4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) is buying New England Cannabis Corporation (NECC) in a deal valued at $55 million. NECC was founded by luxury home developer Kenneth Stevens of Weston and is a cannabis cultivator based in Holliston, Massachusetts. 4Front said that NECC is expected to be significantly accretive to the its EBITDA expectations for 2022 and will immediately scale 4Front’s presence as a dominant wholesaler and producer in the state.
“The acquisition of New England Cannabis reinforces our core thesis of bringing scaled, low-cost production and operational depth to attractive, nascent, adult-use cannabis markets” said Leo Gontmakher, Chief Executive Officer of 4Front. “The addition of NECC’s impressive operations will increase our canopy, kitchen capacity, and add to our extraction capabilities overnight, greatly bolstering our position in the Massachusetts market to become a leading wholesaler of our full suite of products and brands. This acquisition firmly anchors our foothold in the Northeast, and NECC’s state-of-the-art facility will help to drive our growth in the years ahead as we execute on our goal of achieving dominant market share in every geography we operate. I look forward to working with NECC’s seasoned team and leveraging their extensive operational experience as we continue to scale.”
NECC has a fully operational 55,000 sq. ft. licensed cultivation facility that will strengthen 4Front’s expanding footprint in the limited-license state. The acquisition is said to more than double 4Front’s total flower canopy in Massachusetts to over 30,000 sq. ft, with further expansion potential for up to an additional 10,000 sq. ft. of canopy, and will approximately triple 4Front’s kitchen, processing, and distribution space. The NECC facility will supplement the products sold through 4Front’s existing “Mission” dispensaries and will further strengthen the its presence in the Massachusetts wholesale market.
4Front said that the purchase price will be funded through the issuance to the seller of 25 million subordinate voting shares of the company and $25 million of cash. The cash portion will be funded through proceeds raised from a $15 million convertible notes offering, led by Navy Capital, a vendor take back note, and balance sheet cash.
Recently 4Front received its Certificate of Occupancy and approval to operate from the Town of Brookline and received a commencement letter and unanimous approval from the Massachusetts Cannabis Control Commission to operate in the State. The company’s new storefront is located in one of the largest towns in New England that is also a highly desirable place to live, due to its proximity to job opportunities, public transportation, school systems, and livable neighborhoods that balance green space, historic preservation and outstanding commercial services. Mission Brookline in August selling its products such as Funky Monkey, Legends, Marmas, Crystal Clear and Hi-Burst.