(Reuters) – U.S. cannabis firm Acreage Holdings Inc said on Thursday it had secured a $100 million credit line from cannabis REIT AFC Gamma Inc and Viridescent Realty Trust, indicating growing investor optimism in a sector still underfinanced by traditional lenders.
Expectations of policy changes including federal decriminalization have raised prospects for the U.S. cannabis industry, which analysts have estimated is currently worth $24 billion in annual sales and could triple in size over the next decade.
AFC Gamma has committed $60 million under the senior secured credit facility, with $10 million syndicated to an affiliate and the remaining $30 million committed by Viridescent.
The credit line also includes an option for a further $50 million once certain milestones are achieved, AFC Gamma added.
“We believe Acreage is well positioned in high-growth, limited license markets such as New York, New Jersey, Ohio and Pennsylvania, amongst others,” Leonard Tannenbaum, AFC Gamma’s chief executive officer, said.
Acreage said it intends to use proceeds from the new credit facility to repay existing debt, fund expansion initiatives and provide additional working capital. Its total debt as of Sept. 30 stood at $142.6 million.
The facility will bear interest at 9.75% per annum, payable monthly in arrears, with a maturity date of Dec. 1, 2025.
In 2019, Canopy Growth Corp had secured a right to buy Acreage for $3.4 billion once the United States legalizes the production and sale of cannabis.
(Reporting by Arunima Kumar in Bengaluru; Editing by Ramakrishnan M.)
