Boston’s 4Front Ventures Moves Closer to Merger with Cannex

On November 26, Boston-based 4Front Ventures announced its merger with Vancouver-based Cannnex Capital Holdings Inc., which operates under the name Northwest Cannabis Solutions, for $450 million in stock.

Update: On March 1, 4 Front and Cannex signed a «definitive agreement.»

Cannex (OTC: CNXXF) agreed to issue stock in a way that gives majority control of the combined company to 4Front, which will become a public company once the stock sells on the Canadian Stock Exchange (CSE). The transaction entails 4Front being granted shares of Cannex that will be issued next year at a rate of 1.75 of 4Front shares for every one share of Cannex. Based on the value of comparable stocks already traded on the CSE, the shares should sell as long as they’re offered at an attractive price.

Cannex shareholders are expected to vote by the end of February on the proposal to issue more stock, marking the close of the transaction.

“The synergies are perfect,” 4Front president and co-founder Kris Krane tells Freedom Leaf. “Cannex will take over cultivation and production—that’s their competency. That’s the hardest part. Our expertise is in retail sales and capital markets. The pieces fit perfectly.”

4Front co-founder and CEO Josh Rosen will be CEO of the combined company while Cannex CEO Anthony Dutton will focus on capital markets and business development.

«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,» Rosen stated March 1. «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.

Currently, 4Front’s Mission brand has dispensaries in Chicago, IL; Allentown, PA; Baltimore and Silver Spring/Glenmont, MD; and Cambridge, Georgetown and Worchester, MA.

Kris Krane’s Impressive Cannabis Resumé

For Krane, who will be president of the combined company, the merger marks the latest development in his career in cannabis. He was associate director of NORML from 2000-2005 and executive director of Students for a Sensible Drug Policy (SSDP) from 2006–2009.

“I’ve always seen my role in the industry as an extension of my advocacy work,” Krane notes, “not an alternative to it.”

When Krane left SSDP in 2009, he moved to Oakland and launched CannBe with Harborside Health Center’s Steve DeAngelo. For the next two years, CannBe replicated Harborside’s operating model with other dispensaries. Then, in 2011, John Sperling, founder of the University of Phoenix, backed the launch of 4Front Ventures as a new management consulting company with Krane and Rosen at the helm.

“I’ve always seen my role in the industry as an extension of my advocacy work, not an alternative to it.”

After building up the business by helping clients secure dispensary licenses in some of the country’s most competitive markets, 4Front shifted its focus into cultivation and retail stores in 2015.

Winning state, city and town approvals for dispensaries isn’t easy. But Krane believes support is building on the local level. “The opioid crisis has fueled interest, but there’s still a lot of misinformation about dispensaries,” he says. “Most of the concerns from towns center on security—that the dispensaries could be magnets for crime. We emphasize that the stores that use security partners are very professional. We show up not looking like pot dealers. Once we sit down and dispel the stereotypes, towns are more receptive.”

For Krane, 4Front reflects a lifetime of positive thinking about cannabis. “By demonstrating to the public that marijuana could be distributed in a way that’s professional and community focused,” he says, “it changes the public stereotypes of cannabis distribution from a street corner drug deal to a beautiful and well-run retail store.”

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