FFNTF Strong Finish
FFNTF is a LONG
We believe that FFNT is an underappreciated, under-the-radar name in the cannabis space. While its core operation is in the mature Washington State, it is one of the lowest-cost operators. FFNTF reported 4Q20 Pro Forma Revenue of $25.0 million (12% quarter-over-quarter) and GAAP-reported revenue was $17.0 million. 4Q20 (A) EBITDA was $5.9 million for an (A) EBITDA margin of 24%. For FY 2020, Pro Forma Revenue was $88.1 million, and GAAP-reported revenue was $57.6 million, a 203% increase compared to LY. The company reiterated the 2021 guidance of $170-$180 million in Pro Forma Systemwide Revenue and $40-$50 million in (A) EBITDA, with the longer-term view to generate $650 million in revenue and $250 million in EBITDA based on our current licensed footprint.
Business Update
- 4Q20 revenue increased 12% quarter-over-quarter to $25.0 million, driven by the first full quarter of recreational sales in Massachusetts and the opening of 4Front's second Illinois retail location in Calumet City.
- 4Q20 (A) EBITDA increased 59% quarter-over-quarter to $5.9 million, representing an adjusted EBITDA margin of 24% (initially achieving profitability during the third quarter of 2020.) FFNTF achieved a positive operating cash flow of $3.2 million in Q4 2020 and should show significant operating leverage in 2021.
- In 4Q20, 4Front opened its second Illinois Mission Dispensary in Calumet City and recently announced additional 2021 expansion plans in Illinois. The expansion plan includes the build-out of an up to 558,000 square foot cultivation and a production facility.
- The Company's fully-funded, state-of-the-art 185,000 square foot manufacturing only facility in Commerce, California, is nearing completion and is expected to serve the California cannabis market in Q2 2021. The Company is planning to launch its first full line of edibles, tinctures, and vape products on California retail shelves starting in May 2021.
- Construction remains on schedule at the Company's third Massachusetts dispensary in Brookline. Final inspection by the Cannabis Control Commission is anticipated to occur in June 2021, and the Company remains confident that it will open the Brookline dispensary in Q2 2021.
IIPR UPDATE
IIPR is a LONG
As of April 5, 2021, IIP owned 68 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Texas, Virginia, and Washington, representing a total of approximately 6.0 million rentable square feet (including approximately 2.2 million rentable square feet under development/redevelopment), which were 100% leased with a weighted-average remaining lease term of approximately 16.7 years.
As of April 5, 2021, IIPR had invested an aggregate of approximately $1.1 billion and had committed an additional approximately $359.7 million to reimburse certain tenants and sellers for the completion of construction and tenant improvements at IIP’s properties. In January 2021, IIP executed a new long-term lease with Holistic Industries Inc. (Holistic) for IIP’s Los Angeles, California property, bringing IIP’s property portfolio to 100% leased.
During the year-to-date through April 5, 2021, IIP made three acquisitions (including two new properties and additional land expansion at an existing property) for properties located in California, Florida, and Texas and executed three lease amendments to provide additional tenant improvements at properties located in Michigan, New York, and Pennsylvania. In these transactions and the new lease at IIP’s Los Angeles, California property, IIP established a new tenant relationship with Harvest Health & Recreation Inc. while expanding existing relationships with Holistic, Jushi Holdings, Kings Garden Inc., LivWell Holdings, Inc., Parallel, and PharmaCann Inc.
CT is getting Close
A bill to legalize marijuana in Connecticut that’s being backed by the governor was approved by a key committee on Tuesday—but it “remains a work in progress.” The legislation, which has been amended since its introduction to include a series of new social equity provisions, advanced through the legislature’s Judiciary Committee after a 22-16 vote. But it’s not the only legalization bill that lawmakers are considering. A competing proposal from Rep. Robyn Porter (D) was approved in the Labor and Public Employees Committee last month. With the new amendments to Gov. Ned Lamont’s (D) bill, the measures are more closely aligned.
