• Q2 2020 Systemwide Pro Forma Sales, excluding divested non-core assets, increased 1.3% from Q1 2020 to $19m, despite an approximate 10% revenue impact due to the closure of Chicago dispensary in June because of looting.
  • Company achieves positive operating cash flow starting in the month of August and expects positive adjusted EBITDA starting Q3 2020.  Company is poised to show significant operating leverage in 2021.
  • Company continues to see strong demand across its entire portfolio and anticipates accelerating revenue growth in Q3 and Q4 driven by recreational approvals in Massachusetts, continued expansion in Illinois and strong sales trends in Washington.
  • Company expects to finalize the divestiture activities of non-core assets with the closing of Maryland in early September.
  • Funded expansion plans underway in both Massachusetts and Illinois production facilities, as well as opening of second Illinois retail location in Calumet City, remain on schedule to be completed in Q4 2020.
  • Company remains in progressive discussions to strengthen its balance sheet through a financing/sale leaseback of its affiliated facilities in Washington state.

4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) (“4Front” or the “Company”) today announced its financial results for the Second Quarter of 2020.

Second Quarter 2020 Financial Results Highlights

  • Total Systemwide Pro Forma Sales for the second quarter 2020 increased 1.3% quarter-over-quarter to $19m.
  • IFRS Sales for the second quarter of 2020 were flat quarter-over-quarter at $12.7m.
  • Adjusted EBITDA for the second quarter was a loss of $0.4m.

Business Update

Robust consumer demand continues across all operating markets.  Recreational sales in Georgetown, MA progressing steadily since August 12th launch, sales at Mission South Chicago are on pace to climb back to pre-shut down levels since the re-opening on July 31st.  Washington experienced record sales in July with that momentum carrying into August.

Company reaches cash flow goals ahead of schedule.  Achieves positive operating cash flow in the month of August and expects to generate positive adjusted EBITDA for Q3 2020.  Poised to show significant operating leverage in 2021.

All construction and expansion projects remain on budget and on schedule.  Fully funded expansion plans at Elk Grove, IL and Georgetown, MA cultivation/production facilities are expected to be completed in Q4.  Second Illinois retail location in Calumet City also remains on schedule for a Q4 opening.

Completion of non-core asset divestitures nearing completion.  Divestitures of non-core retail assets in Arizona, Arkansas and Pennsylvania are complete.  Close of Maryland divestitures expected to be completed in early September.

Washington Financing/Sale Leaseback Update.  As of June 30, 2020, 4Front’s balance sheet had cash and equivalents of $11.4m with total debt of $78.3m (excluding in-the-money convertible debt of $5.8m). The Company owns and controls highly attractive real estate in Washington state consisting of 176,000 square feet of state-of-the-art industrial space built for cultivation, production and distribution. The Company is in progressive discussions with multiple partners on this transaction.

Management Commentary

Leo Gontmakher, CEO of 4Front, said, “Entering 2020, we have been laser-focused on leaning out and replicating our low-cost cultivation and production model in targeted states. We enter the second half of 2020 with a focused business model, streamlined cost structure and fortified balance sheet that has set the stage for us to accelerate growth across our core markets of Washington, Illinois, Massachusetts, Michigan and California.

Mr. Gontmakher added: “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. We are proving that our success in Washington can be replicated in every state in which we operate and are extremely confident in how the company is positioned as we enter this new season.”

(Please see Note Regarding Non-IFRS Measures, Reconciliation, and Discussion below.) (*Please see the Financial Statement section below, and the Company’s Second Quarter 2020 Unaudited Condensed Consolidated Financial Statements and Management Discussion and Analysis (“MD&A”), available under the Company’s SEDAR profile, for more information.)

Additional Details

As of the date of the MD&A, there were the equivalent of 506,379,437 Class A Subordinate Voting Shares outstanding when calculated as if all share classes were converted to Subordinate Voting Shares. For further details regarding 4Front’s share structure, please see its profile at www.thecse.com.

Conference Call

The Company will also host a conference call and webcast on Monday, August 31, 2020 at 5:00 p.m. EDT to review its operational and financial results and provide an update on current business trends.

To join the call, dial 1-877-407-0792 toll free from the United States or Canada or 1-201-689-8263 if dialing from outside those countries. The webcast, which will include a slide deck, can be accessed at this link.

The call will be available for replay until Monday, September 7, 2020. To access the telephone replay, dial 844-512-2921 toll free from the United States and Canada, or 1-412-317-6671 if dialing from outside those countries, and use this replay pin number: 13708994.

Financial Statements

The condensed consolidated interim financial statements for the three and six months ended June 30, 2020 and 2019, have been prepared in accordance with IAS 34 – Interim Financial Reporting. These statements have not been reviewed by an auditor.

Formerly 4Front Holdings, LLC
Condensed Consolidated Interim Statements of Financial Position
As of June 30, 2020 and December 31, 2019 (unaudited)
Amounts expressed in thousands United States dollars unless otherwise stated
 June 30,  December 31,
2020 2019
Current assets:
Cash $ 11,434 $ 5,789
Accounts receivable 560 677
Other receivables 261 325
     Lease receivables 10,787 9,556
Inventory 12,447 9,138
Biological assets 2,190 2,187
Notes receivable 1,362 1,871
Prepaid expenses 1,845 2,198
Assets held for sale 7,336
Total current assets 48,222 31,741
Restricted cash 2,352
Property and equipment, net 40,977 41,822
Notes receivable 520 1,049
Lease receivables 22,876 23,944
Intangible assets 39,888 41,442
Goodwill 28,854 33,988
Right-of-use assets 30,991 20,476
Investments 759 759
Deposits 3,493 6,346
TOTAL ASSETS $ 216,580 $ 203,919
Current liabilities:
Accounts payable and accrued expenses $ 6,591 $ 8,138
Taxes payable 4,198 1,609
Lease liability 971 972
Contingent consideraton payable 2,100 750
Notes payable and accrued interest 6,750 7,382
Liabilities held for sale 1,752
Total current liabilities 22,362 18,851
Convertible notes 45,645 35,607
Notes payable and accrued interest 43,878 44,289
Long term notes payable 1,978 1,903
Long term accounts payable 1,600 1,600
Contingent consideration payable 2,994 4,714
Deferred tax liability 2,014
Lease liability 31,758 20,976
TOTAL LIABILITIES 152,229 127,940
Equity (Deficiency)
Equity attributable to 4Front Ventures Corp. 238,995 252,656
Reserves 34,111 25,618
Deficit (208,464) (202,090)
Non-controlling interest (291) (205)
Formerly 4Front Holdings, LLC
Condensed Consolidated Interim Statements of Operations and Comprehensive Loss
For The Three and Six Months Ended June 30, 2020 and 2019 (unaudited)
Amounts expressed in thousands United States dollars unless otherwise stated
Three Months Ended Six Months Ended
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
REVENUE $ 12,701 $ 2,518 $ 25,353 $ 4,605
Cost of goods sold, sale of grown and manufactured products (5,034) (1,494) (7,849) (2,349)
Cost of goods sold, sale of purchased products (3,012) (529) (4,846) (676)
Gross profit before fair value adjustments 4,655 495 12,658 1,580
Realized fair value included in inventory sold (436) (321) (573) (112)
Unrealized fair value gain on biological assets 1,480 169 1,853 495
Gross profit 5,699 343 13,938 1,963
Selling and marketing expenses 5,633 1,359 11,817 3,206
General and administrative expenses 2,873 5,620 8,096 9,277
Depreciation and amortization 1,109 386 2,160 706
Equity based compensation 1,048 459 2,275 709
Total operating expenses 10,663 7,824 24,348 13,898
Loss from Operations (4,964) (7,481) (10,410) (11,935)
Other Income (Expense)
Interest income 8 64
Interest expense (3,685) (936) (6,953) (1,123)
Accretion 158 331
Gain on sale of subsidiary 9,559 11,211
Gain on restructuring of notes receivable 281 281
Other income 2,456 2,500 2,456 2,500
Foreign exchange loss (55) (18)
Total Other Income (Expense) 8,722 1,564 7,372 1,377
Net Loss from Continuing Operations Before Income Taxes 3,758 (5,917) (3,038) (10,558)
Income Tax Expense (2,179) (239) (2,923) (452)
Net Loss from Continuing Operations, Net of Taxes 1,579 (6,156) (5,961) (11,010)
Net (Loss) Income from Discontinued Operations, Net of Taxes 127 (351) (499) (950)
Net Loss 1,706 (6,507) (6,460) (11,960)
Net Loss Attributable To Non-Controlling Interest (68) (24) (86) (110)
Net Loss Attributable to Shareholders $ 1,774 $ (6,483) $ (6,374) $ (11,850)
Basic and Diluted Loss Per Share $ $ (0.02) $ (0.01) $ (0.03)
Weighted Average Number of Shares Outstanding, Basic and Diluted 506,379,437 340,370,271 506,379,437 340,370,271

Note Regarding Non-IFRS Measures, Reconciliation, and Discussion

In this press release, 4Front refers to certain non-IFRS financial measures such as Systemwide Pro Forma Revenue and Adjusted EBITDA. These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. 4Front defines Systemwide Pro Forma Revenue as total revenue plus revenue from entities with which the Company has a management contract, or effectively similar relationship (net of any management fee or effectively similar revenue) but does not consolidate the financial results of per IFRS 10 – Consolidated Financial Statements. 4Front considers this measure to be an appropriate indicator of the growth and scope of the business.

Adjusted EBITDA is defined by the Company as earnings before interest, taxes, depreciation and amortization less share-based compensation expense and one-time charges related to acquisition and financing related costs, excluding fair value adjustments for biological assets. 4Front considers these measures to be an important indicator of the financial strength and performance of our business. The following tables provide a reconciliation of each of the non-IFRS measures to its closest IFRS measure.

About 4Front Ventures Corp.
4Front (CSE: FFNT) (OTCQX: FFNTF) is a national multi-state cannabis operator and retailer, with a market advantage in mass-produced, low-cost quality branded cannabis products. 4Front manufactures and distributes a portfolio of over 25 cannabis brands including Marmas, Crystal Clear, Funky Monkey, Pebbles, and the Pure Ratios wellness collection, distributed through retail outlets and their chain of strategically positioned Mission branded dispensaries.

Headquartered in Phoenix, Arizona, 4Front has operations in Illinois, Massachusetts, California, Michigan and Washington state. From plant genetics to the cannabis retail experience, 4Front’s team applies expertise across the entire cannabis value chain. For more information, visit 4Front’s website

This news release was prepared by management of 4Front Ventures, which takes full responsibility for its contents. The Canadian Securities Exchange (“CSE”) has not reviewed and does not accept responsibility for the adequacy of this news release. Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Forward Looking Statements

Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in 4Front Ventures‘ periodic filings with securities regulators. When used in this news release, words such as “will, could, plan, estimate, expect, intend, may, potential, believe, should,” and similar expressions, are forward-looking statements.

Forward-looking statements may include, without limitation, statements related to future developments and the business and operations of 4Front Ventures, developments with respect to legislative developments in the United States, expectations regarding the COVID-19 pandemic, future revenue or Adjusted EBITDA expectations, statements regarding when or if any contemplated or in-progress transactions will close or if/when required regulatory approvals are attained, and other statements regarding future developments of the business. The closing of the transactions described in this news release, including the divesture of Pennsylvania and Maryland assets and the sale of convertible debt, is subject to customary conditions and there can be no guarantee that such transactions will close.

Although 4Front Ventures has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended, including, but not limited to: dependence on obtaining regulatory approvals; investing in target companies or projects which have limited or no operating history and are engaged in activities currently considered illegal under U.S. federal laws; change in laws; limited operating history; reliance on management; requirements for additional financing; competition; hindering market growth and state adoption due to inconsistent public opinion and perception of the medical-use and adult-use marijuana industry and; regulatory or political change.

There can be no assurance that such information will prove to be accurate or that management’s expectations or estimates of future developments, circumstances or results will materialize. As a result of these risks and uncertainties, the results or events predicted in these forward-looking statements may differ materially from actual results or events.

Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release are made as of the date of this release. 4Front Ventures disclaims any intention or obligation to update or revise such information, except as required by applicable law, and 4Front Ventures does not assume any liability for disclosure relating to any other company mentioned herein.

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Cannabis Market Update: Q3 2020 in Review

Click here to read the previous cannabis update.

During the first few months of investment time in 2021, cannabis faced some volatility alongside optimism about federal changes in the most important market for the drug.

The cannabis business found its stride during Q1 thanks to policy change signals and consolidation.

To find out more, the Investing News Network (INN) asked experts about progress in the market during the first major period of the new year, and which developments investors should watch out for.


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Cannabis market update: New York and US potential boost operations

New York state’s legalization of recreational cannabis was a huge Q1 announcement that added pressure to the federal government when it comes to cannabis policy, said George Mancheril, co-founder and CEO of Bespoke Financial, a debt financing business with a particular focus on servicing cannabis businesses.

“It’s going to add to the chorus of voices in the federal scene to basically move sooner rather than later,” he explained to INN.

Following the US election in 2020, the momentum for cannabis businesses went on the upswing, as did company valuations, with the idea of expansion at the heart of it all, according to Mancheril.

Before starting Bespoke Financial, Mancheril learned from traditional investment banks, where he worked on lending, fixed income and debt markets with Goldman Sachs (NYSE:GS) and Guggenheim Partners.

Nawan Butt, portfolio manager with Purpose Investments, agrees with Mancheril. The financial expert told INN the ongoing legalization process seen in the US market is leading to expansion.

“It’s becoming more of a national move, then small pockets of proliferation. That’s very exciting about cannabis right now,” said Butt, who co-manages the Purpose Marijuana Opportunities Fund (NEO:MJJ).

This proliferation effect is causing a change in valuations and enthusiasm for US-based operations. Mancheril told INN that by the end of Q1, multi-state operators (MSOs) had raised approximately US$3.3 billion.

The cannabis lender said he sees the industry as having grown from the woes of 2019; it is now seeing a return to form by way of the excitement for an ongoing opening process in the US.

The expert explained that there is likely to be a windfall of capital in the wake of major federal changes for cannabis policy, although the timeline for these changes is becoming increasingly hard to predict.

Leading up to that capital influx, Mancheril said he wants to see operators really drill down on the value of desired assets and whether they make sense.


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“What I’d hope is that we continue to see bullish sentiment, but with some measure of responsibility, and let’s not just get over ahead of ourselves,” Mancheril told INN. “The idea is let’s minimize the volatility and continue growing responsibly.”

As far as struggles go, Butt explained that the cannabis industry has cemented itself as a growth-type sector, and as such there are macro environment pressures affecting the way these assets operate.

“We’ve seen this preference for cash flows at growth in the current or in the near future, rather than in the far future, and that’s what we’re seeing as far as valuations go in the broad market,” Butt said.

Cannabis market update: Volatility continues to rule as industry foundations build

Despite the industry’s current potential and the growing pains it has gone through as a whole in both the US and Canada, volatility remains a key factor in the cannabis investment scene.

Butt explained that the current shareholder base, which is dominated by hedge funds and retail investors, still lacks enough institutional support to avoid the day-to-day volatility cannabis has come to be known for.

These two investor groups, Butt said, can be easily spooked and excited by the news of the day when it comes to their investments.

“A lot of these institutions’ strategies are not about short-term profits, but they’re about long-term sustainability of the businesses themselves,” Butt said.

“That’s why you see a lot of volatility in the space, and that’s essentially what we’ve seen over the past, I’d say, three to two months as well,” he added.

That means investors shouldn’t expect an end to volatility anytime soon.

“It’s not about whether we continue to expect volatility, because we do,” Butt said. “We really think that the volatility will be taken out when the shareholder base becomes more institutional, but it’s really about understanding why there is volatility in the first place.”

Cannabis market update: Canadians talk up US business potential, but questions remain

A surge of mergers and acquisitions has taken over the Canadian cannabis sector recently as more producers see potential in America.

One of the biggest announcements in this regard came when Organigram Holdings (NASDAQ:OGI,TSX:OGI) secured a C$221 million investment deal from British American Tobacco (NYSE:BTI,LSE:BATS).

Using the funds, the two will work in tandem to develop new branded products designed to work on the international stage, including in the US. Organigram CEO Greg Engel previously told INN that the US represents a critical opportunity for Canadian companies, but the entry point isn’t as clean as it could be at the moment.


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While the long-term potential may be exciting for investors, Butt told INN he’s still unsure how the approach will work for Canadian companies.

The Purpose Investments expert said there will be plenty of space for the biggest Canadian names to pursue US market entries, beyond the initial hemp-derived CBD moves some operators have mde, since the US represents the biggest market in the world.

“But there’s just way too many unknowns right now to say exactly what that participation is going to look like, or when that participation will happen,” he said.

“What we do know is that currently the US MSOs are in a wonderful sort of position to expand on their market leadership that they have. And it will be tough for Canadians to come in and compete with them,” Butt said.

Canadian players still retain the upper hand at times in terms of valuation, which is confusing for both Butt and Dan Ahrens, chief operating officer and portfolio manager at AdvisorShares.

“The performance in quarterly earnings of US companies has been rather spectacular. They’ve knocked it out of the park in most instances,” Ahrens told INN.

Butt praised the recent performance reports from MSOs across the board, pointing to year-over-year growth lines and projections for continued positive performance.

In his view, share prices still don’t reflect company value. “Those are really being discounted at this point,” Butt told INN.

“We’ve seen the Canadian licensed producers be really hot stock performance-wise, outpacing the US (MSOs), and I’ll say it’s rather nonsensical to me,” said Ahrens, who oversees the AdvisorShares Pure Cannabis ETF (ARCA:YOLO) and the recently launched AdvisorShares Pure US Cannabis ETF (ARCA:MSOS).

Cannabis market update: Investor takeaway

The cannabis investment proposition finds itself at an interesting moment in time, as the entire sector eagerly awaits confirmation in the US at the federal level.

While for the Canadians waiting on the sidelines, this development may feel like a major necessity to address current financial struggles, for US-based operators, the heat around the corner could represent an increase to their already thriving operations.

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 Trulieve Cannabis Corp. (“Trulieve” or the “Company”) (CSE: TRUL) (OTC: TCNNF), a leading and top-performing cannabis company in the United States will release its first quarter 2021 financial results on Thursday, May 13, 2021 before markets open. Following the earnings release, management will host a conference call at 8:30 AM Eastern Time to review the financial results.

All interested parties can join the conference call by dialing 1-888-231-8191 or 1-647-427-7450, conference ID: 4880609. Please dial in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until May 20, 2021 . To access the archived conference call, please dial 1-855-859-2056 and enter the encore code 4880609.

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Appointment of Dr. Kelmendi, Assistant Professor of Psychiatry at Yale University and co-founder of the Yale Psychedelic Science Group, brings another experienced medical professional to Lobe’s advisory team.

 Lobe Sciences Ltd. (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce the appointment of Benjamin Kelmendi, MD, Assistant Professor of Psychiatry at Yale University School of Medicine, to its Scientific Advisory Board.

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Ayurcann Holdings Corp. ( CSE: AYUR ) (the “ Company ” or ” Ayurcann “), a Canadian extraction company specializing in the processing of cannabis and hemp for the production of oils and various derivative products, is pleased to unveil further details of its Phase 2 expansion plans.

Ayurcann has commenced trading on the Canadian Securities Exchange (” CSE “) on April 8, 2021 and subsequently announced a private placement of up to $500,000 (” Financing “), as per the Company’s press release dated April 12, 2021. The proceeds of the Financing are intended to be used to further pursue Phase 2 of the expansion of the production capacity of the Company’s Pickering facility.

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