Advanced Flower Capital A Leading Banker To Cannabis Industry
President Donald Trump may not be in favor of legalizing recreational cannabis, but reclassifying state-licensed medical marijuana is a boon for both the industry and research purposes. (Source: “Trump moves to reschedule marijuana,” POLITICO, April 23, 2026.)
The Trump administration is seeking to reclassify cannabis from Schedule 1 of the Controlled Substances Act, which puts it in the same category as heroin, LSD, and ecstasy, to Schedule 3 which puts it in the same category as “Tylenol” with codeine. (Source: “Drug Scheduling,” United States Drug Enforcement Administration, last accessed April 27, 2026.)
It’s important to note that the order and potential rescheduling does not mean cannabis will be legalized for medical or recreational use under federal law, but again, its great news for the regulated medical marijuana industry operating in more than 40 states.
And it should help change public perception on medical cannabis and could go a long way to eventual legalization.
Even if cannabis isn’t fully legalized at the federal level, moving it from Schedule I to Schedule 3 of the Controlled Substances Act—or removing it from the act altogether—would still be a big deal.
Because marijuana is illegal at the federal level it’s tough for cannabis companies to access traditional banking channels. In fact, most banks won’t touch marijuana companies because of the risks associated with federal laws and concerns about money laundering. This is why marijuana dispensaries don’t accept credit cards.
If marijuana is rescheduled under the Controlled Substances Act, it might be easier for the SAFE Banking Act) to become law. That legislation would remove the risk of federal compliance in states where recreational cannabis is legal.
Until that happens, cannabis companies will continue to find it difficult, if not impossible, to access capital from banks and other mainstream financial institutions. Even then, should the SAFE Banking Act get passed, some marijuana companies will need to access capital outside of traditional banking channels.
And that’s where Advanced Flower Capital Inc (NASDAQ:AFCG) comes in.
About Advanced Flower Capital Inc.
Advanced Flower Capital Inc. is a Business Development Company (BDC) that provides credit solutions to lower middle market companies operating directly in or adjacent to the cannabis industry. (Source: “Investor Presentation,” Advanced Flower Capital Inc, March 4, 2026.)
As a point of interest, on January 1, 2026 AFC completed its conversion from a real estate investment trust (REIT) to a BDC. The conversion:
- Expand AFC’s investable scope beyond real-estate-backed loans
- Enhance AFC’s portfolio diversification
- Better position AFC to implement business strategies that can support long-term, sustainable value creation for all shareholders. (Source: “Advanced Flower Capital Completes Conversion to Business Development Company,” Advanced Flower Capital Inc., January 5, 2026.)
As a BDC, the company primarily originates, structures, invests and manages direct senior debt investments typically ranging from $10 to $100 million. They also must generate earnings before interest, tax, depreciation, and amortization (EBITDA) of $5 to $50 million.
Suffice it to say, there are a lot of cannabis companies looking for a cash injection. To date, Advanced Flower Capital has reviewed 1,104 deals, representing over $29.0 billion in aggregate value. Of those, the company has rejected 1,033 (93.5%) of those deals.
It currently has 31 commercial real estate (CRE) deals in review and 15 current cannabis deals funded. It currently has total loan commitments (funded and unfunded) of $382.7 million. It has closed $1.0 billion in deals since its 2021 inception.
Reports Full Year Distributable Earnings of $0.39/Share
For the fourth quarter, Advanced Flower Capital reported net interest income of $5.18 million. It reported fourth quarter net income of $0.9 million, or $0.04 per share and a distributable earnings loss of $2.8 million, or a loss of $0.12 per share.(Source: “Advanced Flower Capital Inc. Announces Financial Results for the Fourth Quarter and Full Year 2025,” Advanced Flower Capital, Inc., March 4, 2026.)
For the year ended December 31, 2025, it reported net interest income of $24.5 million., net loss of $20.6 million, or a loss of $0.95 per share, and distributable earnings of $8.6 million, or $0.39 per share.
Commenting on the results, Dan Neville, CEO said, “In 2025, we focused on disciplined portfolio management and the successful completion of our BDC conversion. As a BDC with a broader investment universe, we remain focused on unlocking value from underperforming loans and redeploying that capital into high-quality, cash-flowing businesses in the lower middle market.”
Declares Quarterly Dividend of $0.05/Share
Because Advanced Flower Capital has to pay out substantially all (at least 90%) of its taxable earnings on a quarterly basis, shareholders are on the receiving end of a reliable distribution.
Because the payout is tied to quarterly earnings, the payouts will fluctuate. In the first quarter, the company’s Board of Directors declared a regular cash dividend of $0.05 per common share, or $0.58 per share on an annual basis, for a current forward dividend yield of 19.3%.
AFCG Stock Up 38% Since February
For the most part, cannabis stocks haven’t exactly been performing well over the last number of years. Shares have mostly been trending lower with short signs of life on news of potential rescheduling, easier banking, or political posturing.
News of potential rescheduling has breathed new life into U.S. cannabis stocks. Should Democrats take the White House in 2028, chances are good cannabis could be legalized on the Federal level. That’s a long way off yet.
For now, potential rescheduling is the kind of good news the cannabis industry needs. And it’s been helping juice U.S. cannabis stocks, including AFCG. AFCG stock actually hit a record low of $2.02 on February 6; it’s been going up since then.
As of this writing, AFCG stock is up:
- 5.0% over the last month
- 38% over the last three months
- 6.2% year over year
The outlook for AFCG stock look much more robust, with Wall Street analyst’s providing a 12-month share price target of $4.50. This points to potential upside of more than 50%.
Chart courtesy of StockCharts.com
The Lowdown on Advanced Flower Capital Inc.
Advanced Flower Capital Inc is a BDC that serves the U.S. cannabis industry. It has a strong balance sheet, a high-quality portfolio, and massive growing addressable market.
It’s throwing off lots of cash and rewarding buy-and-hold investors with a reliable, ultra-high yield dividend. Aside from its inflation busting dividend, Wall Street thinks Advanced Flower Capital stock could advance more than 50% over the coming year.