Cannex Archives - Green Market Report

Debra BorchardtMarch 4, 2019
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Cannex Capital Holdings Inc. (CSE: CNNX)(OTCQX: CNXXF) moved beyond the interim agreement from November and as of March 1, 2019 officially agreed with 4Front Holdings, LLC to merge the two companies. The new company will initially trade under Cannex’s symbol “CNNX”, although the company said it expected to receive a new ticker in connection with the transaction.

The deal is subject to CSE approval, approval of the 4Front members and approval of at least 66 2/3% of the votes cast by Cannex shareholders at a special meeting expected to take place on April 18, 2019. The company said it has commitments from 68% to vote in favor.

The number of Cannex Consideration Shares was determined by way of a previously agreed ratio such that the shareholder ratio will proportionally equal 1:1.75 Cannex shareholders to 4Front shareholders on the closing of the Transaction. The Exchange Ratio was determined when the parties entered into the interim agreement (announced on November 26, 2018). The pre-agreed ratio provides for a pre-Transaction value to 4Front shareholders of approximately C$321.5 million calculated using a Cannex share price of C$1.125 per share.

“Since starting 4Front with Kris Krane in early 2011, we’ve focused on building a company the right way, navigating the evolving landscape and trying to work with people we respect and trust. We’ve known Leo since late 2016 and have great respect for what he and his team built in Washington,” said Josh Rosen, CEO of 4Front. “I believe Cannex is the perfect match for 4Front and that our merger is representative of our belief that the industry is evolving from a game of Monopoly, where it’s about the perceived value of assets, to the game of Risk, where it’s about the combination of assets, strategy, and execution. Cannex is all about execution and I’m already seeing the impact of the Cannex culture on our 4Front team and I look forward to closing this transaction and the full integration.”

The new company will feature Joshua Rosen as the CEO & Director, David Daily, Director, Eric Rey, Director, Leo Gontmakher, COO & Director and Anthony Dutton, Director. The board of directors of the new company will be comprised of five directors, with one executive director from each of Cannex and 4Front and three mutually agreed upon directors. Cannex and 4Front have agreed to a $10 million termination fee.

“Success in the cannabis market is directly related to a company’s ability to profitably scale operations, access and efficiently allocate growth capital all being driven by an experienced management team,” said Leo Gontmakher, COO of Cannex. “With 4Front, we have a partnership across all elements of the combined company with a shared management philosophy of driving best practices throughout all our operations. I am very excited,” continued Gontmakher, “to immediately take the operational leadership we have developed in Washington State to five new states.”

The merger will create a strong operator with expertise across the cannabis value chain, including cultivation, manufacturing, workflow, packaging, distribution, and retail at scale, led by a team with longstanding industry credibility and strategic M&A capabilities. The initial collaboration in Massachusetts and Illinois is already in motion, while collectively laying the groundwork in new states including Arizona, California, and Michigan.

“This is a transformational event for Cannex as we will immediately become operational in six US states with a platform that can be replicated and leveraged into additional jurisdictions,” said Anthony Dutton, CEO of Cannex. “Since our original formation, Cannex has been strategically focused on building vertically integrated operations in multiple states and, upon closing the business combination with 4Front, we expect to become one of the largest multi-state operators in North America with room for continued growth.”

 


Debra BorchardtJanuary 2, 2019
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It’s time for your daily hit for cannabis financial news for January 2, 2019

On The Site

Cannex Capital Holdings Inc. (CSE: CNNX) today announced its financial results for the second quarter of the 2019 fiscal year, which ended on October 31, 2018.

Revenue for the quarter rose to $3.05 million, up roughly 223% from $1.8 million during the same period in the previous year. The bulk of the revenue increase was attributed packaging sales and rental income.

Likewise, the company’s net income rose to $696,746; a significant increase when compared to the loss of $815,188 during the second fiscal quarter of 2018. Adjusted EBITDA decreased slightly, falling from $1.1 million to $1.03 million. At the end of the period, Cannex had approximately $10.04 million in cash and cash equivalents.

In Other News

Xanthic Biopharma, Inc. (CSE : GGB) (OTCQB : GGBXF) officially changed its corporate name to Green Growth Brands Inc. The company had been operating under the trade name “Green Growth Brands” since the November 9, 2018 closing of its reverse take-over of the existing Xanthic entity. The new name is effective immediately and will be implemented across the company. The common shares will continue to trade on the Canadian Securities Exchange under the stock symbol “GGB” and on the OTCQB under the stock symbol “GGBXF”. The new CUSIP number of the Company’s common shares will be 39305B105 and the new ISIN number will be CA39305B1058.

The Supreme Cannabis Company, Inc.  (TSXV: FIRE) (OTCQX: SPRWF) (FRA: 53S1), announced 7ACRES has 19 completed flowering rooms and is on track for all 25 flowering rooms to be completed in March 2019. Once completed, 7ACRES will have a greenhouse footprint of approximately 300,000 square feet, with the total facility reaching over 440,000 square feet.  Supreme Cannabis expects 7ACRES to reach its estimated annual output of 50,000 kg by the middle of calendar 2019.

Sunniva Inc. (CSE:SNN) (OTCQB:SNNVF), a North American provider of cannabis products and services, announced today the closing of the previously reported 100% acquisition of LTYR Logistics, LLC a California-based cannabis distribution company.

Honeydrop Beverages announced a new partnership with Boulder, Colorado-based Evo Hemp to launch a line of Honeydrop Cold-Pressed CBD Lemonades. Made with 20 mg of premium U.S grown CBD sourced by Evo Hemp and a teaspoon of raw U.S. honey, the new CBD lemonades contain only 4 g of sugar per bottle and will be offered in three flavors: REVIVE (Matcha), RELAX (Lemon) and REHAB (Turmeric). The new line was conceived and crafted by Honeydrop’s SVP Mareill Kiernan, who is also a certified holistic natural foods chef and health coach.The products will initially be available in Southern California and the New York Tristate area via distributors Los Angeles Distributing and Doras Natural at an MSRP of $5.99. Nationwide shipping will also be available.

 


Debra BorchardtNovember 26, 2018
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Cannex Capital Holdings Inc. (CSE: CNNX) (OTCQX: CNXXF) and 4Front Holdings signed a binding letter agreement to combine in an all-stock deal.  The combined company will continue to trade on the CSE under Cannex’s existing name and the ticker symbol CNNX. The stock fell over 10% on the news to lately trade at C$0.98.

According to the company statement, the new combined company will own, operate or manage six existing cultivation and production facilities in Washington, Illinois and Massachusetts and five retail operations in Illinois, Massachusetts, Maryland, and Pennsylvania. 4Front also has licenses or licensing agreements in place that will enable it to open and operate several more dispensaries in Massachusetts, Maryland, and Pennsylvania under the Mission brand, which should bring the total number of related operations to 20 by year-end 2019 within the combined company’s existing asset base.

4Front Co-founder and CEO Josh Rosen will become CEO of the combined company while Cannex’s CEO Anthony Dutton will take on the senior capital markets and business development role. Leo Gontmakher, COO of Cannex, is expected to assume the same role in the combined company.

This is an exciting and transformational step as 4Front and Cannex come together to realize our common objective of building a premier cannabis business focused on operational excellence and integrity across the value chain,” said Rosen. “The operations and leadership that Cannex has demonstrated in Washington, one of the most competitive cannabis markets in the world, are unlike anything I’ve seen in the industry. Leo and his team have developed an amazing set of skills and capabilities that we look forward to transferring to 4Front’s existing portfolio, as well as using to capitalize on new opportunities we develop together.”

Cannex

The merger agreement follows Cannex’s November 21, 2018 announcement that Gotham Green Partners’ (GGP) invested $32 million into Cannex. Jason Adler, Managing Member of GGP, noted, “We are excited by the proposed Cannex and 4Front business combination, which is expected to accelerate the deployment of Cannex’s operational capabilities across a broad suite of unique licensed assets. We expect cannabis investors to ascribe increasing value to operational productivity and efficiencies. We believe that 4Front and Cannex have very complementary assets and skill sets, and we look forward to working with them to accelerate their growth.”

Cannex owns two large-scale indoor cultivation facilities and a production and logistics facility in Washington State. Its strategic operating tenant, Northwest Cannabis Solutions, boasts strong cultivation yields and produces some of the top-selling flower and infused-product brands in Washington. It has managed to capture approximately 8% share of the wholesale market in one of the most competitive markets in the country. NWCS employs more than 190 people and currently has an annual revenue run rate of approximately US$40 million.

“Cannex has been evaluating the best platforms to extend our production capabilities into new markets and 4Front is a natural fit given their complementary capabilities, existing portfolio and pipeline, and strong culture,” said Gontmakher.

4Front

4Front operates most of its dispensaries under the Mission brand. It has developed a national platform that consists of a multi-state footprint and a far-reaching network of partnership relationships.

 

 


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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