February 27, 2019
Healthy Pharms and Greens Goddess acquisitions increase 4Front’s national footprint
Vancouver, BC, February 27, 2019 – Cannex Capital Holdings Inc. (CSE: CNNX; OTCQX: CNXXF) (“Cannex” or the “Company”), is pleased to announce that 4Front Holdings, LLC (“4Front”) has recently closed two acquisitions that expand its national presence with new opportunities in Massachusetts and Arizona, two important regulated cannabis markets. As previously disclosed, Cannex and 4Front have signed a binding letter agreement (the “Interim Agreement”) pursuant to which 4Front has agreed to combine with Cannex in an all‐stock transaction (the “Transaction”).
Highlights
- 4Front acquired Massachusetts vertical license holder Healthy Pharms, owner of two dispensaries in Georgetown and Harvard Square. Plans to convert to adult use and re-launch under 4Front’s Mission retail brand;
- Healthy Pharms owns a production facility in Georgetown that will be 4Front’s primary Massachusetts cultivation and processing hub;
- In conjunction with the planned merger of 4Front and Cannex it is expected that Cannex brands will hit the Massachusetts market by mid-2019;
- Acquired the manager of Arizona vertical license holder Greens Goddess, which owns an operating Phoenix dispensary;
- Arizona license comes with approvals to operate a production facility which 4Front plans to build out with the anticipated closing of the Transaction with Cannex.
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“Our Massachusetts acquisition provides 4Front with an immediate platform to more aggressively ramp our growth in the Massachusetts recreational market by providing significantly greater production capacity,” said Josh Rosen, 4Front’s CEO. “This opportunity is made all the more exciting because of 4Front’s planned merger with Cannex, who have deep expertise in scaled cannabis production and distribution operating in the competitive Washington adult-use market.”
The 3,000 ft² Georgetown dispensary is currently medical with adult use anticipated for later this year. The Cambridge store is the sole dispensary in Harvard Square with a premium location currently serving the medical market but with the adult use licensing process underway. Healthy Pharms’ cultivation and processing facility is co-located with its Georgetown dispensary in a 65,000 ft² building with approximately 8,000 ft² of existing flowering canopy and room for significant expansion.
“The Georgetown cultivation facility has the potential to match, or exceed, the capacity and yield of Cannex’s facility in Elma, Washington,” said Leo Gontmakher, COO of Cannex. “I’m excited to optimize the Georgetown space and to capture a dominant market share in the Massachusetts adult-use flower and derivatives market. Expect to see some of Cannex’s most successful brands in the Massachusetts market by the second quarter of 2019.”
In Arizona, 4Front acquired PHX Interactive, LLC, which manages vertically integrated license holder Greens Goddess Products, Inc. (“Greens Goddess”) which currently owns the Herb’N dispensary in northern Phoenix. The license also allows for a cultivation and processing facility with that capacity expected to come online later this year.
“Given the expected near-term regulatory expansion we are excited to enter the Arizona market at an opportune time. In addition to 4Front’s retail leadership the Arizona market will also provide us with an excellent opportunity to leverage Cannex’s cultivation and processing expertise development in Washington State,” said Josh Rosen, 4Front’s CEO. “We expect this market will have ample supply to support a meaningful manufacturing and distribution business and we look forward to building a significant business in the Arizona market.”
As described in the Company’s November 26, 2018, news release, Cannex and 4Front have signed a binding letter agreement (the “Interim Agreement”) pursuant to which 4Front has agreed, subject to execution of a definitive business combination agreement, to combine with Cannex in an all‐stock transaction (the “Transaction”). Subject to the approval of the Canadian Securities Exchange (the “CSE”), the combined company will continue to trade on the CSE initially under Cannex’s existing name and the ticker symbol CNNX.
Closing will remain subject to Cannex shareholder approval, court approval(s), the CSE, as well as any other approvals for that are customary for a transaction of this nature. There can be no assurances that the Transaction will be completed as proposed or at all. Further information will also be available by way of an information circular to be prepared by Cannex and mailed to shareholders. All other relevant and publicly disclosable materials will be filed by Cannex on www.sedar.com.