4Front Archives - Green Market Report

Debra BorchardtDebra BorchardtSeptember 1, 2020
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4Front Ventures Corp. (OTCQX:FFNTF) reported revenue of $12.7 million in the second quarter versus $2.5 million for the same time period as last year. However, sales at 4Front were flat quarter-over-quarter. The company said that it achieved positive operating cash flow in the month of August and expects a positive adjusted EBITDA starting in the third-quarter of 2020.

The loss from operations was $4.9 million. On the company earnings call Chief Investment Officer Andrew Thut said , “Our adjusted EBITDA in the second quarter was a loss of $400,000, as compared to a loss of $2.8 million in the first quarter and $5.8 million in the fourth quarter of last year.”

CEO Leo Gontmakher said, “Our strong business momentum leaving the second quarter will be aided by significant tailwinds as we enter the second half of this year.  We welcomed the first adult-use sales in Massachusetts at our Georgetown facility on August 12th and anticipate final approvals for adult use sales at our Worcester facility imminently.  Our cultivation/processing facility expansions in Massachusetts and Illinois as well as our second Illinois retail location are on-track for end of year completion.  We continue to execute on our plans to flip to cash flow positive during the third quarter and have set the stage to exit this year in a position to drive meaningful operating leverage in our business.”

Washington

The company established itself in Washington state and has since been expanding into other states. With regards to Washington, 4Front said it is seeing a phenomenal market turnaround from where the industry was a year and a half ago. “We had record months back to back in July and August, with the July being the first month we’ve had over $4 million in wholesale revenue. Flower prices are still trending up over the last 8 to 10 months, and we’re currently selling packages delivered flower for $900 a pound on average as compared to $650 a pounds just 12 months ago.” The company also noted that it has record sales for vapes and edibles across the board without having to lower prices in any of those categories.

Massachusetts

The company said that its Georgetown, Massachusetts location began serving the adult-use market on August 14. Its first location to be approved in the state. 4Front said it is pleased with the steady progression of the sales ramps since launch, punctuated by a record weekend leaving the month of August. “We expect to be able to make an announcement about our Worcester location entering the adult use markets in the very near future as well, which provides a further tailwind to growth in the space.” The Worcester location for adult use and the third location in Brookline are expected to open in early 2021.

Illinois

The company was offline in Illinois in June and July as the stores were closed for looting during the protests. The company noted that Joe Epperson, who formerly led the flower team in Washington, moved to Illinois and took over leadership of the grow facilities in January, and since that time, they’ve seen the yield in Elk Grove improved from 250 grams per square foot to right around 350 grams per square foot.

4Front said it is on track with the reopening of our South Chicago dispensary. The Calumet City dispensary is also on track to open in the fourth quarter of this year. “This together with our project that’s currently underway to expand our Illinois cultivation facility, tripling our production capacity is expected to strengthen our foothold in the state and pave the way for both top-line and bottom-line growth.”

Looking Ahead

The company said it is in progressive discussions to strengthen its balance sheet through a financing/sale leaseback of its affiliated facilities in Washington state. It also expects to finalize the divestiture activities of non-core assets with the closing of Maryland in early September.

 

 

 


Debra BorchardtDebra BorchardtMarch 4, 2019
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Cannex Capital Holdings Inc. (CSE: CNNX)(OTCQX: CNXXF) moved beyond the interim agreement from November and as of March 1, 2019 officially agreed with 4Front Holdings, LLC to merge the two companies. The new company will initially trade under Cannex’s symbol “CNNX”, although the company said it expected to receive a new ticker in connection with the transaction.

The deal is subject to CSE approval, approval of the 4Front members and approval of at least 66 2/3% of the votes cast by Cannex shareholders at a special meeting expected to take place on April 18, 2019. The company said it has commitments from 68% to vote in favor.

The number of Cannex Consideration Shares was determined by way of a previously agreed ratio such that the shareholder ratio will proportionally equal 1:1.75 Cannex shareholders to 4Front shareholders on the closing of the Transaction. The Exchange Ratio was determined when the parties entered into the interim agreement (announced on November 26, 2018). The pre-agreed ratio provides for a pre-Transaction value to 4Front shareholders of approximately C$321.5 million calculated using a Cannex share price of C$1.125 per share.

“Since starting 4Front with Kris Krane in early 2011, we’ve focused on building a company the right way, navigating the evolving landscape and trying to work with people we respect and trust. We’ve known Leo since late 2016 and have great respect for what he and his team built in Washington,” said Josh Rosen, CEO of 4Front. “I believe Cannex is the perfect match for 4Front and that our merger is representative of our belief that the industry is evolving from a game of Monopoly, where it’s about the perceived value of assets, to the game of Risk, where it’s about the combination of assets, strategy, and execution. Cannex is all about execution and I’m already seeing the impact of the Cannex culture on our 4Front team and I look forward to closing this transaction and the full integration.”

The new company will feature Joshua Rosen as the CEO & Director, David Daily, Director, Eric Rey, Director, Leo Gontmakher, COO & Director and Anthony Dutton, Director. The board of directors of the new company will be comprised of five directors, with one executive director from each of Cannex and 4Front and three mutually agreed upon directors. Cannex and 4Front have agreed to a $10 million termination fee.

“Success in the cannabis market is directly related to a company’s ability to profitably scale operations, access and efficiently allocate growth capital all being driven by an experienced management team,” said Leo Gontmakher, COO of Cannex. “With 4Front, we have a partnership across all elements of the combined company with a shared management philosophy of driving best practices throughout all our operations. I am very excited,” continued Gontmakher, “to immediately take the operational leadership we have developed in Washington State to five new states.”

The merger will create a strong operator with expertise across the cannabis value chain, including cultivation, manufacturing, workflow, packaging, distribution, and retail at scale, led by a team with longstanding industry credibility and strategic M&A capabilities. The initial collaboration in Massachusetts and Illinois is already in motion, while collectively laying the groundwork in new states including Arizona, California, and Michigan.

“This is a transformational event for Cannex as we will immediately become operational in six US states with a platform that can be replicated and leveraged into additional jurisdictions,” said Anthony Dutton, CEO of Cannex. “Since our original formation, Cannex has been strategically focused on building vertically integrated operations in multiple states and, upon closing the business combination with 4Front, we expect to become one of the largest multi-state operators in North America with room for continued growth.”

 


Debra BorchardtDebra BorchardtNovember 26, 2018
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Cannex Capital Holdings Inc. (CSE: CNNX) (OTCQX: CNXXF) and 4Front Holdings signed a binding letter agreement to combine in an all-stock deal.  The combined company will continue to trade on the CSE under Cannex’s existing name and the ticker symbol CNNX. The stock fell over 10% on the news to lately trade at C$0.98.

According to the company statement, the new combined company will own, operate or manage six existing cultivation and production facilities in Washington, Illinois and Massachusetts and five retail operations in Illinois, Massachusetts, Maryland, and Pennsylvania. 4Front also has licenses or licensing agreements in place that will enable it to open and operate several more dispensaries in Massachusetts, Maryland, and Pennsylvania under the Mission brand, which should bring the total number of related operations to 20 by year-end 2019 within the combined company’s existing asset base.

4Front Co-founder and CEO Josh Rosen will become CEO of the combined company while Cannex’s CEO Anthony Dutton will take on the senior capital markets and business development role. Leo Gontmakher, COO of Cannex, is expected to assume the same role in the combined company.

This is an exciting and transformational step as 4Front and Cannex come together to realize our common objective of building a premier cannabis business focused on operational excellence and integrity across the value chain,” said Rosen. “The operations and leadership that Cannex has demonstrated in Washington, one of the most competitive cannabis markets in the world, are unlike anything I’ve seen in the industry. Leo and his team have developed an amazing set of skills and capabilities that we look forward to transferring to 4Front’s existing portfolio, as well as using to capitalize on new opportunities we develop together.”

Cannex

The merger agreement follows Cannex’s November 21, 2018 announcement that Gotham Green Partners’ (GGP) invested $32 million into Cannex. Jason Adler, Managing Member of GGP, noted, “We are excited by the proposed Cannex and 4Front business combination, which is expected to accelerate the deployment of Cannex’s operational capabilities across a broad suite of unique licensed assets. We expect cannabis investors to ascribe increasing value to operational productivity and efficiencies. We believe that 4Front and Cannex have very complementary assets and skill sets, and we look forward to working with them to accelerate their growth.”

Cannex owns two large-scale indoor cultivation facilities and a production and logistics facility in Washington State. Its strategic operating tenant, Northwest Cannabis Solutions, boasts strong cultivation yields and produces some of the top-selling flower and infused-product brands in Washington. It has managed to capture approximately 8% share of the wholesale market in one of the most competitive markets in the country. NWCS employs more than 190 people and currently has an annual revenue run rate of approximately US$40 million.

“Cannex has been evaluating the best platforms to extend our production capabilities into new markets and 4Front is a natural fit given their complementary capabilities, existing portfolio and pipeline, and strong culture,” said Gontmakher.

4Front

4Front operates most of its dispensaries under the Mission brand. It has developed a national platform that consists of a multi-state footprint and a far-reaching network of partnership relationships.

 

 


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Phoenix,  June 5, 2018 /AxisWire/ 4Front Holdings, LLC (“4Front”), a leading investment and management firm in the cannabis industry, is pleased to announce that Co-founder and President Kris Krane, has been elected to serve a third term on the National Cannabis Industry Association’s (NCIA) Board of Directors.

The NCIA is the cannabis industry’s largest and most influential trade association, representing the interests of its more than 1,500 members.

Mr. Krane was first elected to his first two-year term on the NCIA’s board in 2014. The board consists of 18 elected directors, plus the executive director, and has oversight over the association’s strategic direction and budget.

“I’m excited for the opportunity to serve on the NCIA board for a third term. The next few years will be some of the most critical the cannabis industry has faced, as we are likely looking at our best opportunity ever to make changes at the federal level on critical issues like banking and 280e reform, and possibly even to end federal marijuana prohibition,” Mr. Krane said. “Those of us who have worked on this issue for decades recognize how crucial the upcoming years will be for this industry and it is imperative that organizations like NCIA be well be a leading, well-funded body that is focused on the task at hand.”

Mr. Krane has been a leader in the cannabis industry for more than 20 years, first on the advocacy side, serving as associate director of NORML from 2000-2005 and executive director of Students for Sensible Drug Policy (SSDP) from 2006-2009. In 2011, he co-founded 4Front, which quickly earned a reputation as one of the industry’s most successful consulting companies. He also serves on boards of the New Jersey Cannabis Industry Association, the Arkansas Medical Marijuana Association, and is a Trustee of SSDP. He also writes a regular column for Forbes, and co-hosts the popular Marijuana Today podcast.

About 4Front
4Front Holdings, LLC (“4Front”) is a leading investment and management firm in the U.S. cannabis sector. It has developed a national platform that consists of a multi-state footprint, including its Mission-branded retail operations, and a far-reaching network of partnership relationships. Led by a group of professionals with experience in finance, real estate, manufacturing, and multi-location retail and hospitality operations, 4Front has invested heavily to assemble a comprehensive collection of management skills and hands-on operating expertise that can support the rapid operational growth opportunity being afforded by the increased legalization of cannabis across the United States as well as internationally. For more information, visit the website.

Media Contacts
Anne Donohoe
KCSA Strategic Communications
212-896-1265
adonohoe@kcsa.com

 



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