Bloom Farms Archives - Green Market Report

Adam JacksonAugust 15, 2022

After the market closed on Monday, 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) posted positive results — buoyed by growth from lucrative M&A deals over the past year. The vertical multi-state operator announced its financial results for the second quarter ended June 30, 2022.

4Front delivered approximately $34.5 million in total revenue during the period, versus $34.4 million the same period last year — beating the Yahoo Finance Average analyst estimate for revenues of $27 million. The gain is primarily due to increased revenue in the company’s wholesale revenue as it ramps portions of its business in California, Illinois and Massachusetts.

The earnings per share remained at a loss of one cent — in line with both the pervious quarter and the same time last year.

“Throughout the second quarter and now halfway through the third quarter, we are seeing an acceleration of business trends within our growth markets, particularly in Massachusetts and California,” said CEO Leo Gontmakhert. “Our retail locations platform-wide maintained or gained market share, despite anticipated pricing headwinds as we continue to expand our customer base with new product innovations and quality improvements. We believe we are poised for a significant leg of growth to take place over the next 12 months as we leverage our investments in state-of-the-art automation and scaled manufacturing processes, supplemented by strategic and accretive M&A.”

4Front posted an adjusted EBITDA of $9.2 million in the quarter, up 23% from the same time last year — representing an adjusted EBITDA margin of 26.7%. The company said that continued growth of adjusted EBITDA and margins is expected to persist through 2023 as the company’s operations drive increased production and higher sales volumes without material increases to overhead.

The company had $6.0 million of cash and $49.5 million of related-party long-term debt not due until May, 2024. It has 636,636,686 subordinate voting shares outstanding.

4Front also announced that it has signed a definitive agreement to acquire the California-based Bloom Farms brands. The company said it will complete the transaction with Bloom Farms in the coming weeks, and expects to announce similar acquisitions over the next several quarters.

“In the distressed and fragmented California market, we are seeing increased interest from companies looking to 4Front as their low-cost producer of choice,” said Gontmakhert. “Our long-term plans are to deepen and expand these relationships to grow revenue over time and add a retail presence in the state.”

4Front said at the start of the fiscal year that it continues to believe that wholesale growth in both Massachusetts and Illinois is poised to strengthen over the year “as additional retail comes online in those underserved states.”

“After implementing new techniques and methodologies to our production processes in Massachusetts, we made notable improvements to the yield and quality of our flower across the country during Q2,” Gontmakhert said about the progress since then. “These new processes have now been incorporated in Massachusetts and Illinois, and we are currently applying them to our facilities in Washington. As the construction of Phase 1 of our Illinois cultivation and production facility nears completion, we are looking to expand our retail footprint in the state over the coming months in preparation for that facility to commence operations in 2023.”

“We are excited by the momentum we have seen so far in Q3, and I am convinced that the next twelve months will demonstrate the power of our model at significant scale, paving the way for robust, sustained growth in the long term,” said Gontmakhert.

Debra BorchardtNovember 22, 2021

California-based cannabis company Bloom Farms has won its case with its former investor Jeff Menashe and his investment firm DG BF LLC, according to a report on Law360. Menashe had claimed that he was led to invest $5 million into the company, but that he was given bad information. After Menashe failed to produce documents to support his claim, the judge ultimately dismissed the case. It was originally set to go to trial in September.

Zurn wrote, “Plaintiffs’ failure to answer written discovery substantially weakened that claim, as they declined to identify any omissions or misrepresentations in written discovery and so were precluded from offering any at trial.”

He went on to add, “While Defendants have generously characterized this state of affairs as “a Menashe problem,” I believe his counsel’s approach of prioritizing bluster over substance has compounded the problem. It is clear that no sanction short of dismissal has been or would be meaningful.”

At one point, Bloom Farms was unable to complete any financing for the company as the case was proceeding, but eventually, the Delaware Vice Chancellor Morgan T. Zurn allowed Bloom to resume financing efforts.

American General Resources or AGR is the formal name of the company. It had requested about $2.2 million or at minimum approximately $600,000 based on the fee-shifting orders the court already issued in the case. Zurn said in the court documents that the fees are now shifted to the plaintiffs.

Investor Delays

Menashe and his firm were asked to produce documents supporting the claims by certain dates so that the case could proceed. They were also supposed to provide records from cell phones and laptops. According to the court documents, Menashe’s lawyers said repeatedly that those laptops had been wiped and donated, but eventually, the laptops were found and given to Plaintiffs’ counsel. Menashe also claimed he didn’t send any business texts, but Bloom Farms was able to produce texts that undermined that claim. Various delay tactics were employed by suggested staffing problems at the lawyers office to not having a company in the small Montana town that could search the phone.

The article said that Eric Boustani, general counsel for Bloom Farms, told Law360 that Friday’s order is the kind of decision that restores a lot of his faith in the legal process. “The tactics which were deployed against the company were so wildly out of compliance with appropriate procedure that to do anything other than dismiss this case would have rewarded it,” Boustani said to Law360.

Bloom Farms is a small privately-owned California-based cannabis company. It is mostly known for its vape pens and also its philanthropy. For every product sold, Bloom Farms donates a meal to someone in need. The company has given over 3,000 meals since 2015.

Debra BorchardtFebruary 3, 2018

As more investment vehicles make social responsibility a key requirement, it will not be enough for cannabis companies to claim the plant alone makes a company socially responsible. Bloom Farms has made this a part of its company mission.

The company just hit a milestone delivering its one-millionth healthy meal to California’s nonprofit food banks. For every Bloom Farm product sold, this California cannabis company donates money to food banks across the state to cover the cost of sourcing and distributing a healthy meal.

“From the start, we wanted to build a business that contributed to the communities we live and work on in many levels,” said CEO Michael Ray. “Donating our one-millionth meal shows that we’re succeeding for our customers who have purchased one million of our products and appreciate that we are working toward the greater good, and for California’s most vulnerable families who have received the gift of nutritious food.”

BlackRock investment firm recently stated that it was now going to require that companies must engage in some form of social responsibility in order for those companies to receive investment money. While some cannabis companies stepped up to help in the California wildfire many don’t have it as a part of their mission. Denver-based Organa Brands is also very socially active and set up its own charitable arm with employees volunteering their time.

“Partnering with Bloom Farms has made all the difference for World Harvest LA and its clients,” said Glen Curado, CEO of World Harvest LA Food Bank. “They not only contribute financially, but their staff volunteers with us as often as they can. It’s an amazing company with extraordinary staff.”

In addition to the one-for-one program, Bloom Farms gives employees four hours of paid volunteer time every month to use as they choose.Last year, Bloom Farms was recognized as one of the Top 100 corporate philanthropists in the San Francisco Bay area placing them alongside Google, eBay, Microsoft and PayPal to name a few.

“Bloom Farms is a different kind of cannabis company, and our customers know that when they choose our products,” said Keith J Hart, Bloom Farms Social Good Manager. “Our company’s visions is to change the conversation around cannabis and one of the core values is to give something amazing back; our food bank partnership allows us to do both and we are excited to hare this milestone with them.”

Debra BorchardtDecember 15, 2017

In the latest Green Market Report Executive Spotlight, meet Bloom Farms, Sally Nichols.

Sally Nichols started as an investor in California cannabis company Bloom Farms and ended up as the company President of distribution. Her classic Ralph Lauren look draws the inevitable comparison to Mary Louise Parker from the television show Weeds, but unlike the character, Nichols is strictly legal business.

“I’ve invested in several other cannabis companies, but with Bloom Farms I really fell in love, not just with the brand, but more importantly the people managing and building the company,” said Nichols. “The relationship slowly evolved until they asked me to come and build out distribution and sales with them.”

The Nichols, the family behind K-Swiss, sold the company in 2012. Sally and her husband then moved to New York from California and made numerous investments in cannabis. “I had been in medical and healthcare startups before and then I just gravitated towards cannabis. After living in California, I wasn’t unfamiliar with the industry.”

She chuckles that she’s the least likely person you would think is flying back and forth between Westchester New York, building, selling and distributing marijuana products. She said for the first couple of years, she kept it quiet, but now she’s very open about it.

Nichols believes that brands win. She describes Bloom Farms cannabis as a clean, fresh product. “We’re basically a lifestyle brand that is focused on bringing relief, relaxation, and creativity to people’s lives versus the highest high in the world.” She compared Bloom Farms to the soft drink Coca-Cola, which started as a medicine and ended up becoming one of the most popular beverages in the world.

Bloom sources its cannabis from sustainable California farms for its vape, pre-rolled flower products and oil pods for PAX vape products. The company supports local small farms and uses that as the source for its single origins line of products.

“It’s really our belief that cannabis as an agricultural product has the ability to be transformative for local, for agricultural communities and urban communities alike. It is also a socially responsible company. With every purchase, the company provides a meal to someone in need. It also works against the negative stigma of cannabis. “It’s shocking how many people that work in farming can’t afford to feed themselves,” she said. The products are consumer friendly with suggestions like ‘daytime friendly’ or ‘nighttime friendly.’

“I’m amazed every day that this is the fork I chose to take in the road,” said Nichols. “At this point in my life, I’m a suburban mom living in New York who is working in the California and Colorado weed business.”