Cannex Capital Holdings Provides Corporate Update

Vancouver, BC, January 9, 2019 – Cannex Capital Holdings Inc. (“Cannex” or the “Company”) (CSE: CNNX / OTCQX: CNXXF) reports that one of its tenants, Superior Gardens LLC (“Superior Gardens”) has been issued an administrative violation notice (the “Notice” or “AVN”) by the Washington State Liquor and Cannabis Board (“LCB”).  Superior Gardens will be able to continue operating without interruption while it investigates, contests, and/or appeals the Notice through the prescribed process. While there are no day-to-day changes in operations, Cannex, through its Washington State subsidiary, BrightLeaf Development LLC (“BLD”) is coordinating with Superior Gardens regarding the status of its response and possible appeal. 

“Superior Garden’s management has informed us that they believe the Notice is without merit and that Superior Gardens plans to make every effort to appeal the Notice and to work with the LCB to reach a successful resolution,” said Leo Gontmakher, COO of Cannex. “Most importantly,” continued Gontmakher, “Superior Gardens can continue to operate without interruption while due process runs its course. We will continue to focus on growth opportunities and to closing our previously announced business combination with 4Front Holdings.”

Cannex, through BLD, owns the real estate which Superior Gardens, a licensed cannabis grower and processor, leases and additionally, provides consulting services and sells non-cannabis materials such as packaging, lighting and other analogous materials. 

Per the LCB, the regulatory agency charged with oversight of the regulated cannabis marketplace in Washington, “All license holders have due process and if a business receives an Administrative Violation Notice or AVN there are several options for remedy including accept the recommended penalty, request a settlement conference or request an administrative hearing before an administrative law judge.”

In Washington’s nascent cannabis industry, AVNs are routinely issued as businesses and regulators alike work to establish the integrity of the regulated marketplace. Approximately 600 AVNs and written warnings are issued by the LCB each year with many of these AVNs covering the type of alleged violation issued to Superior Gardens. Many are settled or dismissed for lesser penalties even though, as in the case of Superior Gardens, a possible outcome could be a loss of license. 

After the initial administrative hearing process, there are additional procedural steps that include an opportunity for a negotiated settlement, appeals and also, if necessary, the right to appeal to state judicial courts as well.