4Front Ventures Corp. was one of the Benzinga Global Small-Cap Conference sponsors on December 8-9, 2020. The information contained in this article in no way represents investment advice or opinion on the part of Benzinga or its writers and is intended for informational purposes only.
2020 was a turning point in the history of U.S. cannabis. Throughout the pandemic, cannabis companies were mandated as essential businesses and cannabis legalization measures won resoundingly in five states in the latest federal elections.
The future looks bright for cannabis companies as the new presidential administration has an open-minded view and could potentially put through major cannabis reforms. As the cannabis industry continues to gain traction, multi-state operators like 4Front Ventures Corp (CSE:FFNT) (OTCQX:FFNTF)are in pole position to capitalize on a coming green-wave, should any federal reforms pass.
4Front’s share price continues to rise and break new 52-week highs on a regular basis. The company believes that the conversation has shifted from arbitrary land grabs to a focus on strategy, operations, and most importantly, effectiveness at scale.
4Front brings a laser-like focus on driving long-term value for shareholders in a simple way: great products at the lowest prices.
4Front and the Future of the U.S Cannabis Market
According to New Frontier Data, U.S. legal cannabis sales, both recreational and medical, will have an estimated CAGR of 21 percent by 2025, compared to $13.2 billion in 2019. And many are looking toward near-term banking reform that would result in much-loosened restrictions around the financial activities of cannabis companies.
In the most recent federal election, over 70% of Americans supported full legalization — the highest figure ever recorded. With a new administration that is much more supportive of cannabis reform, the U.S. cannabis space is poised for dramatic market growth in the years to come.
A recent report by Statista projects legal cannabis sales to rise to as much as $50 billion in 2026 with illegal sales relegated to less than $1 billion by the same year. As an operator that has historically been able to compete with the black-market on both cost and quality, this outlook is overwhelmingly positive for 4Front.
4Front currently owns, operates and manages low-cost cultivation, mass production and retail facilities across 5 states. Headquartered in Arizona, the company manufactures and distributes a portfolio of more than 25 cannabis brands including Marmas, Crystal Clear, Funky Monkey, Pebbles and the Pure Ratios wellness collection distributed through retail outlets and its chain of positioned Mission-branded dispensaries.
4Front also has operations in Illinois, Massachusetts, California, Michigan and Washington state. From plant genetics, automated processes and a cannabis retail experience that is second to none, 4Front’s team leverages its expertise across the cannabis value chain to drive results and value for investors.
According to Andrew Thut, CIO of 4Front Ventures, “4Front is focused on execution. Finished goods manufacturing is the sweet spot, and the company is bringing the same focus on efficiency-at-scale that traditional consumer-packaged goods companies have to the cannabis industry.”
The importance of 4Front’s presence in Illinois cannot be understated. According to recent reports, Illinois saw more than $1 billion spent in the market in 2020. The first month of 2021 reported a sales record with nearly $89 million in adult-use cannabis purchases.
In Washington state, where 4Front is currently top two in market share, a recent report found that in 2020 the industry was responsible for $1.85 billion of gross state product and supported approximately 18,700 jobs. The same report showed that retail marijuana sales alone have grown 605% between 2015 and 2020.
In Q3 2020, 4Front reported 170% year-over-year growth in Systemwide Pro Forma Revenue and provided initial guidance for 2021 of $170-180 million of the same. Recent efforts to drive cost efficiencies has decreased annualized corporate overhead by a third from $30 million to under $20 million.
4Front’s focus is on long-term success through low-cost production at scale and processes that work regardless of state regulations. The company’s processes and operational expertise allow it to grow flower and manufacture products like edibles, vapes, tinctures and capsules. Currently, it has over 25 recreational brands for flower, edibles, tinctures, concentrates and topicals and approximately 2,800 SKUs.
4Front Company Highlights
4Front is finalizing plans to significantly expand its cultivation and production operations in Illinois with an additional 210,000-square-foot facility.
4Front’s manufacturing facility in Commerce, California is scheduled for completion in Q2 2021. The state’s operations will be leveraging the same processes used in Washington, scaled up for a larger market. The project is on target for the first of its full line of edibles, tinctures and vape products to be on California retail shelves by May 2021.
In October 2020, 4Front announced it secured $30 million in financing to extinguish a debt obligation owed to the affiliates of Gotham Green Partners. The deal with Innovative Industrial Properties Inc. (NYSE:IIPR), valued at $33 million, closed in December 2020.
Earlier this year, 4Front received permission to start construction of a new Mission-branded dispensary in Massachusetts for adult-use customers. The dispensary is planned to open in Q2 2021.
Today there are 15 states that have legalized recreational adult use of cannabis and 34 states with legal medical use markets. With the tide shifting towards cannabis liberalization in the United States, the future is only getting brighter for 4Front Ventures.
Photo by David Gabric
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