Advanced Flower Capital Inc. (NASDAQ: AFCG) is a business development company (BDC) that originates, structures, and underwrites senior secured loans exclusively to cannabis industry operators. It earns income primarily through interest on those loans, including both cash interest and payment-in-kind interest, as well as exit fees and prepayment premiums collected at loan resolution. As of December 31, 2025, the portfolio held 12 loans at carrying value with aggregate outstanding principal of approximately $259.6 million, down from $301.8 million as of December 31, 2024. The company is externally managed by AFC Management, LLC under an Investment Advisory Agreement dated December 31, 2025. AFCG is listed on Nasdaq, regulated as a BDC under the Investment Company Act of 1940, and has been audited by CohnReznick LLP since 2020. All loans in the portfolio as of December 31, 2025 were senior term loans, with approximately 46% carrying floating interest rates benchmarked to one-month SOFR.

Revenue model

Interest income on senior secured loans to cannabis operators, including floating-rate interest (one-month SOFR plus spread) and fixed-rate cash interest, supplemented by payment-in-kind interest, origination discounts, exit fees, and prepayment premiums. The external manager, AFC Management, LLC, earns a base management fee and incentive compensation subject to an 8.0% annual hurdle rate based on Adjusted Capital, with a clawback provision if Core Earnings fall below that threshold in a given fiscal year.

Products and services

Senior secured term loans to cannabis industry operators. Loans are originated at a discount, carry cash and/or payment-in-kind interest, and are secured by collateral that may include real estate and other assets. As of December 31, 2025, total outstanding principal was approximately $259.6 million across 12 loans, with a weighted average remaining life of 1.4 years. New loan example: a $60.0 million senior secured credit facility originated in January 2026 at a 2.0% discount, bearing interest at SOFR plus 8.5%, maturing February 1, 2031.

Customers and end markets

Established cannabis industry operators in the United States. Borrowers are identified in filings as private companies (e.g., Private Company A, Private Company G, Private Company L, Private Company O, Private Company X, Private Company Y). The end market is the U.S. regulated cannabis sector. Customer names are not publicly disclosed in the filing.

Value-chain role

Direct lender and credit underwriter to cannabis operators. AFC Agent LLC, wholly owned by the company's founders, served as administrative agent to lenders under co-investments, which as of December 31, 2025 included Private Company A and a subsidiary of Private Company G. AFCG holds loans on its balance sheet rather than syndicating or securitizing them.

Geographic exposure

United States cannabis market. Specific state-level geographic breakdown is not disclosed in the filing excerpts.

Source: SEC 10-K, filed 2026-03-04

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