You may not have noticed, but little-known cannabis play Cannex Capital Holdings Inc (OTCMKTS:CNXXF) has recently shot into orbit and may deserve some analytic attention in case this is just the start of a more dramatic launch. Defining the recent action, the company just announced that, further to its press release dated November 26, 2018, it has signed a definitive agreement dated March 1, 2019 with 4Front Holdings, LLC with respect to the business combination whereby the former securityholders of Cannex and 4Front will become securityholders in the combined company.
According to the release, “Cannex and 4Front are arm’s length parties. In connection with the Transaction, an application will be made to list the Resulting Issuer’s subordinate voting shares for trading on the Canadian Securities Exchange initially under Cannex’s symbol “CNNX”, and it is expected that a new ticker symbol will be obtained in connection with the Transaction. The Transaction 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.”
Cannex Capital Holdings Inc (OTCMKTS:CNXXF) bills itself as a company that, through its subsidiaries, leases real estate properties and sells supplies to cannabis cultivators, processors, and dispensaries in the United States and Canada.
It is involved in the provision of turn-key real estate with operational infrastructure; cannabis growing-related consulting services; purchasing agent services; and sale of packaging and other non-cannabis product inputs, such as soil, indoor lighting, and packaging. The company is headquartered in Vancouver, Canada.
According to company materials, “Cannex, through its wholly-owned subsidiaries, provides a wide range of services including real estate, management, financial, branding and IP to licensed cannabis business operators domestically and internationally. Cannex is focused on premium indoor cultivation, extraction, manufacturing and branding of edible and derivative products as well as retail operations. Cannex is undertaking expansion initiatives to support the acquisition and development of additional assets in legal medical and recreational cannabis markets. Based in Vancouver, BC, Cannex is managed by a team of experienced industry and capital markets experts who are committed to aggressive, cost-effective growth. Cannex currently owns BrightLeaf Development LLC which holds real estate assets, property leases, brands and intellectual property, and material supply agreements with Superior Gardens LLC (d/b/a Northwest Cannabis Solutions), Washington State’s and the Pacific Northwest’s largest full-line cannabis producer/processor, as well as 7Point Holdings LLC, another Washington State licensed cannabis producer/processor. Northwest Cannabis Solutions and 7Point Holdings are not Cannex subsidiaries, and Cannex does not hold any ownership position in either company.”
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As noted above, CNXXF just announced that, further to its press release dated November 26, 2018, it has signed a definitive agreement dated March 1, 2019 with 4Front Holdings, LLC with respect to the business combination whereby the former security holders of Cannex and 4Front will become security holders in the combined company.
The chart shows approaching 140% piled on for shareholders of the name during the trailing month. Moreover, the stock has registered increased average transaction volume recently, with the past month seeing topping 260% above its longer-run average levels.
“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.”
Earning a current market cap value of $243.3M, CNXXF has about $10.04M in cash on the books, which stands against about $3.2M in total current liabilities. The company has pulled in about $1.8M in trailing twelve-month revenues. We will update the story again as soon as further details emerge. Sign-up for continuing coverage on shares of $CNXXF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $CNXXF, either long or short, and we have not been compensated for this article.