4Front Ventures Corp. FFNT FFNTF has entered into a $10 million senior secured credit facility agreement with ALT Debt II, LP, an affiliate of Altmore Capital.
What Happened
The funds will be disbursed in two tranches and are committed to building out the company's retail operations in Illinois in connection with the imminent launch of its new state-of-the-art cultivation and processing facility in Matteson.
The outstanding principal of the credit facility will bear simple interest at a rate per annum equal to the greater of the WSJ Prime Rate plus 7% and 15.5%, payable monthly.
Provided 4Front extends the maturity of certain other subordinated debt, the credit facility's maturity date will be September 30, 2026.
Why It Matters
Leo Gontmakher, CEO of the Arizona-based vertically integrated, multi-state cannabis operator, said the funds will help 4Front establish its presence in the Prairie State.
"This additional capital will fuel our efforts to establish 4Front as a state leader across both our retail and wholesale channels in Illinois and position our operations for long-term, sustainable growth," Gontmakher explained.
What's Next
The new facility in Matteson, scheduled to "power up" before the end of 2023, is expected to boost the company's retail operations and "fourfold expansion of our production capacity," Gontmakher said.
"We currently have two Mission dispensaries in operation, and our goal is to have our full slate of 10 retail stores before the end of 2024," he added. "Matteson's enhanced capacity, combined with expanding our dispensary network to 10 stores, has the potential to profitably double total company sales."
Illinois was the first state in the U.S. to legalize adult-use cannabis through legislation fully. The legislation enacted in 2020 has helped Illinois become the home of some of the largest cannabis companies in the country, creating more than 30,000 jobs along the way.
The weed sales in the Prairie State reached a whopping $1.5 billion in 2022. And 2023 is on track to break that record. The state cannabis retailers sold $140 million in weed products in July, breaking a record for 2023 and marking the second-highest monthly total since legal sales launched in 2020.
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FFNTF Price Action
4Front's shares traded 2.6736% lower at $0.2257 per share after the market close on Monday afternoon.
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