4Front Ventures (FFNT.C) entered into agreements with the landowner an an affiliate of Innovative Industrial Properties (IIPR) to build a 558,000 square foot cultivation and production facility in Illinois today, according to a press release.
This will be the largest facility in the state. The agreements have IIPR buying the land for $6.5 million and funding the $45 million phase one build of the facility, which will be leased back to 4Front in a twenty-year lease with two five year extensions.
“Our thesis is simple. Bring tried-and-true cultivation and manufacturing methods from Washington State to large adult-use markets like Massachusetts, Illinois and California. Washington State was and is a highly competitive battleground in which our facilities, over a six year period, honed processes to achieve significant efficiencies and cost savings across a wide array of products. It is over this period that our facilities were forced to learn how to make high quality product at below industry cost, enabling significant profitability despite plummeting wholesale prices,” said Leo Gontmakher, 4Front CEO.
4Front if an American multi-state operator and retailer in the cannabis sector. Their home-base is in Phoenix, Arizona, but they have operations in Illinois, Massachusetts, California, Michigan, and Washington state.
They manufacture and distribute over 25 cannabis brands, including Marmas, Crystal Clear, Funky Monkey, Pebbles, and the Pure Ratios wellness collection, offered through retail outlets and dispensaries. The company is deeply involved in the adult use recreational markets, and has enjoyed substantial success in Illinois through their dispensaries and cultivation-only facility. 4Front believes this change in scope and scale will give them the bump they need to dominate the state.
The first phase of the buildout will be 258,000 square feet, with 65,000 set aside for flowering canopy and another 70,000 for manufacturing space geared towards the development of 4Front’s branded flower, tinctures, concentrates, edibles and other cannabis-related products.
“Cultivation yields now meet or exceed those from our Washington facilities (greater than 370 grams/square foot and as high as 500 grams/square foot in Worcester) and our manufactured products have retained a similar cost structure to that of Washington. We are also thrilled with the demand for our high-quality, affordable manufactured products introduced in Massachusetts over the last year. We are incredibly excited and ready to compete at a larger scale in Illinois,” said Gontmakher.
The company intends phase 1 to be operational by Q4, 2022. It will also mean hiring 240 people to their cultivation and production teams. The remaining phases will add 300,000 square feet to meet market demand.
Shares dipped $0.10 today, and 4Front closed at $1.78.