Since divesting its retail operations in Michigan and exiting the California market as part of its strategic reset, 4Front Ventures Corp. (OTCQX: FFNTF) has charted its path in newer regions, company executives said in a fourth-quarter 2023 earnings call.

Illinois

The multi-state cannabis operator is banking on its Matteson facility in Illinois to drive growth, with plans to gradually ramp up production capacity starting in the third quarter of 2024 and reaching full capacity by early 2025.

“By early 2025, it’s going to come online kind of one room at a time according to a schedule, as fast as we can safely bring it online,” operations VP Brandon Mills told investors on a call this week.

While management is optimistic about its expansion plans in Illinois, CEO Andrew Thut noted that the company remains cautious about the overall competitive landscape, given the tight capital conditions in the industry over the past three years.

By the end of 2023, 4Front had two retail locations in Illinois — South Chicago and Calumet City. The company plans to open its third Illinois store in Norridge in May 2024, followed by a fourth location in Elston/Logan in the fourth quarter of 2024. Mills said the aim is to expand the retail footprint to 10 stores by 2025 through organic openings and strategic acquisitions.

Massachusetts

In Massachusetts, the shift is to focus on expanding its wholesale presence after heavily relying on its own retail outlets, such as its Brookline store, which has faced challenges due to increased competition in the area.

“We have had successes on wholesale, but the rubber’s just meeting the road,” Thut said, adding that he expects a “huge year for wholesale in Massachusetts.”

Last year, the Massachusetts market experienced price declines in flower (12.5% year-over-year) and derivative products like vape and edibles (approximately 15%). However, the price declines have stabilized late in the fourth quarter of 2023 and early 2024.

As 4Front’s manufacturing capabilities come online in May, the company is prioritizing its in-house brands before engaging in formal third-party supply agreements, according to Mills.

The company’s balance sheet has seen recent improvements, including the conversion of $23 million in debt to equity. However, Thut acknowledged further access to capital markets is crucial to fund 4Front’s retail expansion plans in Illinois.

One way to stash more money away might be to follow in the footsteps of some of its peers in the industry when it comes to the 280E tax provision, which has burdened cannabis companies with hefty tax bills. The firm said it plans to pursue all avenues to secure eligible refunds.

Karl Chowscano, Consulting President at 4Front, said, “We clearly are aware of the trend, and I don’t want to say that we were suggesting that this should be the case about a year and a half ago almost, but we were. We will be actively pursuing all of our options in terms of the most efficient way for us to file taxes as well as to get any refunds, both from the state and federal perspective that we can.”