The cannabis industry is growing at an unprecedented rate, and with that growth comes the need for cannabis-focused financing. There are no shortage of companies looking to connect those in need of capital with those looking to get it, but there are some that stand above the rest. AFC Gamma is one of those companies.
If you are a cannabis company, a cannabis company lender, or an investor in this burgeoning industry, then you know that one of the biggest challenges is getting your company funded and your business started. If you are looking to fund a company, or if you are an investor and are looking for a cannabis-related company that will show the potential to become successful, then look no further than AFC Gamma.
The cannabis company, AFC Gamma, has recently announced its next funding round that is expected to be worth a total of $500 million, and this next round is expected to be led by an industry leader, TPG Growth. The company has been growing quickly since the beginning of 2018, and AFC Gamma plans to invest in the cannabis market and move towards launching its own blockchain platform in the next two years. The company has made an industry-leading investment in cannabis companies before, and it is well-positioned to help shape the future of the industry.
Exclusive interview with Advanced Flower Capital CEO Leonard Tannenbaum When Advanced Flower Capital Gamma (AFC Gamma) (NASDAQ:AFCG) CEO Leonard Tannenbaum last spoke to New Cannabis Ventures, the company had closed more than $100 million in deals. Since then, AFC Gamma’s business flow has increased significantly. Today, Tannenbaum spoke with New Cannabis Ventures about the company’s NASDAQ IPO, recent investments and future plans. An audio recording of the entire interview is available at the end of this written summary. Stable leadership and a growing team AFC Gamma’s core management team remains unchanged. Mr. Tannenbaum leads the company as CEO and works closely with Robin Tannenbaum, Head of Origination, and Jonathan Kalikow, Head of Real Estate. AFC Gamma Core Leadership Team : Jonathan Kalikov, Robin Tannenbaum and Leonard Tannenbaum The company expands its team to 18 employees and expands its offices in West Palm Beach, Florida. AFC Gamma is expanding its offices in West Palm Beach. Recent investments AFC Gamma has currently funded 11 transactions. The company has $166 million in loans outstanding and a total of $204 million in liabilities. The company has repaid some loans and sold others. The company’s recent investments include Justice Cannabis Co. AFC Gamma provided a $22 million senior secured credit facility to finance the cultivation and construction of the Company’s dispensary. Tannenbaum estimates that about $1 billion in construction costs will be needed to fully meet the demand for cannabis in the New Jersey market. AFC Gamma also recently made a loan to help a farmer in Ohio. The state recently approved more dispensary licenses, which means the crop will likely make a big difference in supply. NASDAQ IPO AFC Gamma raised $119 million in an IPO, becoming the first legitimate lender to be listed on the NASDAQ. The NASDAQ listing gives the company access to a broader capital base and lower cost of capital, Tannenbaum said. It also expects Gamma to access debt capital at a high discount. As an example, he cites the success of the IPO of Innovative Industrial Properties (NYSE: IIPR) on the American stock exchange. AFC Gamma has positioned itself as a leading NASDAQ listed capital provider for multi-state operators. Many of the investors in the IPO were institutional investors. According to Mr. Tannenbaum, the majority of the shares were distributed among the 17 major institutions that participated in the transaction. Investment approach The Company continues to select investments based on its original model. AFC Gamma provides loans to businesses secured by cash, licenses and real estate. It is primarily aimed at states where permitting is limited. So far, the company has not made any loans in states like California, Oregon or Washington. Over the past year, Gamma has strengthened its presence in the market and gained expanded access to capital, which now allows it to lend to the top 10 MCOs. This will continue to be a priority for the company; next year it will focus on lending to these large MSOs and their facilities as well as smaller operators in the same state. Legalization in the United States Tannenbaum expects federal legalization of cannabis to affirm states’ rights in some form. Once legalization is a reality, cannabis players will have greater access to banking services. Mr. Tannenbaum believes this measure will clean up the industry and lenders. While the Gamma CFA examines the prospects for federal legalization and investment opportunities, its focus remains on vertical operators. Spectacular markets AFC Gamma has investments in 12 states and is considering other attractive markets for future investment. Once New York begins permitting, Tannenbaum expects AFC Gamma’s pipeline to fill with transactions in this market that will be in high demand. He expects New York to be a similar market to Michigan, as it is a state without licensing restrictions. The company is also positive about the Florida market. She has done business there, and the state’s medical market continues to grow. AFC Gamma recently invested in Texas-based Cansortium, as lead investor in a $71 million senior secured loan. The market has only three licenses and has just expanded its medical application profile, Tannenbaum said. AFC Gamma views Texas as a great untapped state with an attractive license profile. The company is also excited about the prospects in the Georgian market. Success stories AFC Gamma supported the Bluma Wellness project in Florida, which was eventually purchased by Cresco Labs. The company has also found success in the Pennsylvania market. It has supported Organic Remedies and helped finance the construction of the company’s 250,000 square foot manufacturing facility. The company’s evolution from a distributor to a vertical operator in the Pennsylvania market has been a great success for AFC Gamma, Tannenbaum said. A $500 million pipeline and future prospects AFC Gamma has a $500 million reconnaissance line. In the first six weeks of this quarter, the company invested $50 million in capital. The company is looking at several states in its pipeline and is challenging the team to explore new markets, new supply and demand dynamics and new regulations. The company will likely increase its investments in states like Massachusetts and Missouri. The time it takes to make new investments – three to nine months – is a challenge. With direct trade, it takes time to get to know the market participants and build a comfortable relationship with them. Tannenbaum expects other companies to follow AFC Gamma’s lead and list on NASDAQ. But it will take time for competitors to build relationships and create their own treadmills. Additionally, Tannenbaum said, the company has generally taken a collaborative approach with other good underwriters working together to serve the cannabis industry. For more information, see the Advanced Flower Capital website. Listen to the interview in its entirety: Stay ahead of the crowd by subscribing to 420 Investor, the largest and most comprehensive subscription service for cannabis dealers and investors since 2013. Carrie Pallardi, a Chicago-based writer and editor, began her career in health care. Today she writes, edits and interviews subject matter experts in various sectors. As a published author, Carrie continues to tell compelling new stories to her network of readers. Please contact us for more information.
AFC Gamma, a Los Angeles-based digital investment firm with more than $500 million in assets under management, recently acquired cannabis-oriented data company Cannabiz Media. The deal, worth $10.4 million, brings the firm’s total acquisition value to $50 million. The company says it plans to expand its data capabilities, while also providing financial advice to cannabis companies in the U.S.. Read more about afc gamma ipo and let us know what you think.
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