, the company recorded a Provision for expected credit losses (CECL) of $7,372,778 and $9,712,427 in unrealized losses, which are the real costs of portfolio risk and active management in this sector. That's a huge drag on GAAP net income.

Asset Management and Servicing Fees

The company is externally managed and pays a Management Fee and an Incentive Fee (performance fee) to AFC Management, LLC. This is a primary, recurring operational cost.

For the full year 2024, net Management and incentive fees totaled $10,361,821. The fee structure is designed to align the Manager's interests with shareholder returns, as the Incentive Fee is tied to 'Core Earnings' (a measure similar to Distributable Earnings). For Q1 2025, the net management and incentive fees were a component of the total operating expenses of $2,476,832, after a fee rebate of $128,580.

Dividend Distributions to Maintain REIT Status

As a REIT, AFC Gamma, Inc. is required by the Internal Revenue Code to distribute at least 90% of its annual REIT taxable income to shareholders. This distribution acts as a mandatory cost of maintaining the tax-advantaged structure.

The company paid a quarterly cash dividend of $0.15 per share for both Q2 2025 and Q3 2025. However, due to expected taxable losses, the company has indicated that no dividend is anticipated for the fourth quarter of 2025. This move, combined with the shareholder approval to convert to a BDC in Q1 2026, signals a fundamental shift away from the mandatory high distribution cost structure of a REIT.

Cost Category	2025 Financial Data (Q3 2025 or YTD)	Notes/Context
Non-Cash Credit Cost (CECL)	$7,372,778 (Q3 2025 Provision)	The largest non-cash cost, reflecting the risk in the cannabis lending portfolio.
Unrealized Losses	$9,712,427 (Q3 2025)	Non-cash charge impacting GAAP Net Loss, reflecting mark-to-market of loans.
Total Operating Expenses	$2,476,832 (Q1 2025 Total)	Includes Management Fees, G&A, Professional Fees, and Stock-based Compensation.
Management & Incentive Fees, Net	Included in Q1 2025 Total Expenses (after $128,580 rebate)	Primary recurring fee paid to the external Manager.
Interest Expense (Cost of Capital)	Implied $30,000 (Q3 2025)	Calculated from Q3 Revenue ($6.53M) minus Net Interest Income ($6.5M). Revolving Credit Facility floor raised to 7.00% in April 2025.
Dividend Distribution	$0.15 per share (Q3 2025 Paid)	Mandatory cost under REIT rules (at least 90% of taxable income). No Q4 2025 dividend anticipated due to expected taxable loss.

• Anticipate the cost structure changing dramatically in 2026.
• The approved conversion to a BDC in Q1 2026 will remove the strict 90% distribution requirement of a REIT.
• This will allow the company to retain more earnings, which is a major shift in the cost of capital allocation.
• The largest cost is currently the non-cash provision for credit losses (CECL), not the cash operating expenses.

AFC Gamma, Inc. (AFCG) - Canvas Business Model: Revenue Streams

You're looking for a clear picture of how Advanced Flower Capital Inc. (AFCG) actually makes its money, especially with the strategic shift toward becoming a Business Development Company (BDC) in 2026. The direct takeaway is that AFC Gamma, Inc.'s revenue is overwhelmingly driven by interest income from its senior secured loan portfolio, but the near-term risk profile means non-cash items, like unrealized losses on equity positions, are currently dominating the GAAP net income figure.

Interest income from senior secured loans, the primary source

The core of AFC Gamma, Inc.'s business model is straightforward: lending money, primarily to state-licensed cannabis operators, and collecting interest. This is the main engine of their revenue stream. As of early November 2025, the company's portfolio consisted of $327.7 million of principal outstanding spread across 14 loans. The loans are structured as senior secured mortgage loans, meaning they are backed by real estate and other assets, which is where the security comes from.

The profitability of this stream is high, reflecting the risk and lack of traditional bank financing in the cannabis sector. The weighted average portfolio yield to maturity (YTM) for their loans is approximately 18%. This high yield is what drives the top-line income. For the third quarter of 2025 (Q3 2025), Advanced Flower Capital Inc. generated $6.5 million in Net Interest Income. That's a clean one-liner on the financial health of the core lending business.

Origination and commitment fees charged to borrowers

Beyond the periodic interest payments, AFC Gamma, Inc. generates revenue through fees tied to the creation and maintenance of its loans. These are non-interest income components, but they are directly linked to the lending activity. They come from two main sources:

• Origination Fees: Upfront fees charged to the borrower for structuring and closing a new loan. These are often recognized over the life of the loan as an adjustment to the yield (Original Issue Discount, or OID).
• Commitment Fees: Fees charged for committing to lend a certain amount, even if the full amount is not immediately drawn down by the borrower.

While the specific dollar amount for these fees in Q3 2025 is not broken out from total interest income in the high-level summary, the nature of their business-originating, structuring, and underwriting loans-confirms this is a consistent, albeit secondary, revenue stream. The high target average portfolio gross yield of 12%-20% is defintely a blend of the stated interest rate and the amortization of these upfront fees.

Potential income from warrants or equity kickers attached to loans

To enhance returns, Advanced Flower Capital Inc. often includes equity features, like warrants (the right to buy stock at a specific price), in its loan agreements. This is the capital appreciation component of their strategy, a way to participate in the upside of the borrower's business growth.

Here's the quick math on the current risk: these non-cash items are currently a headwind. The company reported a total unrealized loss of $31.2 million on loans held at fair value as of September 30, 2025. This unrealized loss, which includes the fair value of these equity kickers, is a major reason why the company reported a GAAP net loss of $(12.5) million for Q3 2025, despite generating positive Net Interest Income. What this estimate hides is that while the potential for future income exists, the current market valuation of these equity positions is negative, reflecting the challenging cannabis market environment.

Interest income from cash and cash equivalents

Like any financial institution, AFC Gamma, Inc. earns interest on its uninvested cash. This is a small, low-risk revenue stream that hedges against the cost of its own debt. The Q1 2025 report indicated that a significant portion of cash and cash equivalents was earning interest at rates between 4.5% and 5.3%. However, the cash position saw a substantial decline earlier in 2025, which would naturally reduce this revenue stream. The focus is on deploying capital into the high-yield loan portfolio, so this income is secondary to the interest from loans.

Fees from loan extensions or modifications

In a stressed market, managing existing loans becomes a revenue source. When a borrower needs more time or a change in terms, Advanced Flower Capital Inc. charges a fee for the extension or modification. This is a tactical revenue stream that helps protect the portfolio's value while generating immediate cash flow. The company is actively managing its portfolio to resolve 'nonaccrual positions' and drive loan repayments. For example, in November 2025, Advanced Flower Capital Inc. reached a settlement agreement with a private company that involved financing $6 million of the settlement via a new term loan at a 10% interest rate. This kind of restructuring activity is where these fees are generated, providing a necessary, albeit unpredictable, source of income during periods of credit stress.

Revenue Stream Component	Nature of Income	Q3 2025 Financial Context (Period Ending Sept 30, 2025)
Interest Income from Senior Secured Loans	Primary, recurring cash flow from lending.	Net Interest Income: $6.5 million. Portfolio Yield: ~18%.
Origination and Commitment Fees	Upfront fees for initiating and committing to loans (often amortized).	Contributes to the high portfolio yield target of 12%-20%.
Income from Warrants/Equity Kickers	Non-cash, potential capital appreciation from equity positions.	Total Unrealized Loss on Fair Value Loans: $31.2 million.
Interest from Cash and Equivalents	Low-risk income from uninvested cash.	Cash earning interest at 4.5% to 5.3% (Q1 2025 context).
Fees from Loan Extensions/Modifications	Fees charged for restructuring or extending existing loans.	Part of active portfolio management, such as the new $6 million term loan at 10% in a recent settlement.