Popular plant-touching cannabis companies like Curaleaf (CURA) and Trulieve Cannabis (TRLV) may hold promise. After all, a majority of voters favor broader cannabis reform – even legalization.
If reform plays out, these stocks will do well.
But they’re also risky, and they require a lot of patience. That’s because they are so dependent on the federal and state governments to carry out reforms that open up new markets.
“We continue to believe legalization of cannabis is inevitable though not imminent. This is not a priority for most voters, which means it is not a priority for Congress,” says Jaret Seiberg, a Washington, D.C.-based cannabis sector analyst at TD Securities. He also thinks President Donald Trump is agnostic on further rescheduling, a kind of “legalization lite” that would boost cannabis company cash flow (more details on this below).
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Another challenge for investors is that cannabis prices keep falling.
Get Paid to Wait
But what if you could get paid to wait for cannabis reform to play out? Fortunately for investors, there’s a way to do this.
I’m talking about a small sector subgroup of cannabis lenders. These companies make money on high-yield loans to plant-touching cannabis companies.
This sounds risky. But these lenders diversify loans across many companies and throughout the country to reduce risk. Often, they favor loans to companies in “limited license” states, meaning those that seem unlikely to flood their markets with lots of new retail cannabis business licenses. These lenders also secure loans against hard assets like real estate, personal property, equipment, inventory, receivables, cash, and operating licenses.
Another significant positive with these lenders is that they continue to see robust insider buying. This is a great signal for these cannabis lenders.
Here’s a look at the recent insider buying at the three big cannabis lenders.
3 Cannabis Lenders with Insider Buying
Chicago Atlantic BDC (LIEN), Yield: 13.3%
Insiders recently bought a sizeable $1.2 million worth of stock at prices up to $10.25. About half of this was from a beneficial owner who is also a director.
The “BDC” in the name stands for business development company. BDCs must distribute at least 90% of their taxable income to shareholders, which creates attractive yields. BDCs avoid paying corporate income taxes on distributed profits. BDCs allow retail investors to invest in debt and equity of private, middle-market U.S. companies. Distributions from BDCs are taxed as ordinary income, not qualified dividends. Typically, taxes on ordinary income are higher than on qualified dividends.
As of the end of the second quarter, this lender had no investments on non-accrual status, and it was earning a 16% weighted average yield on debt.
Chicago Atlantic Real Estate Finance (REFI), Yield: 17.6%
Insiders, including the two co-CEOs, recently bought a sizeable $1.27 million worth of stock at up to $10.67. This is a real estate investment trust (REIT). Distributions from REITs are taxed as ordinary income, not qualified dividends. If shareholders go along with the plan, Chicago Atlantic Real Estate Finance may soon merge into Chicago Atlantic BDC.
Advanced Flower Capital (AFCG), Yield: 5.6%
Insiders recently bought $870,000 worth at prices up to $3.60. This is also a REIT. Only a limited portion of Advanced Flower Capital loans go to cannabis companies. But it still has exposure to companies in the sector.
A Near-Term Catalyst
As the midterms approach, expect to see more headlines and rhetoric – even from President Donald Trump – on rescheduling recreational-use cannabis. Medical-use cannabis was rescheduled months ago. This means it was moved to Schedule III from Schedule I under the Controlled Substances Act. The change gives cannabis companies more cash flow. It neutralizes an IRS provision barring the deduction of operating expenses against revenue from the sale of Schedule I substances.
Since rec-use sales are such a big part of the revenue stream at most cannabis companies, rescheduling rec-use cannabis would be a big deal. Even talk of the change by high-profile politicians will attract interest in cannabis names, including the cannabis lenders.
And we are likely to get a lot of talk on the topic soon. “We believe the Trump administration has an incentive to generate headlines on cannabis rescheduling in advance of the midterms,” says Seiberg. He also expects comments from “progressive Democrats running for Congress in support of full legalization.”
Other Catalysts Down the Road
Hemp-derived THC products become illegal in mid-November. This will boost demand for cannabis-based THC products by eliminating competing hemp-based products. The positive impact on cannabis companies could be big. Curaleaf CEO Boris Jordan thinks the hemp market is worth $25 billion a year in sales. For context, U.S. legal cannabis sales were $29.1 billion in 2025. Trulieve CEO Kim Rivers thinks the hemp market in her state does $4 billion a year in revenue, compared to $2 billion in medical cannabis sales.
Cannabis lenders would also benefit from further cannabis reform at the federal level, and the expansion of legal cannabis sales now playing out particularly in the South, long a holdout on cannabis acceptance.
Even if these reforms drag on, with cannabis lenders you get paid decent yields to wait it out in the meantime. You won’t find that at plant-touching companies like Curaleaf and Trulieve.
For insights on other companies and sectors seeing bullish insider buying, consider subscribing to Cabot Insider Edge here.
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