Advanced Flower Capital, formerly AFC Gamma, (NASDAQ: AFCG) announced its financial results for the fourth quarter and year ended Dec. 31, 2024.

AFC reported a net loss of $1 million, or 5 cents per basic weighted average common share, and distributable earnings of $6.3 million, or 29 cents per basic weighted average common share, for the fourth quarter of 2024. This fell from 2023’s fourth-quarter distributable earnings of $10 million or 49 cents. The company declared a dividend of 33 cents for the fourth quarter, which also fell from last year’s fourth-quarter dividend of 48 cents.

For the full year, the company reported GAAP net income of $16.8 million, or 78 cents per basic weighted average common share, and distributable earnings of $34.9 million, or $1.68 per basic weighted average common share. This was a drop from 2023’s distributable earnings of $41.4 million or $2.04.

The company’s interest income for 2024 was $51.9 million versus 2023’s interest income of $70.2 million. Total expenses fell from $22.3 million in 2023 to $17.2 million in 2024.

The company said in its filing that the interest income decreased by approximately $18.3 million, or 26%, for 2024 versus 2023.

“This decrease was driven by lower interest income of approximately ($17.9) million driven by Subsidiary of Private Company G, Private Company K and Private Company A on nonaccrual status during fiscal year 2024, lower interest income of approximately ($7.7) million driven by less capital deployed relating to loan exits and prepayments, partially offset by higher fee income of approximately $3.8 million driven by loan exits and prepayments during the year ended December 31, 2024, and higher OID income of approximately $3.5 million due to the acceleration of unaccreted OID of current year loan exits and prepayments during the year ended December 31, 2024, as compared to the year ended December 31, 2023, respectively.”

“We believe that the capital supply and demand imbalance in the cannabis sector will remain in the medium-term, given the Republican sweep in November and the lack of progress on Federal reform. This provides the opportunity for AFC to deploy capital into deals with strong risk adjusted returns,” stated Daniel Neville, AFC’s chief executive officer.

He added, “We continue to put capital preservation at the forefront of our investments and remain disciplined on providing debt capital in a challenging environment for operators. As we have done over the last year and plan to do in the coming year, we continue to focus on diversifying our portfolio and providing debt capital to operators who have previous success executing in the cannabis industry.”

AFC told investors that during 2024 it funded approximately $128.8 million of new loans and additional principal, had approximately $53.4 million of principal repayments of loans held at carrying value and sold $90 million in the aggregate of our investments in the Subsidiary of Public Company H and Subsidiary of Public Company M.

On March 11, the company declared a regular cash dividend of 23 cents per common share for the first quarter of 2025. This is a huge drop from last year’s first-quarter dividend of 48 cents per share.

Privately held multistate operator Story Cannabis received a second cash infusion from Florida-based Advanced Flower Capital (Nasdaq: AFCG), formerly known as AFC Gamma, to the tune of $15 million, which it intends to use to fund more expansion in Ohio.

The loan – which was technically awarded to an Ohio-specific subsidiary of Arizona-based Story – comes less than half a year after AFC also loaned Story $41 million to build out operations in Maryland in October.

AFC CEO Daniel Neville said in a press release that Story has proven itself as one of the more creditworthy companies in the U.S. marijuana trade, with a team that has “consistently executed in a volatile cannabis market.”

The new $15 million loan was secured by the value of licenses held by Story in both Ohio and Georgia, along with real estate the company owns in both states, as collateral. The funds will be used to purchase and build out new dispensaries in Ohio, Story said in a release.

Story also has a footprint in New Jersey, according to the company website.

The cash infusion news comes at a time when capital has been scarce for U.S. cannabis companies, with more and more companies choosing to rely on debt financing over selling equity stakes. Those financial struggles have also hit home for AFC, which reported a sharp decline in cannabis industry income in the third quarter last year.

Cannabis real estate lenders are taking markedly different approaches to troubled credit and market headwinds lately, with some aggressively restructuring loans while others maintain a wait-and-see approach, according to earnings calls over the past week.

While broader real estate stocks rallied on the Federal Reserve’s latest rate cut, with the Real Estate Select Sector SPDR Fund seeing some gains this week, cannabis REITs are trying to balance tenant challenges against opportunities created by broader capital scarcity.

“There is, in some ways, not a cannabis market in the U.S. There’s 40 distinct relatively uncorrelated markets,” Chicago Atlantic Real Estate Finance (Nasdaq: REFI) CEO Peter Sack told analysts. The company, which has a $560 million pipeline, has methodically restructured its portfolio against rate risk, increasing fixed-rate protection from 24% to 52% since last year.

Those state-by-state dynamics are also playing out in real time through tenant struggles. Innovative Industrial Properties (NYSE: IIPR) reported a 1.7% revenue decline, to $76.5 million, and it had to dip into security deposits to cover rent from tenants including 4Front Ventures Corp. and Tilt Holdings, while also terminating its Temescal Wellness lease in Massachusetts.

Advanced Flower Capital (NASDAQ: AFCG) has taken a more proactive stance, aggressively working through troubled credits while positioning for what it terms “Cannabis 3.0” opportunities.

“Since last year, we made substantial progress exiting, restructuring or securing significant paydowns on seven key loans,” AFC CEO Daniel Neville said on that company’s analyst call, highlighting $150 million in capital repaid.

The political landscape further complicates those calculations. While Chicago Atlantic emphasized its conservative 7% Florida exposure is underwritten purely to medical market assumptions, AFC sees Republican electoral gains reshaping the broader funding environment.

“With the Republican sweep, we expect access to capital in the cannabis sector to remain scarce,” AFC President Robyn Tannenbaum said. Though President-elect Trump has shown some support for cannabis, she added that “broader cannabis legislation may not be the Republican administration’s top priority.”

Each REIT has also calibrated differently to rate movements. Chicago Atlantic maintained an 18.3% yield while boosting fixed-rate exposure, as AFC positioned 67% of its portfolio in fixed rates or above-market floors.

“We’ve decreased our portfolio exposure to additional interest rate cuts by approximately 28%,” Chicago Atlantic COO David Kite said.

Even workout strategies reflect the divergence. Where AFC has actively restructured troubled credits, NewLake Capital Partners reported 97% rent collection despite allowing Revolutionary Clinics to pay half of its obligations following a restructuring that brought in fresh capital and management.

For Chicago Atlantic’s Sack, the key is staying grounded in fundamentals: “We do not invest based upon the expectation of speculative political or regulatory events, and that principle is fundamental to our focus on comfortable debt service coverage, collateral quality and deep understanding of our limited license markets.”

When asked about competition from regional banks, AFC’s Neville pushed back on suggestions of easing conditions.

“More (banks) coming out or getting more cautious than are coming in,” he said, calling a recent high-profile loan “the exception rather than the rule.”

The mounting challenges mirror broader industry pressures, but Neville argued that specialized lenders maintain an advantage despite – or perhaps because of – the difficulties.

“Having the dedicated focus on cannabis, having both the top-down and the bottoms-up operating experience and having five, six, seven years of history in the industry is a really valuable asset for us,” Neville said. “And those without that type of specialization are generally taking a more cautious approach.”