Chicago Atlantic BDC's Q1 2025 Earnings Call: Contradictory Views on Cannabis Investments and Strategic Direction

Industry outlook and deployment strategy, ratio of cannabis and non-cannabis investments, deployment strategy and market outlook, deployment ratio stability, and BDC leverage strategy are the key contradictions discussed in Chicago Atlantic BDC's latest 2025Q1 earnings call.



Investment Strategy and Yield:
- Chicago Atlantic BDC reported a weighted average yield on debt investments of 16.6%, compared to the BDC average of 12.1%.
- This high yield is supported by the company's distinctive focus on lending to cannabis companies and sub-strategies in underserved markets.

Portfolio Diversification and Strength:
- As of Q1 2025, 21% of the company's portfolio is invested outside of cannabis, with 31 portfolio companies and an average debt position size of 3% of the debt portfolio.
- The diversification has shielded the portfolio from declining interest rates, with 76% of investments being floating rate, and 99% having a rate floor.

Capital Deployment and Origination:
- Chicago Atlantic BDC originated $52.8 million in gross fundings since October 2024, with $32.3 million committed and $20.8 million funded in Q1 2025.
- The company's disciplined and selective approach to lending, focusing on proven operators in strong markets, supports its ability to continue deploying capital.

Dividend and Shareholder Returns:
- The company announced a $0.34 dividend for the quarter, marking the third consecutive quarter at that rate.
- The consistent dividend reflects the company's commitment to growing shareholder returns, with the intent to scale the platform as equity and credit markets stabilize.