Cannex Capital Holdings Inc (OTCMKTS: CNXXF) remains under pressure even on moving a step closer to completing a business combination with 4front Holdings LLC. The stock has shed a significant amount of market value, in recent weeks, after a stellar performance in Q1.
Cannex Capital Price Analysis
A 200% plus rally in the first quarter saw the stock skyrocket to record highs of $2 a share as investors continued to bet on the company’s long term prospects. Fast-forward the upside action appears to have lost momentum triggering the correction lower.
A breach of the $1.60 support level could as well signal that the short-term momentum is bearish ahead of the $1.30 support level. Above the $1.30 mark, Cannex Capital Holdings remains well supported for further upside action.
A breach of the $1.30 support level could result in the stock plunging back to where it started the year at, which is the $0.7 mark.
Conversely, price action bouncing off the $1.30 mark could result in the acceleration of the bullish trend with the stock likely to make a run for 52-week highs.
What Does Cannex Capital Holdings Do?
Cannex Capital Holdings casts itself as a next-generation cannabis company engaged in the business of leasing real estate property and selling of supplies to cannabis cultivator’s processors and dispensaries. The company also offers turnkey real estate and operational infrastructure as well as cannabis growing-related consulting services.
Cannex Capital Holdings has inched a step closer to completing a business merger with 4Front Holdings on security holders approving the deal. The Canadian Securities Exchange has also conditionally approved the proposed merger.
A merger of the two companies will result in a new standard of operational excellence as well as integrity in the cannabis industry. The combined company will encompass proven management and operational skills supported by large-scale indoor cultivation facilities ideal for manufacturing and branding of infused products as well as edibles.
Under the terms of the agreement, 4Front CEO and Co-founder Josh Rosen is to become the CEO of the combined company as Cannex CEI Anthony Dutton takes over senior capital markets and business development role.
“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. 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,” explained Mr. Rosen.
Massachusetts and Arizona Expansion
4front Holdings comes into the deal having strengthened its operating platform with strategic acquisitions in Massachusetts and Arizona. In Massachusetts, the company has acquired vertical license holder Healthy Pharms, which owns a production facility in Georgetown. In Arizona, the company has acquired Greens Goddess, which owns and operates a Phoenix dispensary.
The company remains well positioned to ramp up growth in Massachusetts’ recreational market. Healthy Pharms cultivation and processing facility is also located in a premium location ideal for ramping up sales.
“The Georgetown cultivation facility has the potential to match, or exceed, the capacity and yield of Cannex’s facility in Elma, Washington. I’m excited to optimize the Georgetown space and to capture a dominant market share in the Massachusetts adult-use flower and derivatives market,” said Leo Gontmakher, COO of Cannex.
California is another Cannabis market that a combined Cannex Capital and 4Front will be able to pursue growth opportunities following the acquisition of Pure Ratios. Founded in 2015, Pure Ratios should augment the combined company portfolio with strong positioning in the CBD and cannabis wellness category.
Pure Ratios also boasts of a robust portfolio of cannabis products distributed through a network of holistic and naturopathic medicine practitioners in over 300 health food stores.
While Cannex Capital has taken a significant hit in recent weeks, its long-term prospects are as solid as ever ahead of the much-awaited merger with 4Front. A merger of the two will result in a combined company capable of pushing for market share in some of the biggest and fastest growing cannabis markets.
The strategic investments made so far should continue to strengthen the combined company’s growth metrics, ideal for generating long-term value. That said the stock is likely to bounce back after the ongoing correction given the solid underlying fundamentals.
We will be updating our subscribers as soon as we know more. For the latest updates on CNXXF, sign up below!
Disclosure: We have no position in CNXXF and have not been compensated for this article.