LIEN

• Portfolio and Credit Quality

  • 100% of the debt portfolio is senior secured, with only 1.4% of total portfolio exposure allocated to sub-debt, equity, or joint venture investments, compared to a 25.8% average exposure for peer BDCs
  • 93% of the par value debt portfolio is either fixed-rate or has interest rate floors, insulating the company from interest rate declines; a 100 basis point increase in benchmark rates would positively impact 81% of the debt portfolio
  • No loans are on non-accrual status, compared to a 3.8% industry average non-accrual rate; weighted average gross yield on debt investments is 16%, compared to a 10.8% average yield for public peer BDCs
  • 32.2 million in gross paydowns (including three full borrower payoffs) were partially offset by $2.7 million in new originations during the quarter; all repaid principal was returned at par with no realized losses, and carried a weighted average high-teens contractual yield over the life of the loans
  • Internal credit risk ratings remained unchanged during the quarter, with stable overall portfolio performance

• Origination and Pipeline

  • Modest Q2 2026 deployment was due to transaction timing, not weak market conditions or deal flow; deals expected to close in Q2 have shifted to Q3
  • Subsequent to quarter end, the company funded a $25 million senior secured floating-rate debt investment to a new cannabis-focused portfolio company (this transaction was M&A-related)
  • Total potential pipeline as of quarter end is just under $1.1 billion, split between ~$649 million (59%) in cannabis opportunities and ~$440 million (41%) in non-cannabis opportunities; the pipeline expanded meaningfully quarter-over-quarter
  • The company sources the vast majority of new investments directly, with minimal reliance on syndicated transactions; management prioritizes disciplined, selective underwriting over growth-for-growth's sake to preserve capital and credit quality

• Strategic Update: Proposed Merger

  • The company announced an all-stock merger agreement with Chicago Atlantic Real Estate Finance (ReFi) in June 2026; the combination creates a larger, better-capitalized BDC with complementary portfolios
  • Expected benefits include increased scale for improved capital access, support for future earnings growth, enhanced trading liquidity and market visibility, and a stronger competitive position while maintaining existing rigorous underwriting standards
  • A preliminary joint registration statement on Form N-14 has been filed with the SEC, which is currently under review

• Regulatory Developments

  • The U.S. Department of Justice moved to reschedule state-licensed medical cannabis from Schedule I to Schedule III; an administrative hearing for recreational cannabis rescheduling concluded in mid-July, with a non-binding judicial recommendation forthcoming prior to a final DEA decision
  • Management views these developments as positive for borrower credit quality and broader capital market acceptance of cannabis, but does not incorporate regulatory change assumptions into financial projections and maintains underwriting based on the current regulatory framework

• The company maintains its prior guidance that the proposed merger with Chicago Atlantic Real Estate Finance will close in the fourth quarter of 2026, subject to SEC review, shareholder approvals, regulatory approvals, and customary closing conditions. The SEC comment process is identified as the primary source of timing uncertainty.
• The company expects increased deployment activity in the second half of 2026, driven by a large, expanded pipeline of opportunities that have moved past Q2 2026 transaction delays.
• The $0.34 per share common dividend has been maintained, marking the eighth consecutive quarter at this dividend rate.

Chicago Atlantic BDC reports a single focused investment portfolio for Q2 2026, with the following performance: Total portfolio fair value: $334.8 million (down $29.1 million from Q1 2026, driven by gross paydowns not credit quality); Gross investment income: $14 million (down from $16.7 million in Q1 2026 due to lower origination fee income); Total expenses: $6.3 million (down from $6.7 million in Q1 2026 due to lower income-based incentive fees); Net investment income: $7.7 million ($0.34 per diluted share, down from $10 million / $0.44 per share in Q1 2026); Net unrealized loss: $1.6 million (driven by reversal of prior unrealized gains on loans paid off at par); Net assets: $302.5 million, with net asset value per share of $13.26 (down from $13.33 in Q1 2026); Total outstanding debt: $27 million (all drawn from the $100 million revolving credit facility, resulting in a 0.09x debt-to-equity ratio). 26% of the portfolio is allocated to non-cannabis companies across multiple sectors, while 74% is allocated to cannabis-industry lending. The portfolio holds 37 total investments with an average debt investment size of ~$8.3 million (2.5% of portfolio fair value).

• Forward-looking statements (including those related to merger timing and benefits, future portfolio performance, future dividends, and regulatory impacts) are subject to significant risks and uncertainties that could cause actual results to differ materially from current expectations
• Key merger-specific risks include: failure to complete the transaction on the anticipated timeline, failure to obtain required shareholder, regulatory, and lender approvals, and failure to realize the anticipated strategic and financial benefits of the combination
• Risks related to cannabis lending include ongoing uncertainty around U.S. federal cannabis regulation, which could impact borrower operating performance and credit quality
• Origination and repayment volumes are inherently volatile quarter-over-quarter, which can cause fluctuations in net investment income and deployed capital that do not reflect underlying portfolio or credit quality

Q: The merger is expected to close in Q4 2026, 4-6 months after announcement, which is faster than the typical timeline for BDC mergers. What are the key regulatory approval requirements, and is there reason to expect SEC review will take longer than expected amid current private credit market conditions? / A: The main regulatory step is SEC review of the submitted Form N-14 and joint proxy statement, with SEC comments expected in the coming weeks. The SEC review process is the primary source of timing uncertainty. There are no significant state-level regulatory hurdles. Management has no specific reason to expect a longer review timeline, and maintains the Q4 2026 closing target, though it acknowledges the process could take longer if unexpected delays arise.

Q: Have recent cannabis regulatory changes and uplistings of cannabis companies to the NYSE increased institutional investor interest in Chicago Atlantic, and how does the merger impact investor outreach? / A: Recent regulatory progress and broader cannabis ecosystem development have increased investor engagement and supported the company's narrative around cannabis lending. The biggest driver of increased institutional interest will be the merger, which will result in a combined company ranked as a top 25 BDC by book equity. This increased scale will place the firm on a larger playing field, attracting greater interest from large institutional investors and broader analyst coverage.

Q: Is the $1.1 billion pipeline, particularly the cannabis segment, showing meaningful actual activity, or are cannabis companies still cautious amid past industry mistakes and ongoing uncertainty? What is the pipeline split between cannabis and non-cannabis? / A: Roughly 60% of the pipeline is cannabis, and 40% is non-cannabis diversified lending, matching the breakdown Dino Colonna provided earlier. Management can confirm that meaningful cannabis activity is occurring, pointing to the $25 million M&A-related cannabis loan funded shortly after quarter end as evidence. Many cannabis M&A transactions are mid-market and do not receive the same public visibility as deals involving the largest multi-state operators, so low public market visibility does not equal low activity. Many cannabis firms are pursuing strategic activity as macro uncertainty eases.