Cannex Capital and 4Front are poised to combine into one business entity, transforming business operations and improving service to customers across the board. 4Front is based in the U.S. and Cannex is based in Canada, providing them with a prime opportunity to expand their reach and revenue capabilities across the US border.
The two companies will continue to trade on the Canadian Stock Exchange, using Cannex Capital since it is already established. Meanwhile, the cultivation and production facilities run by Cannex in the U.S. will work with dispensaries owned and operated by 4Front to optimize current revenue and work towards opening new facilities based on licenses issued to 4Front in several states.
Currently, Cannex Capital primarily operates in the state of Washington, with ownership of two indoor cultivation locales and one production and logistics location. Meanwhile, 4Front has five dispensaries located in four states, those being Massachusetts, Maryland, Illinois, and Pennsylvania. Plans are underway for five new facilities thanks to 4Front’s business acumen and licenses already issued to the business in Maryland, Pennsylvania, and Illinois.
A combined board of directors will manage the new entity, with one director from each previous company and three newly appointed and mutually approved directors making up the rest of the five-member group.
The combined entity has high aims for operational excellence and providing premier cannabis within the industry. Meanwhile, according to a press release, the combined company will focus on utilizing current abilities to expand on successes that have already been recorded.
Cannex officials say the move was primarily focused on scale, and the agreement with 4Front made the most logistical sense, both because of their current reach to four states and the future plans to open dispensaries and operate on a larger scale. The officials noted that while Canadian companies were judged on the funding they accumulated prior to country-wide legalization in late 2018, the measure of a U.S. company is their potential for reach across state lines.
The due diligence period for the agreement ends Dec. 7, 2018. The agreement stipulates a $1 million termination fee prior to that deadline, with a $10 million termination fee to apply at any other time should the agreement be terminated for any reason other than a breach of the exclusivity provisions set forth in the agreement documents.