AFC Gamma’s Radical Reinvention: From Cannabis REIT to Diversified BDC

AFC Gamma finds itself navigating the most severe crisis since its inception. A multimillion-dollar loss, the complete suspension of its dividend, and a fundamental strategic pivot are forcing investors to confront a critical question: Is this the beginning of a remarkable comeback or the prelude to a corporate collapse?

In a decisive move to secure its future, an overwhelming 94% of AFC Gamma's shareholders have approved a radical corporate transformation. The company is set to abandon its status as a Real Estate Investment Trust (REIT) and reconstitute itself as a Business Development Company (BDC). This structural shift is designed to liberate the firm from its deep ties to the turbulent cannabis industry. Instead of focusing primarily on cannabis-related real estate, the new strategy involves deploying capital across a diverse range of sectors. The company has already identified a substantial pipeline of potential investments, valued at approximately $350 million, to fuel this new direction. The transition is expected to be finalized by 2026, making the execution of this plan the central factor for the company's survival.

Should investors sell immediately? Or is it worth buying AFC Gamma?

Quarterly Results Reflect Deep-Seated Challenges

The urgency of this strategic reversal was underscored by the company's disastrous financial performance in the third quarter of 2025. AFC Gamma reported a GAAP net loss of $12.5 million, a stark reversal from the profit recorded during the same period the previous year. Compounding the pain for its investor base, the board of directors made the difficult decision to eliminate the dividend entirely. This action serves as a clear indicator of the significant financial strain currently facing the business.

High-Stakes Gamble for Investors

The current situation presents a high-risk proposition for the market. While some technical indicators suggest the stock may be oversold after its steep decline, any potential recovery is entirely contingent on the success of the BDC transformation. The company's fate now hinges on its ability to successfully exit the cannabis sector and establish a profitable, diversified lending portfolio. For shareholders, the outcome is binary: either this radical reinvention succeeds in stabilizing and growing the business, or the ambitious experiment ends in failure. The coming months will be a critical test of the company's new strategy and its leadership's ability to execute a complex turnaround.