•
|
use of proceeds of our common stock offerings;
|
•
|
our business and investment strategy;
|
•
|
the impact of COVID-19 on our business and the United States and global economies;
|
•
|
the ability of AFC Management, LLC (our “Manager”) to locate suitable loan opportunities for us, monitor, service and administer our
loans and execute our investment strategy;
|
•
|
allocation of loan opportunities to us by our Manager;
|
•
|
our projected operating results;
|
•
|
actions and initiatives of the U.S. or state governments and changes to government policies and the execution and impact of these
actions, initiatives and policies, including the fact that cannabis remains illegal under federal law and certain state laws;
|
•
|
the estimated growth in and evolving market dynamics of the cannabis market;
|
•
|
the demand for cannabis cultivation and processing facilities;
|
•
|
shifts in public opinion regarding cannabis;
|
•
|
the state of the U.S. economy generally or in specific geographic regions;
|
•
|
economic trends and economic recoveries;
|
•
|
the amount, collectability and timing of our cash flows, if any, from our loans;
|
•
|
our ability to obtain and maintain financing arrangements;
|
•
|
our expected leverage;
|
•
|
changes in the value of our loans;
|
•
|
our expected portfolio of loans;
|
•
|
our expected investment and underwriting process;
|
•
|
rates of default or decreased recovery rates on our loans;
|
•
|
the degree to which our hedging strategies may or may not protect us from interest rate volatility;
|
•
|
changes in interest rates of our loans and impacts of such changes on our results of operations, cash flows and the market value of
our loans;
|
•
|
interest rate mismatches between our loans and our borrowings used to fund such loans;
|
•
|
the departure of any of the executive officers or key personnel supporting and assisting us from our Manager or its affiliates;
|
•
|
impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters;
|
•
|
our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended (the “Investment Company
Act”);
|
•
|
our ability to qualify and maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes;
|
•
|
estimates relating to our ability to make distributions to our stockholders in the future;
|
•
|
our understanding of our competition; and
|
•
|
market trends in our industry, interest rates, real estate values, the securities markets or the general economy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Names
|
|
|
Status
|
|
|
Original
Funding
Date(1)
|
|
|
Loan
Maturity
|
|
|
AFCG
Loan,
net of
Syndication
|
|
|
% of Total
AFCG
Portfolio
|
|
|
Principal
Balance as of
9/30/2021
|
|
|
Cash
Interest
Rate
|
|
|
Paid in
Kind
(“PIK”)
|
|
|
Fixed/
Floating
|
|
|
Amortization
During
Term
|
|
|
Estimated
YTM(2)(3)
|
|
|
Public Co. A - Real Estate Loan
|
|
|
Funded:
|
|
|
7/3/2019
|
|
|
1/26/2023
|
|
|
$2,940,000
|
|
|
0.99%
|
|
|
$2,940,000
|
|
|
12.00%
|
|
|
2.00%
|
|
|
Fixed
|
|
|
No
|
|
|
19%
|
|
|
Public Co. A - Equipment Loans
|
|
|
Funded:
|
|
|
8/5/2019
|
|
|
3/5/2024
|
|
|
4,000,000
|
|
|
1.35%
|
|
|
2,777,441
|
|
|
12.00%
|
|
|
N/A
|
|
|
Fixed
|
|
|
Yes
|
|
|
19%
|
|
|
Private Co. A(4)
|
|
|
Funded:
|
|
|
5/8/2020
|
|
|
5/8/2024
|
|
|
62,500,000
|
|
|
21.05%
|
|
|
63,391,846
|
|
|
13.00%
|
|
|
3.36%
|
|
|
Fixed
|
|
|
Yes
|
|
|
22%
|
|
|
Private Co. B
|
|
|
Funded:
|
|
|
9/10/2020
|
|
|
9/1/2023
|
|
|
10,500,000
|
|
|
3.54%
|
|
|
10,663,701
|
|
|
13.00%
|
|
|
4.00%
|
|
|
Fixed
|
|
|
Yes
|
|
|
26%
|
|
|
Private Co. C
|
|
|
Funded:
|
|
|
11/5/2020
|
|
|
12/1/2025
|
|
|
22,000,000
|
|
|
7.41%
|
|
|
19,333,871
|
|
|
13.00%
|
|
|
4.00%
|
|
|
Floating
|
|
|
Yes
|
|
|
22%
|
|
|
Sub. of Public Co. D(5)
|
|
|
Funded:
|
|
|
12/18/2020
|
|
|
12/18/2024
|
|
|
10,000,000
|
|
|
3.37%
|
|
|
10,000,000
|
|
|
12.88%
|
|
|
N/A
|
|
|
Fixed
|
|
|
No
|
|
|
14%
|
|
|
Private Co. D
|
|
|
Funded:
|
|
|
12/23/2020
|
|
|
1/1/2026
|
|
|
12,000,000
|
|
|
4.04%
|
|
|
12,169,041
|
|
|
13.00%
|
|
|
2.00%
|
|
|
Fixed
|
|
|
Yes
|
|
|
20%
|
|
|
Private Co. E
|
|
|
Funded:
|
|
|
3/30/2021
|
|
|
4/1/2026
|
|
|
21,000,000
|
|
|
7.07%
|
|
|
14,220,552
|
|
|
13.00%
|
|
|
4.00%
|
|
|
Floating
|
|
|
Yes
|
|
|
26%
|
|
|
Private Co. F
|
|
|
Funded:
|
|
|
4/27/2021
|
|
|
5/1/2026
|
|
|
13,000,000
|
|
|
4.38%
|
|
|
9,799,658
|
|
|
13.00%
|
|
|
4.00%
|
|
|
Fixed
|
|
|
Yes
|
|
|
29%
|
|
|
Public Co. E(5)
|
|
|
Funded:
|
|
|
4/29/2021
|
|
|
4/29/2025
|
|
|
5,000,000
|
|
|
1.68%
|
|
|
5,000,000
|
|
|
13.00%
|
|
|
N/A
|
|
|
Fixed
|
|
|
Yes
|
|
|
17%
|
|
|
Sub. of Private Co. G(6)
|
|
|
Funded:
|
|
|
4/30/2021
|
|
|
5/1/2026
|
|
|
65,400,000
|
|
|
22.02%
|
|
|
42,945,657
|
|
|
12.40%
|
|
|
1.70%
|
|
|
Floating
|
|
|
Yes
|
|
|
20%
|
|
|
Sub. of Private Co. H(7)
|
|
|
Funded:
|
|
|
5/11/2021
|
|
|
5/11/2023
|
|
|
5,781,250
|
|
|
1.95%
|
|
|
5,781,250
|
|
|
15.00%
|
|
|
N/A
|
|
|
Fixed
|
|
|
No
|
|
|
20%
|
|
|
Public Co. F
|
|
|
Funded:
|
|
|
5/21/2021
|
|
|
5/30/2023
|
|
|
10,000,000
|
|
|
3.37%
|
|
|
10,000,000
|
|
|
9.75%
|
|
|
N/A
|
|
|
Fixed
|
|
|
No
|
|
|
12%
|
|
|
Private Co. I
|
|
|
Funded:
|
|
|
7/14/2021
|
|
|
8/1/2026
|
|
|
10,075,000
|
|
|
3.39%
|
|
|
10,109,310
|
|
|
13.00%
|
|
|
2.50%
|
|
|
Floating
|
|
|
Yes
|
|
|
18%
|
|
|
Private Co. K
|
|
|
Funded:
|
|
|
8/20/2021
|
|
|
8/3/2026
|
|
|
19,750,000
|
|
|
6.65%
|
|
|
7,000,000
|
|
|
13.00%
|
|
|
0
|
|
|
Floating
|
|
|
Yes
|
|
|
17%
|
|
|
Private Co. J
|
|
|
Funded:
|
|
|
8/30/2021
|
|
|
9/1/2025
|
|
|
23,000,000
|
|
|
7.75%
|
|
|
18,002,000
|
|
|
13.00%
|
|
|
2.00%
|
|
|
Floating
|
|
|
Yes
|
|
|
19%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SubTotal
|
|
|
$296,946,250
|
|
|
100.0%
|
|
|
$244,134,329
|
|
|
12.8%
|
|
|
2.4%
|
|
|
|
|
|
|
|
|
21%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average
|
|
|
(1)
|
All loans originated prior to July 31, 2020 were purchased from an affiliated entity at fair value which approximated accreted and/or
amortized cost plus accrued interest on July 31, 2020.
|
(2)
|
Estimated YTM includes a variety of fees and features that affect the total yield, which may include, but is not limited to, OID, exit
fees, prepayment fees, unused fees and contingent features. OID is recognized as a discount to the funded loan principal and is accreted to income over the term of the loan. Loans originated before July 31, 2020 were acquired by us, net of
unaccreted OID, which we accrete to income over the remaining term of the loan. In some cases, additional OID is recognized from additional purchase discounts attributed to the fair value of equity positions that were separated from the loans
prior to our acquisition of such loans.
|
|
The estimated YTM calculations require management to make estimates and assumptions, including, but not
limited to, the timing and amounts of loan draws on delayed draw loans, the timing and collectability of exit fees, the probability and timing of prepayments and the probability of contingent features occurring. For example, our credit
agreements with Private Company C, Private Company E, and Private Company F contain provisions pursuant to which certain PIK interest rates and fees earned by us under such credit agreements will decrease upon the satisfaction of certain
specified criteria which we believe may improve the risk profile of the applicable borrower. To be conservative, we have not assumed any prepayment penalties or early payoffs in our estimated YTM calculation. Estimated YTM is based on
current management estimates and assumptions, which may change. Actual results could differ from those estimates and assumptions.
|
(3)
|
Estimated YTM for the loans with Public Company A, Private Company A, Private Company D, and Private Company E is enhanced by purchase
discounts attributed to the fair value of equity warrants that were separated from the loans prior to our acquisition of such loans. The purchase discounts accrete to income over the respective remaining terms of the applicable loans.
|
(4)
|
PIK rate for Private Company A represents a blended rate of the differing PIK rates applicable to each of the two tranches included in
the senior secured term loan credit facility with Private Company A (as may be amended, supplemented, amended and restated or otherwise modified from time to time, the “Private Company A Credit Facility”).
|
(5)
|
Loans to Subsidiary of Public Company D and Public Company E do not reflect each borrower’s option to request a maturity extension for
an additional 364 days from the respective original loan maturity date, each of which we are not obligated to grant.
|
(6)
|
Cash interest and PIK rates for the Subsidiary of Private Company G represents a blended rate of the differing cash interest and PIK
rates applicable to each of the three tranches included in the senior secured term loan credit facility with the Subsidiary of Private Company G (the “Sub. of Private Co. G Credit Facility”).
|
(7)
|
Loan to Subsidiary of Private Company H does not reflect the borrower’s option to request up to two maturity extensions each for an
additional six months from the then-existing loan maturity date. The first extension, which is available at the borrower’s sole option, is subject to a payment of a 2.0% fee. The second extension is subject to the approval of all lenders.
|
•
|
In July 2021, we entered into a commitment to fund to Private Company K a $19.75 million senior secured term loan contingent on the
borrower raising additional equity as required by the loan agreement. Until the borrower met the required criteria for funding under the loan agreement, the commitment had a ticking fee based on the aggregate commitment amount as follows: (a)
6.0% per annum from the date of closing through July 26, 2021 and (b) 6.5% per annum from and after July 27, 2021 through the initial funding date. In August 2021, the borrower met the required criteria and we funded $7.0 million of the loan
commitment. The loan has a per annum interest rate of 12.0% plus London interbank offer rate (“LIBOR”) with a LIBOR floor of 1.0%. The loan has a maturity date of August 3, 2026, an unused line fee of 3.0%, an exit fee of 3.0%, OID of 4.0%
and, an annual agent fee of 0.75% of the total loan commitment amount an interest reserve of $0.75 million.
|
•
|
In July 2021, Private Company I refinanced their bridge loan with us, which had an original maturity date of July 9, 2021, an original
interest rate of 13.0% per annum and original OID of 4.0%. The new refinancing senior secured term loan of $15.5 million was syndicated by our Manager between us and A BDC Warehouse, LLC (“ABW”), with ABW holding approximately one-third of
the principal amount. We committed and funded approximately $10.1 million of the new loan on the closing date and ABW committed and funded approximately $5.4 million of the new loan on the closing date. The new senior secured term loan has a
per annum interest rate of LIBOR plus 12.0%, with a LIBOR floor of 1.0%, and PIK interest rate of 2.5% per annum. The loan has a maturity date of August 1, 2026, an exit fee of 3.0% and OID of 4.0%. As part of the refinancing agreement, the
exit fee on the bridge loan was waived and the borrower was credited for a portion of the original OID on the bridge loan.
|
•
|
In July 2021, we entered into a commitment to fund a $3.0 million bridge loan to Private Company J and funded $3.0 million at closing
of such bridge loan. The bridge loan had an original interest rate of 13.0% per annum, an original maturity date of August 31, 2021, an agent fee of 1.0% of the principal amount of the bridge loan, an exit fee of 10.0% (which would be reduced
to 2.0% upon refinancing with us), and original OID of 4.0%. In August 2021, we refinanced the bridge loan with a senior secured term loan pursuant to which we committed to fund $23.0 million and $18.0 million of which was funded on the
closing date. The refinancing senior secured term loan has a per annum interest rate of LIBOR plus 12.0% with a LIBOR floor of 1.0% and PIK interest rate of 2.0% per annum. The PIK interest rate will step down to 0.0% once certain criteria
are met in accordance with the loan agreement. The loans under the refinancing senior secured term loan facility have a maturity date of September 1, 2025 and an agent fee of 1.0% of the total loan commitment amount payable on the closing
date and 1.0% of the outstanding principal balance of the term loans payable annually thereafter. The loans also have an exit fee of 4.0% (which may be reduced to 2.0% once certain criteria are met as defined in the loan agreement (including
the meeting of certain financial metrics), OID of 4.0% and an interest reserve of $1.5 million. As part of the agreement to refinance the bridge loan, the borrower was credited for a portion of the original OID and agent fee paid in
connection with the bridge loan.
|
•
|
In July 2021, Flower Loan Holdco, LLC (“FLH”), an affiliated entity in which Leonard M. Tannenbaum is the majority ultimate beneficial
owner, purchased approximately $8.5 million of the Private Company A Credit Facility from a third-party lender, and we had a 30-day option to purchase such amount from FLH. Our credit agreement with Private Company A (the “Private Company A
Credit Agreement”) was amended and restated (such amendment and restatement, the “A&R Private Company A Credit Agreement”) concurrently to, among other things add an additional tranche of loans, which increased the aggregate loan
commitments thereunder by $30.0 million, $10.0 million of which our Manager syndicated to ABW, and $20.0 million of which are held by us, as designee of the Agent. The A&R Private Company A Credit Agreement has a maturity date of May 8,
2024. The original tranche of term loans has an exit fee of 2.0% of the original tranche term loan amount (excluding any unfunded portions of the original tranche term loan amount) and the additional tranche of term loans has an exit fee of
2.0% of the total amount of such additional tranches (excluding any unfunded portions of the additional tranche term loan amount). The original tranche of term loans has an agent fee of 1.0% of the total loan commitment amount payable
annually. The second tranche of term loans has an agent fee of (i) 0.3333% of the total loan commitment amount of the additional tranche of term loans payable on the closing date of the A&R Private Company A Credit Agreement and (ii)
0.6667% of the total loan commitment amount of the additional tranche payable subject to the satisfaction of certain conditions precedent. The Private Company A Credit Facility bears interest at (i) a fixed interest rate of 13.0% per annum,
payable in cash, and (ii) a blended PIK interest rate of 3.4% per annum, payable in kind, across the two tranches of loans under the Private Company A Credit Facility. The Private Company A Credit Facility included an upfront fee of 4.0% on
the aggregate amount funded of the original tranche of term loans payable on the closing date of the original tranche of term loans and an unused line fee of 2.0% of the amount of any unfunded portion of the term loans payable annually. In
connection with certain financing accommodations, a fee of $750,000 was payable to the Agent by the borrower on the closing date thereof. The A&R Private Company A Credit Agreement also included an OID of $200,000 payable on the closing
date of the A&R Private Company A Credit Agreement and $400,000 payable to lenders, subject to the satisfaction of certain conditions precedent. Separately, FLH entered into a new credit facility with Private Company A and a third party
lender under which Private Company A may draw up to $40.0 million, secured by collateral separate from collateral securing the Private Company A Credit Facility. In connection with the new credit facility with FLH and a related equity raise
by Private Company A, the Manager or its designees are entitled to (i) appoint three of the seven members of Private Company A’s board of directors and (ii) receive a number of warrants to purchase common stock of Private Company A. In
connection with the equity raise by Private Company A, an investment vehicle controlled by Jonathan Kalikow, one of our directors and executive officers, acquired approximately 8.8% of the equity interest of Private Company A on a
fully-diluted basis. Following the transactions described above, Mr. Kalikow beneficially held or controlled through investment vehicles a total of approximately 10.1% of Private Company A’s equity interest on a fully-diluted basis. As of the
date of these transactions, Mr. Tannenbaum beneficially held approximately 13.7% of Private Company A’s equity interest on a fully-diluted basis through investment vehicles, which amount reflects two acquisitions of additional equity of
Private Company A from third-party stockholders during the three months ended June 30, 2021. Following the transactions described above, Mr. Tannenbaum beneficially held approximately 22.0% of Private Company A’s equity interest on a
fully-diluted basis through investment vehicles. Given Mr. Tannenbaum’s equity ownership, each of the transactions with Private Company A described above were reviewed and approved by the Audit & Valuation Committee of the Board in
accordance with our Amended and Restated Code of Business Conduct and Ethics and our Related-Persons Transaction Policy.
|
•
|
In September 2021, we entered into (i) an Assignment and Acceptance (the “September Loan Assignment”) with FLH, Private Company A, as
borrower, and our Manager, as the agent, pursuant to which we acquired FLH’s interest in the $8.5 million portion of the loan to Private Company A under the Private Company A Credit Facility, for a purchase price of approximately $8.5 million
(which equaled the outstanding principal amount of the loan plus any accrued and unpaid interest and less any unaccreted original issue discount) and (ii) a letter agreement (the “September Commitment Assignment” and, together with the
September Loan Assignment, the “September Assignments”) with our Manager, pursuant to which our Manager assigned to us its commitment to make loans to Private Company A in a principal amount of up to $20.0 million under the Private Company A
Credit Facility, which was funded in September 2021. We did not pay any consideration to our Manager for our acquisition of our Manager’s loan commitments under the A&R Private Company A Credit Agreement pursuant to the September
Commitment Assignment. As a result of the September Assignments, the total loan commitments to Private Company A under the Private Company A Credit Facility increased to an aggregate commitment amount of $72.5 million, of which our total loan
commitments accounted for $62.5 million.
|
•
|
In September 2021, we entered into an amended and restated credit agreement (the “A&R Sub. of Private Co. G Credit Agreement”)
related to the Sub. of Private Co. G Credit Facility to, among other things, increase the total loan commitments by $53.4 million across three tranches, with approximately $10.0 million of new loan commitments allocated to ABW and the
remaining $43.4 million of new loan commitments allocated to us. The loan has a maturity date of May 1, 2026, an annual agent fee of 1.0% of the total loan commitment amount and an exit fee of 10.0%, which will be reduced to 5.0% upon the
satisfaction of certain specified criteria. One of the tranches of loans, representing $10.0 million in total commitments of which we funded approximately $8.1 million, has a per annum interest rate of 9.0%. The other two tranches of loans
have a per annum interest rate of 12.0% plus LIBOR, with a 1.0% LIBOR floor, and PIK interest rate of 2.0% per annum. As a result of the increased loan commitments, the total loan commitments under the A&R Sub. of Private Co. G Credit
Agreement equal $75.4 million, of which our total loan commitments account for $65.4 million.
|
•
|
the development and growth of applicable state cannabis markets (for example, the increase in additional dispensaries in certain
states have diluted the value of the pre-existing dispensaries);
|
•
|
the responsibility of complying with multiple and likely conflicting state and federal laws, including with respect to retail sale,
distribution, cultivation and manufacturing of cannabis, licensing, banking, and insurance;
|
•
|
unexpected changes in regulatory requirements and other laws, in particular licensing requirements;
|
•
|
difficulties and costs of managing operations in certain locations;
|
•
|
potentially adverse tax consequences;
|
•
|
the impact of national, regional or state specific business cycles and economic instability; and
|
•
|
access to capital may be more restricted, or unavailable on favorable terms or at all in certain locations.
|
•
|
these companies may have limited financial resources and may be unable to meet their obligations, which may be accompanied by a
deterioration in the value of any collateral securing our loan and a reduction in the likelihood of us realizing a return on our loan;
|
•
|
they typically have shorter operating histories, narrower product lines and smaller market shares than larger and more established
businesses, which tend to render them more vulnerable to competitors’ actions and market conditions (including conditions in the cannabis industry), as well as general economic downturns;
|
•
|
they typically depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation
or termination of one or more of these persons could have a material adverse effect on such borrower and, in turn, on us;
|
•
|
there are a limited number of management teams in the cannabis industry that have U.S. public company experience. As a result, the
management team of a borrower may not be familiar with U.S. securities laws and may have to expend time and resources becoming familiar with such laws;
|
•
|
there is generally less public information about these companies. Unless publicly traded, these companies and their financial
information are generally not subject to the regulations that govern public companies, and we may be unable to uncover all material information about these companies, which may prevent us from making a fully informed lending decision and
cause us to lose money on our loans;
|
•
|
they generally have less predictable operating results and may require substantial additional capital to support their operations,
finance expansion or maintain their competitive position;
|
•
|
there is generally less market forecast information about the cannabis industry, making it difficult for our borrowers to forecast
demand. If the market does not develop as a borrower expects, it could have a material adverse effect on its business;
|
•
|
we, our executive officers and directors and our Manager may, in the ordinary course of business, be named as defendants in litigation
arising from our loans to such borrowers and may, as a result, incur significant costs and expenses in connection with such litigation;
|
•
|
changes in laws and regulations, as well as their interpretations, may have a disproportionate adverse effect on their business,
financial structure or prospects compared to those of larger and more established companies; and
|
•
|
they may have difficulty accessing capital from other providers on favorable terms or at all.
|
•
|
The manufacturer, distribution, sale, or possession of cannabis that is not in compliance with the CSA is illegal under U.S. federal
law. Strict enforcement of U.S. federal laws regarding cannabis would likely result in our borrowers’ inability to execute a business plan in the cannabis industry;
|
•
|
Laws and regulations affecting the regulated cannabis industry are varied, broad in scope and subject to evolving interpretations, and
may restrict the use of the properties our borrowers acquire or require certain additional regulatory approvals, which could materially adversely affect our loans to such borrowers;
|
•
|
Our borrowers may have difficulty borrowing from or otherwise accessing the service of banks, which may inhibit our ability to open
bank accounts or otherwise utilize traditional banking services;
|
•
|
Our borrowers may have a difficult time obtaining financing in connection with our investment strategy;
|
•
|
There may be no material aspect of our borrowers’ businesses that is protected by patents, copyrights, trademarks or trade names, and
they may face strong competition from larger companies, including those that may offer similar products and services to our borrowers;
|
•
|
U.S. federal courts may refuse to recognize the enforceability of contracts pertaining to any business operations that are deemed
illegal under U.S. federal law, including cannabis companies operating legally under state law;
|
•
|
Our borrowers may have a difficult time obtaining the various insurance policies that are needed to operate such businesses, which may
expose us and our borrowers to additional risks and financial liabilities;
|
•
|
Our borrowers are subject to unfavorable U.S. tax treatment under Section 280E of the Internal Revenue Code of 1986;
|
•
|
Our borrowers may be foreclosed from using bankruptcy courts;
|
•
|
Assets collateralizing loans to cannabis businesses may be forfeited to the U.S. federal government in connection with government
enforcement actions under U.S. federal law;
|
•
|
U.S. Food and Drug Administration (the “FDA”) regulation of cannabis and the possible registration of facilities where cannabis is
grown could negatively affect the cannabis industry, which could directly affect our financial condition and the financial condition of our borrowers;
|
•
|
The cannabis industry may face significant opposition from other industries that perceive cannabis products and services as
competitive with their own, including but not limited to the pharmaceutical industry, adult beverage industry and tobacco industry, all of which have powerful lobbying and financial resources; and
|
•
|
Consumer complaints and negative publicity regarding cannabis-related products and services could lead to political pressure on states
to implement new laws and regulations that are adverse to the cannabis industry, to not modify existing, restrictive laws and regulations, or to reverse current favorable laws and regulations relating to cannabis.
|