4Front Ventures Corp.

Q3 2024 total revenue was $17.1 million, down just over 8% from Q2 2024. Including Washington revenue, pro forma total revenue was $26.9 million, down from $27.8 million in Q2. Adjusted EBITDA was $1 million versus $2.6 million in Q2. Illinois revenue was $7.3 million, down 12% quarter over quarter, and Massachusetts revenue was $7.9 million, down 4% quarter over quarter. Washington system-wide sales were $9.72 million, up 6.6% quarter over quarter. Management said Q3 weakness was mainly retail-related and tied partly to Matteson ramp costs. Looking ahead, they did not give formal company guidance, but said they expect wholesale growth to drive future revenue, with Matteson scaling from 24,000 square feet of flowering canopy to 34,800 by mid-January 2025 and producing 3,000 pounds of total biomass with 2,000 pounds of sellable flower monthly by year-end. They also said October wholesale revenue in Massachusetts was up 91% year over year.

Andrew Thut struck an optimistic but still execution-focused tone, framing the quarter as a turning point driven by operational improvements, better flower quality, and the Matteson expansion in Illinois. He said the company is building a stronger foundation for future success and emphasized that the company is focusing first on traditional cannabis, while keeping hemp-derived opportunities on the radar. He also highlighted October momentum, new Q4 product launches, and the potential for federal reform, including rescheduling.

Michael Kronberg emphasized that the financial pressure in Q3 came mostly from retail softness and higher costs tied to scaling Matteson. He said adjusted EBITDA was $1 million, that cash and cash equivalents were $1 million at quarter-end, and total debt was $68 million. He also noted that SG&A declined sequentially partly because Matteson-related lease costs moved out of SG&A and into cost of goods as the facility began production, and he expects higher Matteson throughput to improve contribution margin and the overall margin profile.

Analysts focused on whether Matteson’s added capacity would be challenged by falling Illinois flower prices and rising retail competition, and asked whether 4Front might enter hemp-derived products. Management said it remains focused on traditional cannabis but has flexibility to pivot later if needed. On revenue trends, management said it is fair to assume the company has likely hit a trough and that future growth should come primarily from wholesale, while retail remains competitive. They also explained that Illinois wholesale pricing for trimmed A-grade flower is around $1,100 to $1,200 per pound, with branded flower at about $2,500 to $3,100 per pound.