4Front Ventures Corp. (PNK:FFNTF) Q3 2024 Earnings Call Transcript

4Front Ventures Corp. (PNK:FFNTF) Q3 2024 Earnings Call Transcript November 16, 2024

Operator: Welcome to the 4Front Ventures Third Quarter 2024 Earnings Conference Call. Today’s call is being recorded. And at this time all lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question-and-answer session. As a reminder, during the course of this conference call, 4Front’s management may make forward-looking statements that are based on current expectations and are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. These risks are outlined in the Risk Factors section of the company’s filings and disclosure material. Any forward-looking statements should be considered in light of these factors.

Please note, as a safety harbor, any outlook presented speaks as of today and 4Front’s management does not undertake any obligation to revise any forward-looking statements in the future. Also on today’s call, we will refer to certain non-GAAP financial measures, such as EBITDA and adjusted EBITDA. These measures do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies. 4Front Ventures considers certain non-GAAP measures to be meaningful indicators of the performance of its business in addition to, but is not as a substitute for our GAAP results. A reconciliation of non-GAAP financial measures to the nearest comparable GAAP measures is included in our press release issued earlier today.

I will now turn the call over to Andrew Thut, Chief Executive Officer of 4Front Ventures. Please go ahead.

Andrew Thut: Thank you, operator, and welcome, everyone. Joining me on the call today are Brandon Mills, EVP of Operations; Michael Kronberg, our Interim CFO; Karl Chowscano, our Consulting President; and Ray Landgraf, President of Corporate Development. As we begin today’s discussion, I want to emphasize how encouraged I am by the strides we’ve made. I feel confident about our operations as I have since stepping into a more hands-on operational role over the last year. I’m genuinely encouraged by the progress achieved and the direction we’re headed. This is a pivotal time for 4Front and the actions we’re taking right now are laying a strong foundation for future success. Our quarter-over-quarter performance is a key indicator of the company’s trajectory.

And I’m proud of the sequential growth we’ve achieved across critical areas from operational improvements to product expansion, we’re making steady strides that are positioning this organization for long-term stability and growth. While there is work ahead, I’m confident in our team and the strategic steps that we’ve put in place to help guide us forward. As we look at our progress in Illinois, I couldn’t be more excited about the opportunity our Matteson facility represents. This facility, stand out in both scale and design, has been met with positive reactions from everyone who steps through its doors. From state representatives to local community and industry leaders, the feedback has been overwhelmingly supported, culminating in our recent ribbon-cutting ceremony, a true milestone for 4Front.

Built with growth in mind, Matteson isn’t just a beautiful facility. It’s a testament to our commitment to high-quality, efficient production that we believe will play a thorough role in our next stage of growth. Every inch of Matteson was developed with purpose, allowing us to expand our presence in Illinois as we deliver on our vision and meet the strong demand from wholesale and retail partners across the state. Looking at our Q3 results, I’m pleased to report some positive highlights. Total revenue from Illinois and Massachusetts came in at $17.1 million, with our wholesale channel demonstrating strong performance overall. With Massachusetts achieving significant growth in Illinois contributing steady gains as we scale those operations.

This combined performance reflects the success of our approach to expanding partnerships and delivering high-demand products across both markets. One of the standouts in Q3 was the improvement of flower quality and product availability, particularly in our Illinois and Massachusetts operations. Those gains drove success across both our retail and wholesale channels, where we’ve made substantial progress in securing long-term supply contracts in wholesale agreements, critical elements of our growth strategy. We recognize that our success hinges on a solid financial foundation, and we’re committed to making the necessary adjustments to ensure stability. Actively engaging with financial partners, we’re working to streamline costs and enhance operational efficiencies across the board to support sustainable growth and cash flow.

As part of our plan, we’re also taking deliberate steps to raise additional capital and optimize our balance sheet, creating the runway needed to drive our growth plans forward. This disciplined approach not only addresses our immediate needs, but establishes a financial pathway for long-term profitability and expansion. Turning to this quarter’s highlights. Our wholesale operations are showing strong momentum. In Massachusetts, we saw an impressive 56% increase quarter-over-quarter while Illinois delivered steady results leading up to where we are now, poised to unlock the full potential of our Matteson facility. We strengthened our team and with a focused push in branding and marketing, we’re gaining solid traction with both consumers and wholesale partners as we enter this new growth stage.

As I mentioned, I’m also extremely optimistic about our progress on our growth opportunity in Illinois. Now with 24,000 square feet of flowering canopy already active at Matteson and plans to expand to 34,800 by mid-January 2025, we’re poised to significantly scale our wholesale capacity at increased wholesale accounts, while providing increased offerings to our current accounts and capture increased branded market share in the state. Since our first harvest on September 7, we anticipate producing 3,000 pounds of total biomass with 2,000 pounds of sellable flower monthly by year-end. This growth firmly establishes Matteson as a key driver for our continued success in the supply-constrained Illinois market, and we are laser-focused on executing on the significant opportunity.

To elaborate, the demand for our product in Illinois has been particularly robust, underscoring the critical role our Matteson facility will play in meeting and sustaining this market appetite. Illinois remains one of the most promising and supply-constrained markets. The Matteson scale-up is set to capture immediate opportunities while serving as a key factor in derisking our growth strategy. In just the first weeks of operations, we’ve already secured substantial supply agreements and strategic partnerships with the majority of our flower and excess derivative products, including distillate, presold for the foreseeable future. By bringing this production capacity online, we’re positioned to reliably serve our wholesale and retail partners, strengthening our foothold and capitalizing on Illinois’s growth potential with confidence.

We’ve also made significant strides in flower quality and expanded our product lines, rolling those improvements out across our entire portfolio. By staying attuned with consumer preferences, and delivering impactful high-quality products, we’re steadily building growth across our key markets. Massachusetts has experienced some tough market conditions and pricing challenges. Despite this, our wholesale operations are expanding, and Our efforts to boost brand visibility are yielding encouraging results. Massachusetts has also set quality benchmarks with 100% pass rates on cultivation tests since the end of Q2. This focus on quality and sustainable growth is making a real difference, even in a competitive environment. Washington remains a standout for us and continues to set the bar for what’s possible in our other markets.

In Q3, there was a notable 6.6% quarter-over-quarter revenue growth, with record sales across multiple categories. The success of the EZ Vape line and connoisseur-oriented live resin products underscores the payoff of consumer-focused innovations at both ends of the price spectrum. We’re eager to replicate these successes in Illinois and Massachusetts. We’re also keeping a close watch on potential federal reforms that could benefit the industry, such as changes to 280E taxation. The cannabis industry has potentially gained an unexpected advocate on the newly elected administration. As recent support for rescheduling marijuana and back in the state banking signals a potential shift in federal policy. This could reshape the industry landscape with reclassification to Schedule 3 anticipated in 2025, and we are prepared to capitalize on these opportunities if and when they arise.

As we close out the quarter, I’d like to give you a sneak peek into the momentum we saw in October. One of our strongest months for wholesale this year and a promising sign of what’s ahead. Our wholesale revenue reached impressive levels with Illinois achieving its third best month of the year, and Massachusetts recording its second best, signaling a solid return to form. In fact, October wholesale revenue in Massachusetts was up 91% year-over-year. In Illinois, targeted promotions and rising brand recognition drove significant multi-store orders, highlighting strong demand for our branded products. Massachusetts has shown steady growth as well, benefiting from effective local promotions and customer loyalty initiatives. Operational improvements have boosted our ability to meet this demand, and October’s momentum has positioned us well as we look forward to further growth next quarter.

Speaking of sneak peeks, in Q4, we’re excited to roll out new Mission cannabis strains, Marmas high-dose edibles, Crystal Clear disposable vapes in Massachusetts and Illinois with Smoke Breaks Diamond Infused multipack tins and EZ-Flower products. Over in Washington, Crystal Clear and Marmas Bar cartridges will be introduced, given our customers even more variety to choose from. In closing, while this is a critical juncture, I believe we’re taking the right steps to strengthen our position. The quarter-over-quarter gains, improvements in product quality and expansion of our wholesale business underscore our commitment to sustainable growth. We’re making significant strides and with our focus on refining our branding, marketing and business strategy, I believe we’re well positioned for continued success as we take advantage of our large near-term opportunity in our Illinois expansion.

Thank you for your continued support. I’ll now turn it over to Brandon, who will provide a deeper dive into our state-by-state performance. Brandon?

Brandon Mills: Thanks, Andrew. I’ll begin with Washington results as I believe they properly set the stage for the growth we aim to build upon in both Illinois and Massachusetts markets, showcasing what 4Front can achieve in a highly competitive wholesale environment at scale. Starting at the top, in Q3, Washington achieved its strongest quarter since Q1 of 2022, generating $9.72 million in system-wide Washington sales, representing a 6.6% quarter-over-quarter growth. It was a standout period with record-breaking wholesale sales across multiple product categories. In both edibles and vape, we hold a top three market share position with mid- to high single-digit market share and growing in both categories. We saw the highest ever quarterly sales of vape units, moving an impressive 473,000 units which represents 20% quarter-over-quarter growth each quarter this year.

Additionally, the Washington facilities are having a record year for flower sales to retailers this year with 5,100 pounds distributed in Q3 alone, representing 16% growth since Q1. Live resin base sales also reached new heights with 55,000 units sold, generating $636,000, over 30% category growth year-to-date, and a category we plan to continue to expand into and take market share. Similarly, the value-oriented EZ Vape line saw the highest sales of the year with 155,000 units sold in Q3 translating to $1.14 million in revenue, a notable increase over Q1 and Q2. This surge in vape sales speaks to our ability to be data-driven in our product development process to listen to our customers, track the market trends and quickly respond and deliver high-quality innovative products to stay ahead of evolving consumer preferences.

Our ability to continue to make improvements across our cultivation facilities and processes has resulted in increasingly high quality and commercially in-demand flower which is in every market serves as the foundation for our success across other categories. What’s especially exciting is how Washington is serving as our R&D lab, a space where we can test and refine products before rolling them out in other markets, a capability that will soon be shared with and further developed in Illinois. Successful innovations across our brand and product portfolio in Washington, like our popular EZ Vape pen, are now being introduced in other markets, ultimately creating a stronger and more compelling assortment nationwide. In short, we’re leaning into what works and the performance in Washington will be invaluable as we scale our wholesale efforts in Massachusetts and most importantly, Illinois.

Now shifting to Massachusetts. The market demonstrated a 3.5% growth from Q2 to Q3 consistent with previous quarter-over-quarter trends as reported by BDS. Flower pricing softened in the mid-single-digit percentages over the period, settling at $4.93 per gram in Q3. Even in this competitive pricing environment, 4Front managed to achieve just over 2% growth when excluding the impact of our now closed Brookline resale location. This growth was largely propelled by our strong wholesale performance, leveraging product that would have gone to Brookline or that wasn’t available in the prior quarter due to our strategic reset at our Worcester grow facility. The Massachusetts retail market has shown significant expansion with approximately 493 retailers licensed today and about 375 of those currently operational compared to 452 licensed and 334 operational at the start of the year.

This increase of 41 new dispensaries reflects a material wholesale opportunity for 4Front, which we’re well on the way to capitalizing on. Shifting into wholesale performance, our revenue was up over 56% quarter-over-quarter, approaching $2 million in quarterly revenue. With our current production rates driven by historically high yields and historically low failure rates, we firmly believe that achieving an additional 50% growth to reach around $1 million per month in wholesale revenue is within our sights. This momentum is bolstered by an exciting road map of new brands and products launching throughout Q4 and into Q1, as Andrew mentioned earlier, including some innovative product expansions into THCA isolates and solventless hash rosin throughout this quarter.

Turning to our cultivation operations in Massachusetts, we couldn’t be more optimistic about the quality and quantity of the flower we’re producing. In Q3, our Worcester, Holliston and Georgetown grows achieved a 100% pass rate on testing, not a single batch fail. This success reflects our ongoing investments in genetics, pest control, cleaning and environmental programs. Additionally, we continue to uphold a zero irradiation policy on all of our flower, placing us among a select group of operators in any market maintaining this standard. And finally, turning to Illinois. According to BDS and Illinois state data, the market declined by just under 2% from Q2 to Q3, primarily driven by softer flower pricing, which fell by about 3.8%. As new retail locations continue to open in a relatively fixed supply environment, we expect overall relative price stability and promising wholesale growth prospects through Q4 and into 2025 as new stores scale and additional stores come online.

Focusing on our retail performance, our Mission stores saw a little over a 12% decline quarter-over-quarter, driven by a mix of macro factors and localized temporary challenges that we’ve since resolved, which I’ll go into. A key pressure point has been the intensified competition for consumer spending as new retail entrants compete for a relatively stable consumer audience. Although same-store foot traffic was down across most MSOs reporting over the last week or two, our Mission customers maintain consistent spending. We simply had to rely more heavily on promotions and bundling last quarter to stay competitive and sustain average transaction sizes. We also faced a onetime administrative setback related to taxes, which temporarily closed two retail locations for about a week in Q3.

We acted swiftly to reopen the doors working closely with the IDOR. With renewed local marketing efforts and offers, we expect to recover any temporary dislocation in traffic and are working closely with our marketing agency to launch and test various campaigns that are already delivering results. In July, our South Chicago location also experienced a three-day closure due to technical issues with our safe and cash management system. Altogether, these closures accounted for 8.7% of the quarter’s operational period for these two locations, which explains most of the quarter-over-quarter decline and which we do not expect to be an issue in future periods. Our newest store in Norridge, which soft opened in Q2 is steadily progressing towards full maturity.

We’re encouraged by the strong local demographics and the above-average performance of nearby competitors. With more aggressive local marketing starting in October, we anticipate attracting customers from competing locations and integrating them into our loyalty programs, which have demonstrated significantly higher purchase frequency, average order size and lifetime customer value. More to come on that progress next quarter. In short, in Illinois, the story is clear. Rapid retail license expansion has been a double-edged sword. While it is intensified competition for our own Mission retail locations, it also provides a material tailwind and a solid foundation for future wholesale growth. At the beginning of the year, there were approximately 177 retailers.

Today, that number has risen to 234, representing 32% growth year-to-date. Looking ahead, we are confident in our ability to operate profitable retail stores that serve as strong hubs for distributing our branded products, building a large and loyal fan base and providing valuable insights for our product development. We are equally, if not more confident in our ability to bring a proven portfolio of high-performing brands and products to a wholesale market starved for the high-quality products we are producing nationwide at 4Front. I’d like to wrap up my section on another positive note. Our investment in our flagship Matteson facility is finally beginning to bear fruit. As Andrew mentioned, we’re now about two-thirds scale in terms of where we will take flower capacity over the next two months.

The quality is exceptional, some of the best we’ve produced nationwide in our history. Failure rates are extremely low, yields are exceeding expectations, and unlike most of our peers in Illinois, not a single gram of this flower will be irradiated before reaching our customers. SKU expansion has begun, and our extraction lab is now running 7 days a week. Team is growing and the energy in the facility is both positive and contagious. Most importantly, the results are already speaking for themselves. Nearly all our planned production output is spoken for through the expansion of our own brands and products reaching the market via Mission stores, our rapidly growing wholesale footprint as well as presale agreements, long-term supply contracts and strategic partnerships that will position 4Front alongside the largest players in one of the most attractive cannabis markets in the country.

We’re excited to share more details soon and are beyond proud of the foundation being laid for substantial growth as we enter the next quarter and beyond. Now I’d like to introduce Michael Kronberg, our new Interim CFO. Michael brings extensive experience as a CPA and a valuable background in cannabis from his time at Cresco. As an Illinois resident and now a member of our local leadership team at the Matteson facility, we’re looking forward to his contributions as we build on the momentum we’ve established. Michael, welcome to the team. I’ll turn it over to you to say a few words.

Michael Kronberg: Thank you, Brandon, for the introduction and for outlining the operational highlights. I’m glad to be on board and look forward to helping us navigate the current environment and drive our financial objectives forward. Now let’s take a closer look at the financial results for the quarter. In Q3 2024, 4Front reported total revenue of $17.1 million, which is down just over 8% from Q2 2024. Including Washington revenue, which adds another $9.7 million in the third quarter, pro forma total revenue was $26.9 million, down from $27.8 million in the second quarter. Our adjusted EBITDA for the quarter was $1 million, representing a moderate decline from Q2 2024 adjusted EBITDA of $2.6 million. This decrease in adjusted EBITDA was almost entirely attributable to the softness within retail in both Massachusetts and Illinois.

This was further compounded by the increasing cost of goods associated with the Matteson facility. As we continue to scale operations at Matteson to full capacity, we expect this incremental revenue to generate a greater contribution margin due to the effective distribution of fixed overhead costs across increased production and improved operational efficiency. This scaling will position us not only for stronger profitability but also a stronger margin profile as we leverage our growing production base. In Illinois, our total Q3 2024 revenue was $7.3 million, reflecting a 12% decrease from the previous quarter, which was driven by the retail softness that Brandon had discussed earlier. Massachusetts contributed revenues of $7.9 million, representing a 4% decrease quarter-over-quarter.

Similar to the Illinois market, this softness was entirely attributable to retail while being offset by the 56% growth in wholesale from the previous quarter. From a balance sheet perspective, as of the end of Q3, we had $1 million in cash and cash equivalents with total debt at $68 million. We remain optimistic about our ability to generate further cash flows as we scale our operations. I’ll now turn the call back to Andrew for final remarks before opening it up for questions.

Andrew Thut: Thank you, Michael. To wrap things up, I want to give a huge shout out to our incredible 4Front team. Their grit, passion and relentless drives have been nothing short of all inspiring in this quarter. It hasn’t been an easy ride. Like any growth journey, we faced some bumps along the way, but every challenge has made us stronger and sharper. As we gear up for Q4, we’re more fired up than ever. We’re laser focused on keeping this momentum going, dialing in our operational efficiency and continuing to build on our footprint in the markets that matter most. We know there’s still a lot of work to be done. But with this team, there’s no doubt in my mind that we’re on the right path to achieving even bigger things in the months ahead. I’ll now turn the call back to the operator to open up the lines for questions.

Q&A Session

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Yewon Kang of Canaccord Genuity. Please go ahead.

Yewon Kang: Hi. Good afternoon, everyone. Thank you for the question. This is Yewon Kang on behalf of Matt Bottomley. Good, good. So yes, my first question here is just regarding the usage of Matteson facility. I was wondering how you guys are thinking about this additional capacity coming online with the flower prices have continued to decline in the state with additional retail competition that’s coming online? Would there be any plans to penetrate the hemp-derived market, which is something that we’ve been seeing a lot of your peers get into just because it is able to be transported across state lines. And so I was just wondering how you guys are thinking about that segment.

Michael Kronberg: Andrew or Karl, either of you want to take that one?

Andrew Thut: Yes. It’s Andrew. Just in terms of the hemp, certainly something that we’ve been keeping an eye on. In terms of hemp-derived products currently edibles, beverages and such, a small portion of the market currently, and so we are very focused on traditional cannabis, delta-9. And the beauty of how we’re positioned, though, is we have plenty of space in our Matteson facility and in Washington to pivot as we see fit. So as it currently stands, we’re really focused on getting the flower and our products into the Illinois market and expanding our wholesale footprint in Massachusetts. But hemp as we sort of look at the months ahead, hemp is certainly something that we have the capacity to process and grow, and it’s something that we continue to look at. But we’re sort of chopping the wood that’s in front of us as first things first.

Yewon Kang: Great, thank you. And just my second question is, obviously, for the past couple of quarters, we’ve seen revenue declines, but obviously, with this Matteson facility finally coming online, and I think in your prepared remarks, it was mentioned that you guys are expecting a lot of wholesale growth coming out of the facility. So would it be fair to assume that you guys have kind of hit the trough in terms of revenues and we should expect to see continued growth coming forward?

Andrew Thut: I would think that is fair to assume.

Michael Kronberg: Yes, Yewon, I’ll take that one.

Andrew Thut: Sure, go ahead.

Michael Kronberg: I was just going to say, I think retail continues to be a challenge in both Massachusetts and Illinois in that there are more retail licenses coming online in a relatively fixed supply environment. So I think we’re all going to be fighting fiercely for every retail dollar we can get. That being said, I think the locations that we have online today are strong. We continue to improve them. We’ve actually been layering on more local marketing efforts especially in Illinois than we had historically. So I think we can wholesale in retail. And then yes, all the growth will come from wholesale, and that comes in a few different flavors. It comes in the growth of our branded packaged, wholesale business through third-party retailers.

It comes through long-term supply chain agreements like we have in Illinois with large partners that can offload a significant amount of that product at attractive prices. And then eventually, it can come in flavors like strategic co-packing agreements or brand licensing agreements, which we’re just starting to entertain those conversations. Each of the different flavors of wholesale growth come with a different trade-off in terms of their strategic value, their margin profile, our ability to grow our other wholesale footprint, our ability to represent more brands in the portfolio. So we’re just carefully weighing in those trade-offs as we grow.

Yewon Kang: Great. Thank you for the color. And if I could just ask one final question. Just on the SG&A line here. We saw about there was a sequential decline of about 11%. Is this kind of a good base going forward? And could you comment on any of the specific initiatives that have led to the sequential decline in the cost this quarter? Thank you.

Andrew Thut: Certainly. Michael, do you want to take that one?

Michael Kronberg: Absolutely. Yes. So as far as the decline in SG&A, one of the primary drivers of that is actually our Matteson facility coming on. So previously, those costs associated with the lease of our Matteson facility, we’re rolling into SG&A. So now with our Matteson facility ramping up and beginning its production activities, those costs have actually shifted over to our cost of goods. So that was the primary driver but there absolutely are a ton of great cost-saving initiatives as we look at our labor and our staff model, trying to ensure that we are effectively placing people where they need to be in order to keep our production as maxed out as possible. But that would be the large reason for — or the biggest driver of the decrease in SG&A.

Yewon Kang: Great. Thanks so much for the call. I’ll jump back into the queue.

Andrew Thut: Thank you, Yewon.

Operator: Thank you. Your next question comes from the line of Josh Sulker of [CV1 Capital] (ph). Please go ahead.

Unidentified Analyst: Hey everyone, congrats on the wholesale strength in the quarter. Thanks for the question. Congrats on the wholesale strength in the quarter. You’ve noted kind of your capacity in Illinois and what you expect to be selling there. Are you able to touch on what kind of pricing you’re seeing in the Illinois wholesale market on a pound basis?

Andrew Thut: Yes, sure. Ray, you want to take that one?

Ray Landgraf: Sure. Josh, so it ranges depending on the type of material, but on the higher end for the type of quality that we’re outputting, if we’re just talking about trimmed A-grade flower, we’re seeing $1,100 to $1,200 per pound and then it goes down a little bit all the way down to trim around $250 per pound. Right under full As, you can see whole flower around $700 to $800 depending on the quality and testing other characteristics like strain. Does that answer your question on the bulk side?

Unidentified Analyst: Super. Appreciate that.

Ray Landgraf: Is that if your question on the bulk side?

Unidentified Analyst: Absolutely.

Andrew Thut: That’s false though. Yes. And going forward, I think an increasing the amount of that will be going to branded flower.

Ray Landgraf: Yes, on the brand, it’s like $2,500 to $3,100 per pound.

Unidentified Analyst: Super. And then on the Washington strength during the quarter, anything you could specifically attribute that to, whether it was the SKU launches over the past year, competitors falling out of the market, increased wholesale promotional efforts. Any color there would be appreciated. Thank you.

Andrew Thut: I think that there are two things going on in Washington if you were to bucket it. I think that flower quality. Flower quality in this industry is just — it’s something that you need to work at every single day. And flower quality over the years going to ebb and flow, and we have — we’re finally at a point as a company where we feel like we have the proper controls in place and focus to keep flower quality sustainably high going into the future. So I think the first thing is that Washington had the flower quality has improved markedly, and we intend to keep it that way. And that’s been a huge tailwind. And I think the second thing, as you look at the business is, if you looked at last year, I don’t think that we were innovating as well as we could have been on vapes.

And there are a number of reasons for that. But it got a lot of management focus over the last year. And so we’ve gotten to a place where we’ve not only gotten back that market share, but we’re starting to elevate the market share in vapes. And I guess the third thing is product innovation. We talk about it on the calls, and I’m sure some of it flies over people’s heads, but we’ve spent a lot of time over the last 18 months at 4Front, making sure that our products are truly innovative, they were keeping things fresh, that we’re keeping our ear to the ground in terms of what the market wants. And we’re really starting to see that manifest itself in our wholesale numbers. And so the wholesale numbers we’re seeing in Washington have just been growing steadily.

We’ve been delighted to see it. We’re going to see some seasonal — we’re going to see some seasonal dip into January — December and January, likely. But we’re really looking forward to how ’25 is shaping up really across the company with the strength in Washington, the wholesale strength in Massachusetts and Matteson coming online full bore, I think we have a lot of reason for optimism as we flip the calendar.

Unidentified Analyst: Super. Appreciate the color.

Karl Chowscano: Andrew, if I could step in on that as well. This is Karl. I think with Matteson coming on board, the company as a whole and Matteson coming on board and the movement out of California, the company as a whole has had the opportunity over the last few quarters to really focus on this concept of being a top great wholesaler. And in addition to those changes or focuses that we gave to Washington, we really took another look at the way in which we sell product from a wholesale perspective. Not only the product we’re selling, how we sell it, and I’m excited with the changes that we made in Washington with respect to our sales team, our structure, our commission, leadership and we’re taking that and bringing that into Illinois and Matteson and as well into Massachusetts.

So in addition to focusing on having great product, and as Andrew puts that having great flower really is the lead, but we’re also taking those extra steps to make sure that when we have great product, we actually know how to sell it, we know how to compensate people appropriately for it. And I do believe that has helped considerably in terms of our significant turnaround in Washington over the last eight months.

Unidentified Analyst: Got it. Thank you.

Operator: Thank you. [Operator Instructions] There are no further questions at this time. I’d now like to turn the call back over to Andrew for final closing remarks. Please go ahead.

Andrew Thut: Well, thank you, everyone, for your time. We are, as we said, we are very excited about what we have going on in the 4Front right now across all three of our states, we see great momentum from a product side into wholesale — in the wholesale side. And as Matteson continues to mature, we expect as, as I said earlier, a great thing moved into 2025 in terms of continuing the progress and momentum that we’ve seen in October and throughout the year. So I appreciate your support and look forward to updating people in the new year. Thanks for listening.

Operator: Ladies and gentlemen, this concludes your conference call for today. Thank you for participating and ask that you please disconnect your lines.