PHOENIX – 4Front Ventures Corp., a vertically integrated multi-state cannabis operator and retailer, today announced its results for the quarter ended September 30, 2024. All financial information is presented in U.S. dollars unless otherwise indicated.
Q3 2024 Financial Highlights
- GAAP revenue from continuing operations of $17.1 million
- Adjusted EBITDA of $1.0 million
Management Commentary
“I’m encouraged by the solid progress we’ve made this quarter, reflecting 4Front’s strategic focus on disciplined growth and operational efficiency,” said Andrew Thut, CEO of 4Front Ventures. “Our recent achievements are especially evident in Illinois, where demand for our products has been incredibly strong. With our flagship Matteson facility scaling up to meet this demand, we are well-positioned to capture market share, especially in this supply-constrained market. Early responses to Matteson’s production have been highly positive, and we’ve secured significant supply agreements that de-risk our growth strategy as we continue to ramp up.”
“In Massachusetts, we’ve made strides in expanding wholesale, achieving 56% quarter-over-quarter growth despite challenging market conditions. Our emphasis on quality has been reinforced by consistent 100% pass rates on our cultivation tests, supporting both our wholesale and retail channels as we build brand loyalty. Washington, too, saw standout performance with a return to record revenues, driven by consumer-focused product innovation. These results underscore our ability to execute in competitive markets, setting the bar for our operations in Illinois and Massachusetts.”
“Looking ahead, despite the uncertainties surrounding federal cannabis reform, we’re optimistic, especially given signs that we may have unexpected advocates in the incoming administration. Paired with strong momentum across our operations, including the scaling up of our Matteson facility, we’re confident entering Q4 and are ready to return to growth and sustainable positive cash flows from operations. We’re taking decisive steps to solidify our financial foundation and expand our operational reach, positioning 4Front to seize future opportunities and create sustained value for our shareholders.”
Third Quarter 2024 Company Highlights
4Front Ventures Retains Canaccord Genuity to Optimize Capital Structure: 4Front is at a key moment as it continues to scale its flagship Matteson facility and expand the Mission retail footprint in Illinois. The partnership with Canaccord Genuity is expected to secure the necessary growth capital, streamline the balance sheet, and position the Company for substantial and sustainable cash flow generation, driving shareholder value creation.
4Front Ventures continues to make significant strides at its Matteson facility in Illinois, expanding cultivation capacity to 24,000 square feet, with plans to reach 34,800 square feet by mid-January 2025. With this expanded production capability and the introduction of successful brands from other markets, 4Front is strategically positioned to capture material market share in Illinois. The Company is also preparing to expand and diversify its genetic library of offerings to meet rising demand, expecting to yield over 3,000 pounds of biomass monthly by year-end.
Company Drives Growth in Challenging Markets with Return to Record Revenues in Washington: In Q3 2024, Washington operations achieved a return to record revenue levels, driven by strong demand for its high-quality flower and innovative product offerings. The successful launch of new products, including vapes and concentrates, combined with operational efficiencies in cultivation and manufacturing, positioned Washington as a key contributor to the Company’s overall growth. This performance underscores 4Front’s ability to succeed in one of the most competitive and mature wholesale markets, reinforcing the Company’s strength and adaptability across its entire operational footprint.
Launched New Brand ‘Smoke Breaks’ in Illinois and Massachusetts: The Company introduced its new brand, Smoke Breaks, in Illinois and Massachusetts. These mini pre-rolls, each weighing 0.35 grams, are designed for convenient and quick respites. Packaged in tins of five pre-rolls, they are available in five strains per state: two Daytime, two Anytime, and one Nighttime. Crafted with unbleached cones, the pre-rolls ensure a natural smoking experience.
Company Continues to Expand Product Lines with Additional Key Launches Across Markets: 4Front continued to expand its product lines with a variety of new SKUs and formulations across major markets. In Washington, the Crystal Clear vape line introduced new SKUs alongside edibles like Koko Gemz and Cosmic Candy with innovative formulations. In Illinois, the popular 1988 Infused Blunts and Smoke Breaks pre-rolls saw the release of new strains, enhancing the diversity of available options. Meanwhile, in Massachusetts, the Dabl concentrates and Marmas edibles lines added new formulations to their product offerings.
Wholesale: The Company reported substantial growth in its wholesale segment this quarter, with Massachusetts wholesale revenue increasing over 56% quarter-over-quarter, approaching $2 million in quarterly revenue. With continued strong production rates, driven by high yields and low failure rates, 4Front anticipates monthly wholesale revenue of approximately $1 million in the near term. In Illinois, this quarter is expected to mark the end of constrained growth due to limited supply. The recent operational launch of the Matteson facility positions the Company to significantly expand production capacity, backed by presales and longer-term supply chain agreements, thus creating a solid foundation for a robust and scalable wholesale channel to drive future growth.
Post-Quarter End Developments
4Front Ventures Has Official Ribbon Cutting of Its 250,000 Sq. Ft. Cultivation and Production Facility in Illinois, Now Operational and Serving Mission Dispensaries and the State of Illinois: The Company held an official ribbon-cutting ceremony for its new 250,000 sq. ft. cultivation and production facility in Matteson, Illinois. Attended by Illinois government representatives and local media, this event marked the completion of the first phase of 4Front’s expansion project in the state. The fully operational facility will support Mission Dispensaries and wholesale partners throughout Illinois, further establishing 4Front’s footprint in one of the fastest-growing cannabis markets in the U.S.
New Product Releases: The fourth quarter will feature several new product launches across 4Front’s key markets. In Massachusetts, October saw the release of Mission Cannabis strains like Truffle Monkey and Military Chocolate, along with high-dose Marmas edibles, Crystal Clear Blast vapes, and Chewee’s Classic Caramel. November will see the introduction of The Hunt’s Yuck Mouth strain in Massachusetts, Marmas Cartridges in Illinois, and the Crystal Clear x Marmas Bar Cartridge in Washington. December will see Marmas Bar disposable vapes across MA, IL, and WA, alongside Smoke Breaks Diamond Infused 5-pack Tins and Illinois’ new EZ-Flower line, offering EZ-Eighths, Quarters, and Halves.
Q3 Financial Overview
Revenue was $17.1 million for Q3 2024, compared to $18.7 million for Q2 of 2024.
For the third quarter, Illinois reported total revenue of $7.3 million, slightly down from $8.2 million in Q2. This decrease was primarily driven by softness in our retail channel stemming from heightened competition, inconsistent in-store traffic and a one-time administrative setback related to taxes that temporarily closed two of three retail locations. Meanwhile, Massachusetts showed a similar trend, with total revenue decreasing to $7.9 million in Q3 from $8.2 million in Q2. This marginal softness was mainly attributed to our retail channel and was offset by the 56% growth in wholesale sales.
The Company’s adjusted EBITDA decreased slightly to $1.0 million in the third quarter of 2024, compared to the previous quarter’s performance of $2.6 million. The decrease in the Company’s adjusted EBITDA was primarily driven by a rise in cost of goods sold associated with the Matteson facility. The Company views this trend as temporary and a product of scaling our Matteson facility to its full production capabilities. As the facility realizes its full production capacity and generates incremental revenues, the Company expects an improved gross margin profile.
As of September 30, 2024, the Company had $1.2 million in cash, cash equivalents, and restricted cash. The total debt amount as of quarter-end was $68.9 million.
As of September 30, 2024, the Company had 913,923,993 Class A subordinate voting shares and 1,276,208 Class C multiple voting shares outstanding.
About 4Front Ventures Corp.
4Front is a national, vertically integrated multi-state cannabis operator with operations in Illinois and Massachusetts and facilities in Washington. Since its founding in 2011, 4Front has built a strong reputation for its high standards and low-cost cultivation and production methodologies earned through a track record of success in facility design, cultivation, genetics, growing processes, manufacturing, purchasing, distribution, and retail. To date, 4Front has successfully brought to market more than 20 different cannabis brands and over 1,800 products, which are strategically distributed through its fully owned and operated Mission dispensaries and retail outlets in its core markets. As the Company continues to drive value for its shareholders, its team is applying its decade of expertise in the sector across the cannabis industry value chain and ecosystem.
