AFC Gamma Provides Sunburn Cannabis with a Total of $34.0 Million Across Senior Secured Credit Facilities
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Insights
The provision of $34.0 million in debt capital by AFC Gamma to High End Holdings and Sunburn Cannabis represents a strategic move to strengthen AFC Gamma's position in the Florida medical cannabis market. The capital is earmarked for refinancing existing debt, providing working capital and expanding operational facilities, which indicates an aggressive growth strategy by Sunburn. This transaction may increase AFC Gamma's exposure to the cannabis sector and its associated risks and rewards.
For investors, the key considerations include the creditworthiness of Sunburn and the terms of the credit facilities. Given that the loan is senior secured, it suggests a lower risk profile as it is backed by Sunburn's assets. However, the cannabis industry's regulatory environment remains complex and fluid, which could impact Sunburn's ability to scale and AFC Gamma's potential returns. The mention of Sunburn's top 5 market share ranking provides a positive signal about its operational capabilities and market acceptance.
The medical cannabis industry in Florida is experiencing growth and AFC Gamma's investment in Sunburn Cannabis aligns with the broader trend of increased institutional capital flowing into the sector. Sunburn's intent to build out cultivation, processing facilities and retail dispensaries signals an expansion drive that could enhance its competitive position in the market. The potential for recreational use legalization in Florida presents a significant upside for Sunburn and, by extension, AFC Gamma.
Market share gains by Sunburn, as highlighted by the CEO, suggest effective market strategies that could translate into robust sales growth. However, investors should be aware of the market saturation risks and the potential for price compression as more operators expand their footprint in Florida. The broader impact on the stock market will depend on Sunburn's performance post-expansion and the overall health of the cannabis industry.
The legal landscape for the medical cannabis industry in Florida is a critical factor in assessing the risk associated with AFC Gamma's investment. While the current transaction does not directly involve regulatory approval, the evolving legal environment can significantly affect Sunburn's business operations. The mention of potential 'catalyst moments' likely refers to the possibility of changes in legislation, particularly regarding recreational cannabis use.
Investors should consider the implications of such legal changes, both positive and negative. On one hand, legalization could open up a larger market for Sunburn, potentially increasing the value of AFC Gamma's secured loans. On the other hand, increased regulatory scrutiny or adverse legal developments could constrain Sunburn's operations and impact AFC Gamma's returns. The ability of Sunburn to navigate the legal complexities of the cannabis industry is therefore a key factor in the success of this financial arrangement.
Represents AFC Gamma’s Second Transaction in Florida’s Growing Medical Cannabis Market
WEST PALM BEACH, Fla., March 26, 2024 (GLOBE NEWSWIRE) -- AFC Gamma, Inc. (NASDAQ:AFCG) (“AFC Gamma” or the “Company”) today announced that it has provided a total of
“Since entering the Florida market in 2022, Sunburn has continually increased its market share ranking in the top 5 of Florida operators year-to-date based on product sold per dispensary1,” said Daniel Neville, the Company’s Chief Executive Officer. “Brady and the Sunburn team are an example of the Cannabis 3.0 lending opportunities that we are excited to finance. This is a team with prior success in the Florida market that knows how to scale and operate in cannabis and is focused on building a true brand. We believe Sunburn is well positioned to continue to take market share in Florida and benefit from the industry’s transition to a mainstream consumer packaged goods marketplace.”
“On behalf of the Sunburn team, I am pleased to close these credit facilities with AFC Gamma as we look to expand our operations in Florida and beyond. Having a committed capital provider like AFC Gamma, which is led by a CEO who understands the industry and the inflection point that we are facing in both Florida and America, is extremely valuable. This transaction provides us with the opportunity to shore up our balance sheet, responsibly scale up our operations in Florida (with or without recreational use passing), and remain nimble enough to play offense in enhancing Sunburn as we await potential catalyst moments,” stated Brady Cobb, CEO of Sunburn.
AFCG will hold the entire
About AFC Gamma, Inc.
AFC Gamma, Inc. (NASDAQ:AFCG) is a publicly-traded, institutional lender that originates, structures and underwrites loans secured by commercial real estate and other types of financing solutions. AFC Gamma targets direct lending and bridge loan opportunities typically ranging from
About Sunburn Cannabis
Sunburn Cannabis is the brand created by Florida-based Sunburn Holdings, LLC, which was created to build the authentic ultra-premium southern cannabis brand that celebrates America's rebellious, rock n roll, free spirit as well as cannabis culture. The Sunburn Cannabis brand is based on the true story of CEO and Founder, Brady Cobb, and his late father, Clyde Walton "Bill" Cobb, who was one of the largest cannabis smugglers in the 1970s and 1980s until the DEA task force dubbed “Operation Sunburn” put him in jail. Sunburn incorporates the culture and traditions passed down from its founders, employing a team that is passionate about the plant and cultivating only the highest quality product. For more information, visit www.sunburncannabis.com.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the company’s current views and projections with respect to, among other things, financial performance and market developments. All statements other than historical facts, are forward-looking statements. Words such as “believes,” “expects,” “will,” “intends,” “plans,” “guidance,” “estimates,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions and are not guarantees of future performance, conditions or results. Certain factors, risks and uncertainties discussed under the caption “Risk Factors” and elsewhere in AFC Gamma’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings, could cause actual results and performance to differ materially from those projected in these forward-looking statements.
AFC GAMMA, INC. INVESTOR CONTACT:
Robyn Tannenbaum
561-510-2293
ir@advancedflowercapital.com
www.afcgamma.com
AFC GAMMA, INC. MEDIA CONTACT:
Collected Strategies
Jim Golden / Jack Kelleher / Taylor Koedding
afcg-cs@collectedstrategies.com
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1 Based on Office of Medical Marijuana Use (OMMU) weekly update reports year-to-date through March 22, 2024.
FAQ
What is the total amount of debt capital provided by AFC Gamma to High End Holdings and Green Sentry Holdings?
What are the intended uses of the proceeds from the credit facilities provided by AFC Gamma to Sunburn?
How has Sunburn performed in the Florida market since entering in 2022?
Who is the CEO of AFC Gamma?
Who is the CEO of Sunburn Cannabis?
