To close out our series on the US cannabis market, we want to highlight the Illinois market after it legalized recreational cannabis. Demand for recreational cannabis in Illinois has exceeded our expectations and we are favorable on the early numbers that are coming out the market.
When compared to markets like California and Colorado, Illinois represent a much less saturated opportunity and we find this to be significant. So far this year, we have seen a substantial increase in the amount of activity and believe that the Illinois cannabis market is in the early innings of a major growth cycle.
Today, we want to highlight 3 companies that are focused on the Illinois cannabis market. Over the next year, we expect the Illinois market to report substantial growth and are favorable on the companies that are levered to it.
4Front Ventures: Executing on the Chicago Market
Earlier this year, 4Front Ventures Corp. (CSE: FFNT) (OTCQX: FFNTF) reported a major milestone after it had started to sell recreational cannabis at its Chicago dispensary. Demand for cannabis was strong over the first week and the company reported to have served over 2,300 customers and generated more than $266,000 of revenue during this time.
Over the next year, we expect 4Front to benefit from its leverage to the Chicago cannabis market and are favorable on the way the management team has been able to penetrate this market. Chicago represents an attractive opportunity and believe that the company is well positioned to capture market share and take advantage of its first mover advantage.
4Front has been highly focused on the US cannabis market and it has been especially active in limited license markets. We believe that the US cannabis company will reach an inflection point in the back half of 2020 and expect it to record impressive growth as it continues to execute on its expansion strategy.
Although 4Front has attractive leverage to burgeoning markets in the US, it is not the first cannabis retailer to come to mind. Going forward, the name of the game for 4front is execution and we are favorable on the direction that the management team is bringing the company. We are excited about 4Front and believe that it is an opportunity to be aware of.
MedMen: Sold its Illinois Asset too Early
MedMen Enterprises (MMEN.CN) (MMNNF) was once a high-flyer in the cannabis industry and was considered to be a leading play on the US cannabis market. A lot has changed over the last year and the company has been pulling out all the stop to raise capital and stay afloat.
In late 2019, the US cannabis retailer sold several state licenses in an effort to raise capital. MedMen divested licenses that were considered to be non-core assets and we believe that it missed out on some attractive opportunity by doing so. Included in the assets that were sold was licenses in Arizona (including three vertically integrated licenses) and a cultivation and manufacturing license in Illinois.
Going forward, MedMen plans to continue to explore the sale of other non-core assets and will focus on increasing market share in California, Nevada, Florida, Illinois, Massachusetts and New York. By selling the Illinois asset, the company missed out having leverage to a burgeoning recreational cannabis market.
Over the next year, we expect to see MedMen raise additional capital through the sale of assets and by raising debt capital that is dilutive to shareholders. We do not have a high conviction level when it comes the company’s ability to stay afloat and will monitor how the story evolves from here.
Green Thumb Industries: A Leading Player in Illinois
Earlier this year, Green Thumb Industries Inc. (CSE: GTII) (GTBIF) announced it would open its seventh cannabis dispensary in Illinois. The company was an early mover on the Illinois cannabis market, and we are favorable on the way it has opened new dispensaries and increased market share.
In the article that we published on the Nevada cannabis market, we also highlighted Green Thumb. During the last year, the company has announced several significant acquisitions that have quickly proved to be accretive. Going forward, we expect to see Green Thumb announce additional acquisitions and are favorable on this possibility.
Green Thumb is a leading player in the Illinois cannabis market and is an opportunity to be aware of. The company is led by a management team that has a proven track record of success and we are bullish on the direction that the business is heading. We believe that Green Thumb has substantial growth prospects and is an opportunity to be aware of.
Published at Fri, 24 Apr 2020 11:58:15 +0000