Previously Published On Benzinga
A new operation in Commerce, California is quickly becoming one of the world’s largest next-generation cannabis production facilities.
The 170,000 square-foot facility is owned and operated by the 4Front Ventures Corp. (OTCQX: FFNTF), a national, vertically-integrated multistate operator with seed-to-sale operations in strategic medical and adult-use cannabis markets, including Illinois, Massachusetts, Michigan, Washington and now, California.
Established in 2011, 4Front Ventures has built a reputation in the industry for setting high standards in low-cost cultivation and applying traditional production methodologies to a less-than-traditional business sector. To date, the company has successfully brought more than 20 different cannabis brands and nearly 1,800 unique products to market.
As the cannabis industry is expected to reach $54.41 billion in sales by 2026, growing at an average annual rate of 27.25%, competition for market share will only continue to increase. Companies are finding the need to distinguish themselves by delivering unique, eclectic product offerings that appeal to a wide variety of customers. There’s a cannabis brand war brewing, and 4Front is betting on scale and automation to come out on top.
Destined to be a Leader in the Cannabis Industry
Co-Founder and CEO Leo Gontmakher started his career working in his father’s Washington-based specialty seafood business, Direct Source Seafood – one of North America’s largest seafood processors and distributors. It was here where he learned the ins and outs of supply chain management, logistics, compliance and commerce. Gontmakher told Marijuana Venture that the skills he mastered working alongside his father would later prove integral in navigating the challenges of the “nascent cannabis industry” he’d soon enter.
Not only did he learn the importance of establishing and implementing effective management, accounting, sales, and branding strategies – he came to realize the secrets to success boiled down to company culture and efficiency.
Taking these lessons with him, Gontmakher has consistently made it a point at 4Front to carefully vet applicants and invest in his workers, acquire cutting-edge machines and incorporate automation wherever possible to enhance production efficiency.
As the specialty seafood industry is also highly regulated and complicated on the supply side, Gontmakher didn’t shy away from entering the cannabis space. In fact, he had his eyes on cannabis before his home state of Washington legalized it in 2012, and his company became one of the first to win an operating license.
A long-time advocate of legalization and the benefits cannabis can have on people’s lives, Gontmakher thoroughly researched medical marijuana markets and their regulatory and business models, licensing processes and supply chains.
“I wanted to take on the challenge of developing an efficient, low-cost business within the industry that would appeal to a wide swath of customers from different walks of life,” Gontmakher said. “I’m a strong believer that cannabis is headed toward national – and potentially global –legalization, and I’m determined to position 4Front as the gold standard in reliability and customer value and satisfaction.”
Despite Barriers, 4Front Pushed Into Volatile Washington Markets
In the early years of legal cannabis, Gontmakher and his colleagues at 4Front Ventures learned key lessons in a tough Washington market. At that time there wasn’t a playbook to follow. Washington was the first legal recreational market in the country.
Consequently, there was no uniform state legislation on cannabis markets — and to further complicate matters, cannabis remained illegal in many jurisdictions within the state. Having co-founded one of the first cannabis companies established in Washington, Gontmakher had to navigate the uncharted industry building out supply chains and networks while being proactive about compliance.
While getting institutional capital is still a challenge today, back in 2012, banks, lenders, and landlords were understandably wary of doing business with cannabis companies, fearing they could misunderstand and therefore fail to comply with the strict and evolving regulations in the industry. However, by being agile, persistent and working hard and creatively, the leaders at 4Front managed to establish strategic connections and acquire the necessary capital to build operations and started accumulating enough revenue to scale. The company would eventually rake in 10% of all sales in the Washington market and rank as the No. 2 producer of flower and the No. 1 producer of edibles.
4Front sells both flower and manufactured products in Washington and in other markets, but in California the company is focusing solely on manufacturing. Gontmakher shared with New Cannabis Ventures that the reason behind this decision is that there is a large supply of biomass already in the state. With an oversaturation of flower being produced and a high customer demand for alternative consumption methods, this is a strategic move for the company.
A New Era In Cannabis?
Going all in on California by opening the new 170,000 square-foot Commerce facility is certainly bold, but may present tremendous opportunity for the company going forward. 4Front Ventures reports that their new flagship location, the state-of-the-art Commerce facility, now produces nine of the company’s 20 in-house cannabis-infused brands, and 164 SKUs – and this number will likely grow.
The facility rolls out a wide assortment of products including infused pre-rolls, gummies, lozenges, fruit chews, caramels, mints, concentrates, soft gels and tinctures for both in-house and partner brands. Given the vast, efficient manufacturing capabilities, the company may look to grow wholesale operations in the future.
To give perspective of the operational efficiency, in the Commerce facility, 4Front reports that it can produce more than 10 times the capacity that it can in its 40,000-square-foot Washington production hub – currently the top producer of derivative cannabis products in Washington State. And incredibly, Commerce requires only one-third of the manpower that the Washington facility does, according to the company.
“In Commerce, we’re reaching unprecedented levels of operational efficiency, rolling out incredible products, and streamlining processes that are replicable across 4Front’s nationwide footprint. With our suite of brands, custom-built automated machinery, signature low-cost production and manufacturing capabilities, we’re confident our Commerce facility will enable us to emerge as one of the top high-quality cannabis producers and price leaders in California, one of the largest and most competitive marketplaces in the world,” Gontmakher said. “We’re setting a new bar for large-scale manufacturing in cannabis and helping propel the industry to new heights.”
To learn more about 4Front Ventures, visit https://www.4frontventures.com
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