4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) announced its financial results for the third quarter ended September 30, 2021 with total revenues of $25.9 million, topping last year’s $12 million for the same time period for a gain of 70%. However, the company experienced a 4% sequential drop in sales from the second quarter. The company blamed the decline in sales to permitting delays during the local review process for both the Commerce, CA facility and Brookline, MA dispensary. The revenue was also short of the Yahoo Finance average analyst estimate for revenue of $27 million. The net loss for the quarter was $4.5 million, which was slightly higher than last year’s $4 million. 

“While we experienced some regulatory delays in getting Commerce up and running, we are more confident than ever that we have the tools, facilities, and teams in place to meet our considerable growth expectations in the coming year,” said Leo Gontmakher, Chief Executive Officer of 4Front. “During the quarter we made meaningful progress in the development of our three key growth markets of California, Illinois, and Massachusetts. In Illinois, we officially broke ground this summer on the construction of our cultivation and production facility in Matteson. Construction of the facility is expected to last through 2022, with Phase 1 anticipated to come online in the first quarter of 2023, offering 4Front’s in-house brands and products to the growing retail and wholesale markets in the state.”

Delays In California

4Front also reported that its third-quarter adjusted EBITDA grew 103% year-over-year to $7.5 million, up from $3.7 million in 2020 for the same time period. This was flat when compared to the second quarter, representing an Adjusted EBITDA margin of 23% as compared to Adjusted EBITDA margin of 22% in second quarter. “While higher overall dispensary sales and increased sales of the company’s internally produced products continue to drive systemwide margin improvements as designed, meaningful quarterly EBITDA growth predicated on a fully operational California manufacturing facility was temporarily hindered due to delays in the local review process for the Commerce facility.

4Front’s branded and wholesale manufactured products will be sold to licensed dispensaries in California via its partnership with Nabis, a leading distributor of cannabis products covering 100% of licensed retailers in the state. The facility is currently producing nine of 4Front’s 20 brands and 164 different SKUs including gummies.

“During the quarter we made meaningful progress in the development of our three key growth markets of California, Illinois, and Massachusetts,” Mr. Gontmakher added. “In Illinois, we officially broke ground this summer on the construction of our cultivation and production facility in Matteson. Construction of the facility is expected to last through 2022, with Phase 1 anticipated to come online in the first quarter of 2023, offering 4Front’s in-house brands and products to the growing retail and wholesale markets in the state.”