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.”