The Daily Hit is a recap of the top financial news stories for Thursday, September 26, 2024.

On the Site

SEC fines Former Weedmaps executives $175k apiece for ‘misleading’ user numbers

The SEC announced earlier that the company agreed to a $1.5 million fine to settle the same allegations of wrongdoing.

Read more here.

SEC hands down final judgments in CanaFarma case

CanaFarma Co-founder Vitaly Fargesen is fined and barred from penny stock offerings.

Read more here.

Kentucky awards first medical marijuana business permit to testing lab

A lottery for cultivator and processor permits is scheduled for Oct. 28.

Read more here.

Hemp companies sue New Jersey over new regulatory system

The operators argue that the new rules change the definition of hemp that was laid out in the 2018 Farm Bill.

Read more here.

4Front hires Canaccord Genuity to help with its finances

The company also signed an updated credit agreement with an existing lender for $2.6 million.

Read more here.

Simply Solventless to acquire pre-roll maker for $13.5 million

The move is expected to boost Simply Solventless’ projected 2024 annualized net income to $10 million per year.

Read more here.

Earnings:

In Other News

Shiny Bud

Shiny Health & Wellness Corp. completed its NOI process for its wholly owned subsidiary Shiny Bud, pursuant to the provisions of the Bankruptcy and Insolvency Act (Canada). Effective Sept. 20, 2024, the company issued 100 common shared to a purchaser and cancelled all other previously issued securities of Shiny Bud without consideration.

Read more here.

US cannabis policy

With more Americans using ever-stronger marijuana, a federal advisory panel is calling for a public health approach that’s a big departure from “Just Say No.” Thursday’s report proposes a health-focused strategy with the Centers for Disease Control and Prevention taking a larger role in cannabis policy than ever before.

Read more here.

Global cannabis seeds market

The global cannabis seeds market was valued at $1.3 billion in 2021 and is projected to reach $6.5 billion by 2031, growing at a CAGR of 18.4% from 2022 to 2031.

Read more here.

4Front Ventures Corp. (OTCQX: FFNTF) has its eyes set on branded and private label products to capitalize on Illinois’ underdeveloped wholesale market, executives said during the company’s Wednesday earnings call.

Despite a 31% revenue decline over the year, 4Front saw wholesale revenue growth of 10% in Illinois versus the previous quarter. And the company’s new Matteson, Illinois, cultivation facility has been key to its strategy for further growth.

Part of that wholesale opportunity comes from 4Front’s existing wholesale branded business, but the company isn’t putting all its eggs in one basket. Instead, it’s implementing a “multipronged strategy” that also includes private label deals.

“We want to have a balanced assortment where we can have goods that appeal to a broader range of customers,” Ray Landgraf, president of business development, said, “and we’re acknowledging that maybe not every single one of those brands will be a 4Front brand.”

Just how much growth does the company see in that wholesale segment? “We think we can grow that 3x to 4x,” Landgraf said.

The company says partnering with third-party brands is a “strong monetization opportunity.” The approach is particularly appealing in Illinois, which Landgraf characterized as “one of the least mature markets in terms of wholesale and bulk.”

“We just see a great opportunity to find stability, to get contracts in place, to deliver partners’ consistent supply,” Landgraf said.

It’s a win-win situation, according to Landgraf. By supplying third-party brands, 4Front can nab consistent demand for its increased production while also gaining more shelf space for its own brands.

“Illinois doesn’t have a ton of external brands or large brand participation,” Landgraf said, in part due to a lack of consistent supply.

Management said the company’s increased production capacity from the Matteson facility can help secure those long-term supply contracts with partners.

But the first step is ramping up production at the grow. Brandon Mills, executive vice president of operations, said 4Front plans to reach 35,000 square feet of canopy by November, with monthly production stabilizing at 15 harvests by December.

“As of now, we have over 12,000 square feet of flowering canopy online in Matteson, nearly doubling our cultivation footprint versus prior quarters in Illinois,” CEO Andrew Thut said. “By the end of August, we’ll triple the size of our canopy in the state and will be at full capacity by the end of November.”

At full capacity, Mills projects monthly production of around 3,000 pounds of dried biomass and more than 2,000 pounds of sellable flower.