Cannex Capital Holdings Inc.: Exhibit 99.105

EX-99.105 106 exhibit99-105.htm EXHIBIT 99.105 Cannex Capital Holdings Inc.: Exhibit 99.105 - Filed by newsfilecorp.com

NOTICE OF MEETING

AND

MANAGEMENT INFORMATION CIRCULAR

RELATING TO

THE SPECIAL MEETING OF SECURITYHOLDERS

TO BE HELD ON APRIL 18, 2019

THE BUSINESS COMBINATION AND THE RELATED SECURITIES DESCRIBED HEREIN HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY SECURITIES REGULATORY AUTHORITY, INCLUDING WITHOUT LIMITATION ANY SECURITIES REGULATORY AUTHORITY OF ANY CANADIAN PROVINCE OR TERRITORY, THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, OR THE SECURITIES REGULATORY AUTHORITY OF ANY STATE OF THE U.S., NOR HAS ANY OF THEM PASSED UPON THE ACCURACY OR ADEQUACY OF THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

March 19, 2019

March 19, 2019

Dear Securityholder:

You are invited to attend a special meeting (the "Meeting" or the "Cannex Meeting") for the holders of Class A convertible restricted voting shares ("Cannex Class A Shares") in the capital of Cannex Capital Holdings Inc. ("Cannex"), common shares ( "Cannex Common Shares" and together with the Cannex Class A Shares, the "Cannex Shares") in the capital of Cannex, and senior secured convertible notes ("Cannex Notes" and together with the Cannex Shares, the "Cannex Securities") of Cannex to be held at the offices of McMillan LLP, Royal Centre, 1055 West Georgia Street, Suite 1500, P.O. Box 11117, Vancouver, B.C., V6E 4N7, on April 18, 2019 commencing at 8:00am (Vancouver time), to consider and, if thought advisable, approve a series of transactions that will result in the exchange of Cannex Common Shares for subordinate voting shares in the capital of the Resulting Issuer ("Resulting Issuer Subordinate Voting Shares") and Cannex Class A Shares for class B proportionate voting shares in the capital of the Resulting Issuer ("Resulting Issuer Proportionate Voting Shares" and together with the Resulting Issuer Subordinate Voting Shares, the "Resulting Issuer Shares") in accordance with the Cannex Share Exchange Ratio, as applicable, of the Resulting Issuer (as defined below) and the exchange of Cannex Notes for senior secured convertible notes of the Resulting Issuer (the "Resulting Issuer Notes") in accordance with the Cannex Note Exchange (as defined below). These transactions, among others, are contemplated under the terms of a business combination agreement dated March 1, 2019 (the "Business Combination Agreement") entered into among Cannex, 4Front Holdings LLC ("4Front"), 1196260 B.C. Ltd. ("BC Newco"), and 4Front Corp. ("Nevada HoldCo"). References herein to the "Resulting Issuer" are to the successor corporation under the statutory Business Combination of Nevada Holdco and BC Newco pursuant to the provisions of the Business Corporations Act (British Columbia) (the "BCBCA") and the plan of arrangement set forth in Appendix C (the "Plan of Arrangement") with the Resulting Issuer as the successor corporation following the completion of the business combination (the "Business Combination") contemplated by the Business Combination Agreement and the Plan of Arrangement.

The Resulting Issuer will continue the businesses of Cannex and 4Front and intends to operate large-scale indoor cannabis cultivation facilities and to manufacture and brand infused products, edibles, and other derivative cannabis products in the United States. A more detailed description of the Resulting Issuer is set forth in Appendix F in the attached Management Information Circular.

On completion of the Business Combination contemplated by the Business Combination Agreement: (i) former holders of Cannex Common Shares are expected to hold approximately 78.4% of the outstanding Resulting Issuer Subordinate Voting Shares (on an undiluted basis); and (ii) former holders of Cannex Class A Shares are expected to hold approximately 24.3% of the outstanding Resulting Issuer Proportionate Voting Shares (on an undiluted basis). In aggregate, Cannex Shareholders are expected to hold approximately 36.6% of the outstanding Resulting Issuer Shares (on an as-converted, undiluted basis). The Resulting Issuer will also have a class of multiple voting shares ("Resulting Issuer Multiple Voting Shares") held by certain former equity holders of 4Front. The Resulting Issuer Multiple Voting Shares will provide such former holders with voting control of the Resulting Issuer, as such shares represent 62.4% of the aggregate votes represented by the Resulting Issuer Multiple Voting Shares and Resulting Issuer Shares together.

In connection with the Business Combination, the Cannex Shareholders will also be asked to consider and, if deemed advisable, to pass an ordinary resolution to approve the equity incentive plan of the Resulting Issuer for Resulting Issuer Subordinate Voting Shares and the the equity incentive plan of the Resulting Issuer for Resulting Issuer Proportionate Shares (collectively, the "Resulting Issuer Equity Incentive Plans").

Voting Requirements

In order to become effective, the Cannex Component of the Business Combination must be approved by a resolution passed by: (i) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Class A Shares present in person or by proxy at the Cannex Meeting voting as a class pursuant to section 289(1)(b) of the BCBCA; (ii) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Common Shares present in person or by proxy at the Cannex Meeting voting as a class pursuant to section 289(1)(b) of the BCBCA; (iii) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Class A Shares and Cannex Common Shares present in person or by proxy at the Cannex Meeting voting together pursuant to section 289(1)(a) of the BCBCA; (iv) the majority of votes cast by minority shareholders of Cannex, as defined and contemplated in OSC Rule 56-501 - Restricted Shares and NI 41-101 - General Prospectus Requirements; (v) a majority in number of the Cannex Noteholders who represent at least 3/4 in value of the Cannex Notes or class of noteholders pursuant to section 289(1)(d) of the BCBCA; (vi) a simple majority of the votes cast by holders of Cannex Common Shares excluding the votes of Cannex Common Shares held or controlled by "interested parties" as defined under MI 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"); and (vii) a simple majority of the votes cast by holders of Cannex Class A Shares excluding the votes of Cannex Class A Shares held or controlled by "interested parties" as defined under MI 61-101. See "The Business Combination -- Regulatory Law Matters and Securities Law Matters -- Canadian Securities Law Matters". In addition to that approval, completion of the Business Combination is subject to certain customary conditions, including the approval of the Supreme Court of British Columbia, which are described in the attached Management Information Circular.

The resolution to approve the Resulting Issuer Equity Incentive Plans must be approved by a majority of the votes cast in person or by proxy by the Cannex Shareholders at the Meeting.

Board Recommendation

The Board of Directors of Cannex (the "Cannex Board") unanimously recommends that the Cannex Securityholders vote FOR the Cannex Component of the Business Combination. After taking into consideration, among other things, the Cannex Fairness Opinion of Beacon Securities Limited ("Beacon"), the Cannex Board has unanimously determined that the Cannex Component of the Business Combination is in the best interests of Cannex and is fair to the Cannex Securityholders and Cannex Noteholders and the Cannex Board has approved the Cannex Component of the Business Combination and authorized its submission to the Cannex Securityholders and the Cannex Noteholders. The attached Management Information Circular contains a detailed description of the reasons for the determinations and recommendations of the Cannex Board.

The Cannex Board also unanimously recommends that the Cannex Shareholders vote FOR the approval of the Resulting Issuer Equity Incentive Plan. It is a condition precedent to the completion of the Business Combination that Cannex Shareholders approve the Resulting Issuer Equity Incentive Plans.

Voting

Your vote is important regardless of the number of Cannex Securities you own. If you are not registered as the holder of your Cannex Securities but hold your securities through a broker or other intermediary, you should follow the instructions provided by your broker or other intermediary to vote your Cannex Securities. See the section in the accompanying Management Information Circular entitled "General Proxy Information - Voting Options - Voting for Non-Registered Holders" for further information on how to vote your Cannex Securities.

If you are a registered holder of Cannex Securities, we encourage you to vote by completing the enclosed form of proxy. You should specify your choice by marking the box on the enclosed form of proxy and by dating, signing and returning your proxy to Alliance Trust Company by mail, or by hand delivery at 1010, 402 - 2^nd Street SW, Calgary, Alberta T2P 2Y3, or by fax at (403) 237-6111 or email at inquiries@alliancetrust.ca at least 48 hours (excluding Saturdays, Sundays and holidays) prior to the time of the Meeting or any adjournment or postponement thereof. Please do this as soon as possible. Voting by proxy will not prevent you from voting in person if you attend the Meeting and revoke your proxy, but will ensure that your vote will be counted if you are unable to attend.

Letters of Transmittal for Cannex Shares

If you hold your Cannex Shares through a broker or other person, please contact that broker or other person for instructions and assistance in receiving the Resulting Issuer Shares in respect of such Cannex Shares. If you are a registered Cannex Shareholder, we also encourage you to complete and return the enclosed Letter of Transmittal together with the certificate(s) or DRS Statement(s) representing your Cannex Shares and any other required documents and instruments, to the depositary, Alliance Trust Company, in the enclosed return envelope in accordance with the instructions set out in the Letter of Transmittal so that if the Cannex Component of the Business Combination is approved, the consideration for your Cannex Shares can be sent to you as soon as possible following the Business Combination becoming effective. The Letter of Transmittal contains other procedural information related to the Business Combination and should be reviewed carefully.

If you have any questions, please us by telephone at (604) 628-9338 or by e-mail at info@cannexcapital.com.

Sincerely,

(signed) Anthony Dutton

Anthony Dutton

Director, President and CEO

Cannex Capital Holdings Inc.

NOTICE OF MEETING

NOTICE IS HEREBY GIVEN that a special meeting (the "Meeting") of the holders (the "Cannex Shareholders") of common shares (the "Cannex Common Shares") in the capital of Cannex Capital Holdings Inc. ("Cannex"), Class A convertible restricted voting shares (the "Cannex Class A Shares" and together with the Cannex Common Shares, the "Cannex Shares") in the capital of Cannex, and the holders (the "Cannex Noteholders" and together with the Cannex Shareholders, the "Cannex Securityholders") of senior secured convertible notes (the "Cannex Notes" and together with the Cannex Shares, the "Cannex Securities") of Cannex will be held at the offices of McMillan LLP, Royal Centre, 1055 West Georgia Street, Suite 1500, P.O. Box 11117, Vancouver, B.C., V6E 4N7, on April 18, 2019 commencing at 8:00am (Vancouver time) for the following purposes:

1. to consider pursuant and, if thought advisable, to pass, with or without variation, a special resolution (the "Cannex Component of the Business Combination Resolution"), the full text of which is set forth in Appendix B to the accompanying Management Information Circular (the "Circular"), to approve the Cannex Component of the Business Combination (as defined herein) in accordance with the Interim Order made pursuant to Section 291 of the BCBCA that entails the approval of the Business Combination, the Plan of Arrangement, the Cannex Share Exchange, the Cannex Warrant Exchange, the Cannex Note Exchange, the Cannex Option Exchange, the Cannex Windup and the CCGI Windup;

2. to consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution, the full text of which is set forth in Appendix H to the Circular, to approve the equity incentive plans for the Resulting Issuer (the "Resulting Issuer Equity Incentive Plans"); and

3. to transact such further or other business as may properly come before the Meeting or any adjournments or postponements thereof.

The Circular provides additional information relating to the matters to be addressed at the Meeting, including the Business Combination Agreement and the Plan of Arrangement and is deemed to form part of this Notice of Meeting.

The record date for the determination of Cannex Securityholders entitled to receive notice of and to vote at the Meeting is March 19, 2019 (the "Record Date"). Only Cannex Securityholders whose names have been entered in the register of Cannex Securityholders as of the close of business on the Record Date will be entitled to receive notice of and to vote at the Meeting.

Cannex Securityholders are entitled to vote at the Meeting either in person or by proxy. Registered Cannex Securityholders who are unable to attend the Meeting in person are encouraged to read, complete, sign, date and return the enclosed form of proxy in accordance with the instructions set out in the proxy and in the Circular. In order to be valid for use at the Meeting, proxies must be received by April 16, 2019 at least 48 hours (excluding Saturdays, Sundays and holidays) prior to the time of the Meeting. The time limit for the deposit of proxies may be waived or extended by the chair of the Meeting at his or her discretion without notice.

If you are a non-registered Cannex Securityholder, please refer to the section in the Circular entitled "General Proxy Information - Voting Options - Voting for Non-Registered Holders" for information on how to vote your Cannex Securities. If you are a non-registered Cannex Securityholder and you do not complete and return the materials in accordance with such instructions, you may lose the right to vote at the Meeting.

Registered Cannex Shareholders have the right to dissent with respect to the Cannex Component of the Business Combination Resolution in accordance with Section 238 of the BCBCA, as modified by Article 4 of the Plan of Arrangement and the Interim Order. A Cannex Shareholder's right to dissent is more particularly described in the Circular and the text of Section 238 of the BCBCA is set forth in Appendix G. Please refer to the Circular under the heading "Dissent Rights of Cannex Shareholders" for a description of the rights to dissent in respect of the Business Combination.

Failure to strictly comply with the requirements set forth in Part 8 - Division 2 of the BCBCA, Article 4 of the Plan of Arrangement and the Interim Order with respect to the Business Combination, may result in the loss of any right to dissent. Persons who are beneficial owners of Cannex Shares registered in the name of a broker, custodian, nominee or other intermediary who wish to dissent should be aware that only the registered holders of Cannex Shares are entitled to dissent. Accordingly, a beneficial owner of Cannex Shares desiring to exercise the right to dissent must make arrangements for the Cannex Shares or beneficially owned by such holder to be registered in such holder's name prior to the time the written notice of dissent to the Cannex Component of the Business Combination Resolution is required to be received by Cannex or, alternatively, make arrangements for the registered holder of such Cannex Shares to dissent on behalf of the holder.

DATED at Vancouver, British Columbia this 19^th day of March, 2019.

BY ORDER OF THE BOARD OF DIRECTORS OF CANNEX CAPITAL HOLDINGS INC.

(signed) Anthony Dutton

Anthony Dutton

Director, President and CEO

TABLE OF CONTENTS

STATEMENT ON GLOSSARY OF TERMS	1
INFORMATION CONTAINED IN THIS CIRCULAR	1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	2
NOTE TO UNITED STATES SECURITYHOLDERS	6
SUMMARY	8
The Meeting	8
Record Date	8
Purpose of the Meeting	8
The Business Combination	8
Recommendation of the Cannex Board	14
Cannex Fairness Opinion	14
Cannex Shareholder Voting Agreements	14
Cannex, 4Front and the Resulting Issuer	14
Conditions to the Business Combination	15
Non-Solicitation and Right to Match	17
Termination of Business Combination Agreement	17
Procedure for Exchange of Cannex Securities	17
Dissent Rights	18
Income Tax Considerations	19
Court Approval	21
Regulatory Law Matters and Securities Law Matters	22
Selected Unaudited Pro Forma Consolidated Financial Information of the Resulting Issuer	24
Risk Factors	25
GENERAL PROXY INFORMATION	27
Solicitation of Proxies	27
Voting Options	27
How a Vote is Passed	28
Who can Vote?	29
Appointment of Proxies	29
What is a Proxy?	29
Appointing a Proxyholder	30
Instructing your Proxy and Exercise of Discretion by your Proxy	30
Changing your mind	30
Voting Securities and Principal Holders	30
THE BUSINESS COMBINATION	31
Principal Steps of the Business Combination	32
Background to the Business Combination	37
Recommendation of the Cannex Board	38
Reasons for the Business Combination	39
Cannex Fairness Opinion	40
Treatment of Cannex Options	42
Treatment of Cannex Warrants	42
Treatment of Cannex Notes	42
Approval of Cannex Component of the Business Combination Resolution	42
Cannex Shareholder Voting Agreements	43
Completion of the Business Combination	43
Procedure for Exchange of Cannex Securities	43
No Fractional Shares to be Issued	45
Treatment of Dividends	46
Cancellation of Rights after Six Years	46
Unclaimed or Abandoned Property Law	46
Court Approval of the Business Combination	46

Regulatory Approvals	47
Regulatory Law Matters and Securities Law Matters	48
Fees and Expenses	53
Interests of Certain Persons in the Business Combination	53
The Business Combination Agreement	56
DISSENT RIGHTS OF CANNEX SHAREHOLDERS	70
Dissenting to the Cannex Component of the Business Combination	70
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS	74
Shareholders Resident in Canada	75
Non-Residents of Canada	77
ELIGIBILITY FOR INVESTMENT	79
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS	79
Tax Classification of the Resulting Issuer as a U.S. Domestic Corporation	81
U.S. Federal Tax Consequences to U.S. Holders	82
Ownership and Disposition of Resulting Issuer Shares	86
Other Tax Matters	87
Tax Considerations for Non U.S. Holders Regarding Holding and Disposing of Resulting Issuer Shares	89
INFORMATION CONCERNING CANNEX	92
Trading Price and Volume Data	92
Prior Purchases and Sales	92
Dividend Policy	94
INFORMATION CONCERNING 4FRONT	95
4Front Overview	95
Overview of Advisors	96
Overview of Mission	98
Principal Products or Services of Advisors	100
Principal Products or Services of Mission	101
Production and Sales	102
Recent Developments	102
Prior Sales	102
INFORMATION CONCERNING THE RESULTING ISSUER FOLLOWING THE BUSINESS COMBINATION	104
General	104
Directors and Executive Officers of the Resulting Issuer	105
Description of Share Capital	105
Selected Unaudited Pro Forma Consolidated Financial Information of the Resulting Issuer	110
Description of Notes	111
Auditors, Transfer Agent and Registrar	112
OTHER MATTERS TO BE CONSIDERED AT THE MEETING	112
RISK FACTORS	113
Risk Factors Related to the Business Combination	114
OTHER INFORMATION	116
Indebtedness of Directors and Executive Officers	116
Other Matters	116
Additional Information	116
LEGAL MATTERS	117
APPROVAL OF DIRECTORS	118

ADDENDA

APPENDIX A	GLOSSARY OF TERMS
APPENDIX B	CANNEX COMPONENT OF THE BUSINESS COMBINATION RESOLUTION
APPENDIX C	PLAN OF ARRANGEMENT
APPENDIX D	CANNEX FAIRNESS OPINION
APPENDIX E	PETITION AND INTERIM ORDER
APPENDIX F	INFORMATION RELATING TO THE RESULTING ISSUER
APPENDIX G	DIVISION 2 OF PART 8 OF THE BCBCA
APPENDIX H	RESULTING ISSUER EQUITY INCENTIVE PLANS RESOLUTION
APPENDIX I	FINANCIAL STATEMENTS
APPENDIX J	RESULTING ISSUER EQUITY INCENTIVE PLANS

STATEMENT ON GLOSSARY OF TERMS

Unless the context otherwise requires, any capitalized terms used herein and not otherwise defined have the meanings given to them in the Glossary of Terms attached to this Circular attached to this Circular as Appendix A. Unless otherwise indicated, the defined terms in the Glossary of Terms are not used in the other appendices attached to this Circular.

INFORMATION CONTAINED IN THIS CIRCULAR

The information contained in this Circular, unless otherwise indicated, is given as of March 19, 2019.

No person has been authorized to give any information or to make any representation in connection with the matters being considered herein other than those contained in this Circular and, if given or made, such information or representation should be considered or relied upon as not having been authorized by Cannex or 4Front. This Circular does not constitute an offer to sell, or a solicitation of an offer to acquire, any securities, or the solicitation of a proxy, by any person in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such an offer of proxy solicitation. Neither the delivery of this Circular nor any distribution of securities referred to herein shall, under any circumstances, create any implication that there has been no change in the information set forth herein since the date of this Circular.

Information contained in this Circular should not be construed as legal, tax or financial advice and Cannex Securityholders are urged to consult their own professional advisors in connection with the matters considered in this Circular.

The Business Combination, the Plan of Arrangement and the related securities described herein have not been approved or disapproved by any securities regulatory authority (including, without limitation, any securities regulatory authority of any Canadian province or territory, the United States Securities and Exchange Commission, or any securities regulatory authority of any state of the U.S.), nor has any securities regulatory authority passed upon the fairness or merits of the Business Combination or upon the accuracy or adequacy of the information contained in this Circular and any representation to the contrary is unlawful.

Descriptions in this Circular of the terms of the Business Combination Agreement, the Plan of Arrangement and the Resulting Issuer Equity Incentive Plans are summaries of the terms of those documents and are qualified in their entirety by such terms. Cannex Securityholders should refer to the full text of the Business Combination Agreement, the Plan of Arrangement, and Resulting Issuer Equity Incentive Plans for complete details of those documents. The Business Combination Agreement and the Plan of Arrangement have been filed by Cannex under its profile on SEDAR and are available at www.sedar.com. In addition, the Plan of Arrangement is attached as Appendix C to this Circular and the Resulting Issuer Equity Incentive Plans are attached as Appendix J to this Circular.

Information Contained in this Circular regarding 4Front

The information concerning 4Front and its affiliates contained in this Circular has been provided by 4Front for inclusion in this Circular and should be read together with, and qualified by, the documents of 4Front incorporated by reference herein. Although Cannex has no knowledge that would indicate any statements contained herein relating to 4Front and its affiliates taken from or based upon such information provided by 4Front are untrue or incomplete, neither Cannex nor any of its officers or directors assumes any responsibility for the accuracy or completeness of the information relating to 4Front and its affiliates, or for any failure by 4Front to disclose facts or events that may have occurred or may affect the significance or accuracy of any such information but which are unknown to Cannex.

Currency and Exchange Rates

Unless otherwise indicated herein, references to "$", "US$" or "U.S. dollars" are to United States dollars, and references to "Cdn$", "C$" or "Canadian dollars" are to Canadian dollars.

The following table sets forth the high and low exchange rates for one U.S. dollar expressed in Canadian dollars for each period indicated, the average of the exchange rates for each period indicated and the exchange rate at the end of each such period, based upon the indicative rate or the noon buying rate provided by the Bank of Canada, as applicable:

	Years ended December 31
	2018 (Cdn$)	2017 (Cdn$)	2016 (Cdn$)
High	1.3642	1.3743	1.4589
Low	1.2288	1.2128	1.2544
Rate at end of period	1.3642	1.2545	1.3427
Average rate for period	1.2957	1.2986	1.3248

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Circular and the documents incorporated into this Circular by reference, contain "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of the applicable Canadian securities legislation (forward-looking information and forward-looking statements being collectively herein after referred to as "forward-looking statements") that are based on expectations, estimates and projections as at the date of this Circular or the dates of the documents incorporated herein by reference, as applicable. These forward-looking statements include but are not limited to statements and information concerning: the Business Combination; intentions, plans and future actions of Cannex, 4Front and the Resulting Issuer; the timing for the implementation of the Business Combination and the potential benefits of the Business Combination; the likelihood of the Business Combination being completed; principal steps of the Business Combination; statements made in, and based upon, the Cannex Fairness Opinion; statements relating to the business and future activities of and developments related to Cannex, 4Front and the Resulting Issuer after the date of this Circular and prior to the Effective Time and to and of 4Front and the Resulting Issuer after the Effective Time; approval of Cannex Securityholders and Court approval of the Business Combination; listing of the Resulting Issuer Subordinate Voting Shares on the CSE; market position, ability to compete and future financial or operating performance of the Resulting Issuer; liquidity of Resulting Issuer Shares following the Effective Time; anticipated developments in operations; and other events or conditions that may occur in the future.

Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "should", "would", "might", or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements and are intended to identify forward-looking statements.

To the extent any forward-looking information constitutes "future-oriented financial information" or "financial outlook", as those terms are defined under Canadian securities laws, such statements are being provided to describe the current anticipated effect of the Business Combination, and readers are cautioned that these statements may not be appropriate for any other purpose, including investment decisions. Future-oriented financial information and financial outlook, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to the risks set out in this cautionary statement. The Resulting Issuer's actual financial position and results of operations may differ materially from management's current expectations and, as a result, the Resulting Issuer's revenue, earnings and expenses may differ materially from the revenue, earnings and expenses profiles provided in this Circular. Such information is presented for illustrative purposes only. Forward-looking information that may constitute "future-oriented financial information" or "financial outlook" includes (in each case at Appendix F to this circular): statements about potential sale leaseback transactions of the Resulting Issuer; the forecasted budget of the Resulting Issuer; and expectations regarding generation of cash to fund operations of the Resulting Issuer.

These forward-looking statements are based on the beliefs of Cannex's and 4Front's management, as the case may be, as well as on assumptions, which such management believes to be reasonable based on information currently available at the time such statements were made. However, there can be no assurance that the forward-looking statements will prove to be accurate. Such assumptions and factors include, among other things, the satisfaction of the terms and conditions of the Business Combination Agreement, including the approval and its fairness by the Court.

Forward-looking statements may relate to future financial conditions, results of operations, plans, objectives, performance or business developments. These statements speak only as at the date they are made and are based on information currently available and on the then current expectations of the party making the statement and assumptions concerning future events, which are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from that which was expressed or implied by such forward-looking statements, including, but not limited to, risks and uncertainties related to:

Business Combination Risks:

the parties failure to satisfy the conditions to completion of the Business Combination Agreement;
the Business Combination Agreement may be terminated in certain circumstances;
the possibility that the Cannex Component of the Business Combination Resolution may not be approved at the Meeting;
retention of employees, suppliers and other personnel being adversely affected by uncertainty surrounding the Business Combination;
risks related to factors beyond the control of 4Front, Cannex or the eventual Resulting Issuer;
Cannex share price volatility due to events that may or may not be within such parties' control;
disruptions or changes in the credit or security markets;
the inability to renew existing licenses or permits or obtain required licenses and permits, or the inability to obtain regulatory approval in all states of operation for the commercial arrangements described herein
litigation risks;
risks related to directors and officers of Cannex possibly having interests in the Cannex Component of the Business Combination that are different from other Cannex Securityholders;
risks relating to the possibility that more than 5% of Cannex Shareholders may exercise their dissent rights with respect to the Cannex Component of the Business Combination;
risks that other conditions to the consummation of the Business Combination are not satisfied;
the dilution of Cannex Securityholders, Cannex Noteholders, or Cannex Warrantholders;
risks related to the possibility that 4Front and Cannex may not integrate successfully;
the timely receipt of all necessary consents and approvals (including, without limitation, CSE, regulatory and shareholder) for the Business Combination;

United States Regulatory System Risks:

the federal government has not legalized marijuana for medical or adult-use;
there is a substantial risk of regulatory or political change;
in addition to the Resulting Issuer's anticipated ownership and investment in the business being conducted by Advisors (as defined in Appendix F), the Resulting Issuer intends to invest in businesses with little or no operating history and that are engaged in activities considered illegal under U.S. federal law;
banks often refuse to provide banking services to businesses involved in the marijuana industry due to the present state of the laws and regulations governing financial institutions in the United States;
with the exception of the limited operating history of its subsidiaries, the Resulting Issuer will have a limited operating history;

lack of access to U.S. bankruptcy protections and other bankruptcy risks;
Resulting Issuer maybe subject to heightened scrutiny by Canadian authorities;
Foreign Private Issuer (as defined herein) status;
loss of Foreign Private Issuer status;
there may be unknown additional regulatory fees and taxes that may be assessed in the future;
the Resulting Issuer likely will not be able to secure its payment and other contractual rights with liens on the inventory or licenses of its clients and contracting parties;
delays in enactment of new state or federal regulations could restrict the ability of the Resulting Issuer to reach strategic growth targets and lower return on investor capital;
U.S. Food and Drug Administration regulation of cannabis and industrial hemp;
the Resulting Issuer will be subject to applicable anti-money laundering laws and regulations;
limited trademark protection;
there is a risk of high bonding and insurance costs;
the inability of the Resulting Issuer to respond to the changing regulatory landscape could harm its business;
reliable data on the medical and adult-use marijuana industry is not available;
there are general regulatory risks that may have a material effect on the Resulting Issuer and its subsidiaries; and
inconsistent public opinion and perception of the medical and adult-use use marijuana industry hinders market growth and state adoption.

Business and Operations Risks:

dependence on performance of subsidiaries;
projections;
the marijuana industry presents substantial risks and uncertainty;
4Front is currently involved in litigation, and there may be additional litigation that the Resulting Issuer will be involved in in the future;
future acquisitions or dispositions;
ability to manage future growth;
lending activities;
enforceability of contracts;
operation permits and authorizations;
the Resulting Issuer will rely to a great extent on the expertise of the anticipated Resulting Issuer Board and officers, and any departures may impair the Resulting Issuer's businesses and investments;
security risks;
synthetic products may compete with medical marijuana use and products;
there are risks associated with well-capitalized entrants developing large-scale operations;
4Front is fairly described as an early stage business enterprise;
talent pool;
risks inherent in an agricultural business;
the Resulting Issuer may be subject to significant competition;
internal controls;
potential disclosure of personal information to government or regulatory entities;
promoting and maintaining brands;
certain remedies and rights to indemnification may be limited;
proposed acquisitions;
the uncertain and fragmented nature of the medical and adult-use marijuana industry often results in an unconventional due diligence process and acquisition terms that could result in unknown and materially detrimental consequences to the Resulting Issuer;
disparate state-by-state regulatory landscapes and the constraints related to holding cannabis licenses in various states results in operational and legal structures for realizing the benefit from cannabis licenses that could result in materially detrimental consequences to the Resulting Issuer;

there may be material delays in identifying and acquiring assets;
currency fluctuations;
investments maybe pre-revenue;
enforceability of judgments against foreign subsidiaries;
results of future clinical research;
environmental risk and regulation;
product liability;
product recalls;
reliance on key inputs;
management of growth;
fraudulent or illegal activity by employees, contractors and consultants;
intellectual property;
operational risks;
lack of control over operations of investments;
the Resulting Issuer will not have a highly diversified portfolio of assets;
many of the Resulting Issuer's assets will be subject to a substantial risk of default, and payment of obligations owing to the Resulting Issuer will generally not be guaranteed by any other third party;
the Resulting Issuer's assets may be purchased with limited representations and warranties from the sellers of those assets;
information technology systems and cyber security risk; and
the Resulting Issuer may be subject to risks associated with financial leverage.

Market, Securities and Other Risks:

eventual holders of Resulting Issuer Multiple Voting Shares (as defined herein) will have voting control of the Resulting Issuer;
additional financing;
there will be conversion limitations on the Resulting Issuer Proportionate Voting Shares;
the Resulting Issuer will face potential conflicts of interest;
shareholders will not be represented by the Resulting Issuer's legal counsel;
price volatility of publicly traded securities;
shareholders will have little or no rights to participate in the Resulting Issuer's affairs;
dividends;
costs of maintaining a public listing; and
Canada-United States border risks.

Certain Tax Risks:

United States tax classification of the Resulting Issuer;
the application of Section 280E of the Code (as defined herein) substantially limits the Resulting Issuer's ability to deduct certain expenses;
changes in tax laws may affect the operations of the Resulting Issuer and the taxation of the interest to shareholders; and
investment in the Resulting Issuer is not intended to provide any material tax benefits to shareholders.

Cannabis Industry Risks:

the timing and completion of acquisitions and other transactions discussed in this Circular (including in Appendix F);
the timing and amount of capital expenditures;
future exchange rates;
the granting, renewal and/or timing of a state or local cannabis license;
the impact of increasing competition;
conditions in general economic and financial markets;

access to capital;
future operating costs;
government regulations, including future legislative and regulatory developments involving medical and recreational cannabis and the timing thereto;
the effects of regulation by governmental agencies;
the anticipated changes to laws regarding the recreational use of cannabis;
the demand for cannabis products and corresponding forecasted increase in revenues; and
the size of the medical cannabis market and the recreational cannabis market.

Although Cannex and 4Front believe that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the availability of sources of income to generate cash flow and revenue; the dependence on management and directors; risks relating to the receipt of the required licenses, risks relating to additional funding requirements; due diligence risks; exchange rate risks; potential transaction and legal risks; risks relating to laws and regulations applicable to the production and sale of marijuana; and other factors beyond Cannex, 4Front or the Resulting Issuer's control, as more particularly described under the heading "Risk Factors" in the information relating to the Resulting Issuer attached as Appendix F.

Consequently, all forward-looking statements made in this Circular and other documents regarding Cannex, 4Front or the Resulting Issuer, as applicable, are qualified by such cautionary statements and there can be no assurance that the anticipated results or developments will actually be realized or, even if realized, that they will have the expected consequences to or effects on Cannex, 4Front or the Resulting Issuer. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that Cannex, 4Front or the Resulting Issuer, and/or persons acting on their behalf may issue. None of Cannex, 4Front or the Resulting Issuer undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required under securities legislation.

This list is not exhaustive of the factors that may affect any forward-looking statements of Cannex, 4Front and the Resulting Issuer. Forward-looking statements are statements about the future and are inherently uncertain. Actual results could differ materially from those projected in the forward-looking statements as a result of the matters set out or incorporated by reference in this Circular generally and certain economic and business factors, some of which may be beyond the control of Cannex, 4Front and the Resulting Issuer. Some of the important risks and uncertainties that could affect forward-looking statements are described further in Appendix F to this Circular. Cannex, 4Front and the Resulting Issuer do not intend, and do not assume any obligation, to update any forward-looking statements, other than as required by applicable law. For all of these reasons, Cannex Securityholders should not place undue reliance on forward-looking statements.

NOTE TO UNITED STATES SECURITYHOLDERS

THE BUSINESS COMBINATION AND THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE BUSINESS COMBINATION HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR SECURITIES REGULATORY AUTHORITIES IN ANY U.S. STATE, NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORY AUTHORITIES OF ANY STATE PASSED UPON THE FAIRNESS OR MERITS OF THE BUSINESS COMBINATION OR UPON THE ADEQUACY OR ACCURACY OF THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Resulting Issuer Shares, Resulting Issuer Replacement Options, Resulting Issuer Warrants and Resulting Issuer Notes to be issued under the Business Combination have not been registered under the U.S. Securities Act or applicable state securities laws, in reliance on the exemption from the registration requirements of the U.S. Securities Act set forth in Section 3(a)(10) thereof on the basis of the approval of the Court, which will be informed of the intention to rely on the exemption provided by Section 3(a)(10) of the U.S. Securities Act and will consider, among other things, the substantive and procedural fairness of the Business Combination to Cannex Securityholders as further described in this Circular under the heading "The Business Combination - Regulatory Law Matters and Securities Law Matters".

The solicitation of proxies made pursuant to this Circular is not subject to the requirements of section 14(a) of the U.S. Exchange Act. Accordingly, this Circular has been prepared in accordance with disclosure requirements applicable in Canada, and the solicitations and transactions contemplated in this Circular are made in the United States for securities of a Canadian issuer in accordance with Canadian corporate and Securities Laws. Shareholders in the United States should be aware that such requirements are different from those of the United States applicable to registration statements under the U.S. Securities Act and to proxy statements under the U.S. Exchange Act.

The financial statements and information included or incorporated by reference in this Circular have been prepared in accordance with IFRS as issued by the International Accounting Standards Board and are subject to Canadian auditing and auditor independence standards and thus may not be comparable to financial statements prepared in accordance with United States standards.

Cannex Securityholders who are resident in, or citizens of, the United States, or are otherwise subject to United States federal income taxation, are advised to review the summary contained in this Circular under the heading "Certain United States Federal Income Tax Considerations" and to consult their own tax advisors to determine the particular United States tax consequences to them of the Business Combination in light of their particular situation, as well as any tax consequences that may arise under the laws of any other relevant non-U.S., state, local or other taxing jurisdiction.

The enforcement by investors of civil liabilities under United States federal or state securities laws may be affected adversely by the fact that each of Cannex and the Resulting Issuer is incorporated or organized outside the United States, that many of their respective officers and directors and the experts named herein are residents of a foreign country, and that some of the assets of Cannex, 4Front and/or the Resulting Issuer and said persons are located outside the United States. As a result, it may be difficult or impossible for U.S. Cannex Securityholders to effect service of process within the United States upon Cannex, 4Front and the Resulting Issuer, their respective officers or directors or the experts named herein, or to realize against them upon judgments of courts of the United States predicated upon civil liabilities under the federal securities laws of the United States or "blue sky" laws of any state within the United States. In addition, U.S. Cannex Securityholders should not assume that the courts of Canada: (a) would enforce judgments of United States courts obtained in actions against such persons predicated upon civil liabilities under the federal securities laws of the United States or "blue sky" laws of any state within the United States; or (b) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the federal securities laws of the United States or "blue sky" laws of any state within the United States.

SUMMARY

This summary is qualified in its entirety by the more detailed information appearing elsewhere in this Circular, including the Appendices which are incorporated into and form part of this Circular. Terms with initial capital letters in this summary are defined in the Glossary of Terms attached to this Circular as Appendix A.

The Meeting

The Meeting will be held at the offices of McMillan LLP, Royal Centre, 1055 West Georgia Street, Suite 1500, P.O. Box 11117, Vancouver, B.C., V6E 4N7 on April 18, 2019 commencing at 8:00am (Vancouver time).

Record Date

Only Cannex Securityholders of record at the close of business on March 19, 2019 will be entitled to receive notice of and vote at the Meeting, or any adjournment or postponement thereof.

Purpose of the Meeting

The Meeting is a special meeting of Cannex Securityholders. At the Meeting, Cannex Securityholders will be asked to consider and, if deemed advisable, to pass, the Cannex Component of the Business Combination Resolution approving the business combination involving 4Front, BC Newco, Cannex, and Nevada Holdco. The full text of the Cannex Component of the Business Combination Resolution is set out in Appendix B to this Circular. In order to implement the Cannex Component of the Business Combination, the Cannex Component of the Business Combination Resolution must be approved, with or without variation, by: (i) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Class A Shares present in person or by proxy at the Cannex Meeting voting as a class pursuant to section 289(1)(b) of the BCBCA; (ii) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Common Shares present in person or by proxy at the Cannex Meeting voting as a class pursuant to section 289(1)(b) of the BCBCA; (iii) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Class A Shares and Cannex Common Shares present in person or by proxy at the Cannex Meeting voting together pursuant to section 289(1)(a) of the BCBCA; (iv) the majority of votes cast by minority shareholders of Cannex, as defined and contemplated in OSC Rule 56-501 - Restricted Shares and NI 41-101 - General Prospectus Requirements; (v) a majority in number of the Cannex Noteholders who represent at least 3/4 in value of the Cannex Notes or class of noteholders pursuant to section 289(1)(d) of the BCBCA; (vi) a simple majority of the votes cast by holders of Cannex Common Shares excluding the votes of Cannex Common Shares held or controlled by "interested parties" as defined under MI 61-101; and (vii) a simple majority of the votes cast by holders of Cannex Class A Shares excluding the votes of Cannex Class A Shares held or controlled by "interested parties" as defined under MI 61-101. See "The Business Combination -- Regulatory Law Matters and Securities Law Matters -- Canadian Securities Law Matters".

In addition, the Cannex Shareholders will also be asked to consider and, if deemed advisable, to pass an ordinary resolution to approve the Resulting Issuer Equity Incentive Plans. The resolution to approve the Resulting Issuer Equity Incentive Plans must be approved by a majority of the votes cast in person or by proxy by the Cannex Shareholders at the Cannex Meeting. See "Other Matters to be Considered at the Meeting - Approval of the Resulting Issuer Equity Incentive Plans".

The Business Combination

Under the Business Combination, the following shall occur and shall be deemed to occur, except to the extent otherwise indicated, in the following order without any further act or formality:

1. each Nevada Holdco Dissenting Share held by a Nevada Holdco Dissenting Shareholder in respect of which a Nevada Holdco Shareholder has validly exercised his, her or its Nevada Holdco Dissent Right shall be deemed to be transferred by such Nevada Holdco Dissenting Shareholder to Nevada Holdco (free and clear of any Liens of any nature whatsoever) in accordance with and for the consideration as set forth in Article 4 of the Plan of Arrangement, and such Nevada Holdco Dissenting Shareholder shall cease to be a holder of such Nevada Holdco Share and his, her or its name shall be removed from the central securities register of Nevada Holdco as a holder of a Nevada Holdco Dissenting Share. Such Nevada Holdco Dissenting Shareholder shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to transfer such Nevada Holdco Dissenting Shares to Nevada Holdco in accordance with Article 4 of the Plan of Arrangement. Nevada Holdco shall be the holder of all of the Nevada Holdco Dissenting Shares transferred in accordance with Article 4 of the Plan of Arrangement and such Nevada Holdco Shares will be cancelled and the central securities register of Nevada Holdco shall be revised accordingly;

2. one minute after step one above, each Cannex Dissenting Share held by a Cannex Dissenting Shareholder in respect of which a Cannex Shareholder has validly exercised his, her or its Cannex Dissent Right shall be deemed to be transferred by such Cannex Dissenting Shareholder to Cannex (free and clear of any Liens of any nature whatsoever) in accordance with and for the consideration as set forth in Article 4 of the Plan of Arrangement, and such Cannex Dissenting Shareholder shall cease to be a holder of such Cannex Share and his, her or its name shall be removed from the central securities register of Cannex as a holder of a Cannex Dissenting Share. Such Cannex Dissenting Shareholder shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to transfer such Cannex Dissenting Shares to Cannex in accordance with Article 4 of the Plan of Arrangement. Cannex shall be the holder of all of the Cannex Dissenting Shares transferred in accordance with this Subsection and such Cannex Shares will be cancelled and the central securities register of Cannex shall be revised accordingly;

3. one minute after step two above, BC Newco and Nevada Holdco shall amalgamate to form the Resulting Issuer, with the same effect as if they had amalgamated under Section 269 of the BCBCA;

(i) without limiting the generality of step three above, BC Newco and Nevada Holdco shall amalgamate and continue as one company, the Resulting Issuer, under the terms and conditions prescribed in the Plan of Arrangement;

(ii) the property, rights and interests of each of BC Newco and Nevada Holdco shall continue to be the property, rights and interests of the Resulting Issuer;

(iii) the Resulting Issuer shall continue to be liable for the obligations of each of BC Newco and Nevada Holdco;

(iv) the Resulting Issuer shall be deemed to be the party plaintiff or the party defendant, as the case may be, in any civil action commenced by or against either BC Newco or Nevada Holdco before the BC Amalgamation has become effective;

(v) a conviction against, or a ruling, order or judgment in favour of or against, either BC Newco or Nevada Holdco may be enforced by or against the Resulting Issuer;

(vi) the board of directors of the Resulting Issuer shall be comprised of a minimum of three and a maximum of 10 directors and the initial five directors of the Resulting Issuer will be the Board Nominees;

(vii) the notice of articles and articles of the Resulting Issuer shall be substantially in the form of the notice of articles and articles of Nevada Holdco following the Continuance and the registered office of the Resulting Issuer shall be the registered office of Nevada Holdco following the Continuance;

(viii) each BC Newco Share held by a holder thereof will be cancelled and the holder's name shall be removed from the register of holders of such BC Newco Shares, and in consideration therefor, the holder thereof shall receive a fully paid and non-assessable Resulting Issuer Subordinate Voting Share on the basis of one Resulting Issuer Subordinate Voting Share for each BC Newco Share and the registered holder thereof shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to exchange such BC Newco Share in accordance with the Plan of Arrangement;

(ix) each Nevada Holdco Subordinate Voting Share, Nevada Holdco Proportionate Voting Share and Nevada Holdco Multiple Voting Share held by a Nevada Holdco Shareholder will be cancelled and the holder's name shall be removed from the register of holders of such Nevada Holdco Subordinate Voting Share, Nevada Holdco Proportionate Voting Share and Nevada Holdco Multiple Voting Share, respectively, and in consideration therefor, the holder thereof shall receive a Resulting Issuer Subordinate Voting Share, Resulting Issuer Proportionate Voting Share or Resulting Issuer Multiple Voting Share, as the case may be, upon the BC Amalgamation on the basis of one Resulting Issuer Subordinate Voting Share, Resulting Issuer Proportionate Voting Share and Resulting Issuer Multiple Voting Share for each Nevada Holdco Subordinate Voting Share, Nevada Holdco Proportionate Voting Share and Nevada Holdco Multiple Voting Share, respectively, and the registered holder of the Nevada Holdco Shares shall be deemed to have executed and delivered all consents, releases, assignments and waivers, statutory or otherwise, required to exchange such Nevada Holdco Shares in accordance with the Plan of Arrangement;

(x) the amounts added to the stated capital of the Resulting Issuer Subordinate Voting Shares, Resulting Issuer Proportionate Voting Shares and Resulting Issuer Multiple Voting Shares shall be amounts equal to the paid-up capital (as that term is used for purposes of the Tax Act) of the corresponding class of Nevada Holdco Shares (other than the Nevada Holdco Shares held by Nevada Holdco Dissenting Shareholders) immediately prior to the Effective Time, and an additional amount equal to the paid-up capital of the BC Newco Shares immediately prior to the Effective Time shall be added to the stated capital of the Resulting Issuer Subordinate Voting Shares;

(xi) each Nevada Holdco Warrant shall be and shall be deemed to be terminated and cancelled and each holder of Nevada Holdco Warrants shall be entitled to receive, from the Resulting Issuer, a Resulting Issuer NH Warrant in exchange for the termination of the rights and release of claims in respect of each Nevada Holdco Warrant terminated and cancelled. Each Resulting Issuer NH Warrant shall be exercisable into a Resulting Issuer Subordinate Voting Share and the exercise price per Resulting Issuer NH Warrant will be adjusted accordingly, and any document evidencing a Nevada Holdco Warrant will thereafter evidence and be deemed to evidence such Resulting Issuer NH Warrant. Except as explicitly provided in the Plan of Arrangement, all terms and conditions of a Resulting Issuer NH Warrant, including the term to expiry, conditions to and manner of exercising, will be the same as those of the corresponding Nevada Holdco NH Warrant for which it was exchanged, and will be governed by the terms of the Resulting Issuer NH Warrant and the former holder of such Nevada Holdco Warrants will cease to be the holder thereof or to have any rights as a holder of such Nevada Holdco Warrants; and

(xii) each Nevada Holdco Option shall be terminated and cancelled and each holder of Nevada Holdco Options shall be entitled to receive, from the Resulting Issuer, Resulting Issuer NH Replacement Options in exchange for the termination of the rights and release of claims in respect of each Nevada Holdco Option terminated and cancelled. Each Resulting Issuer NH Replacement Option shall be exercisable into a Resulting Issuer Proportionate Voting Share. Such Resulting Issuer NH Replacement Options shall provide for an exercise price per Resulting Issuer NH Replacement Option (rounded up to the nearest whole cent) equal to the exercise price per Nevada Holdco Option, and any document evidencing a Nevada Holdco Option shall thereafter evidence and be deemed to evidence such Resulting Issuer NH Replacement Option for Resulting Issuer Proportionate Voting Shares. Except as explicitly provided herein, all terms and conditions of a Resulting Issuer NH Replacement Option, including the term to expiry, conditions to and manner of exercising, will be the same as those of the corresponding Nevada Holdco Option for which it was exchanged, and shall be governed by the terms of the Resulting Issuer Equity Incentive Plans, the former holder of such Nevada Holdco Options will cease to be the holder thereof or to have any rights as a holder of such Nevada Holdco Options, and the exchange shall not provide any optionee with any additional benefits as compared to those under his or her original Nevada Holdco Option. It is intended that subsection 7(1.4) of Tax Act and U.S. Treas. Reg. Secs. 1.424-1(a)(5) and 1.409A-1(b)(5)(v)(D), as applicable, apply to such exchange of Nevada Holdco Options. Accordingly, and notwithstanding the foregoing, if required, the exercise price of a Resulting Issuer NH Replacement Option will be increased such that the In-The-Money Amount of the Resulting Issuer NH Replacement Option immediately after the exchange does not exceed the In-The-Money Amount of the Nevada Holdco Option (or a fraction thereof) exchanged for such Resulting Issuer NH Replacement Option immediately before the exchange;

4. one minute after step three above, each Resulting Issuer Share held by the Initial BC Newco Shareholder shall, without any further action by or on behalf of the Initial BC Newco Shareholder, be, and shall be deemed to be, canceled and the holder's name shall be removed from the register of holders of such Resulting Issuer Share, and in consideration therefor, the holder thereof shall receive a cash payment for such Resulting Issuer Share equal to $1.00;

5. one minute after step four above, the CCGI Windup shall be, and shall be deemed to be, effected;

6. one minute after step five above, each Cannex Common Share and Cannex Class A Share outstanding immediately prior to the Effective Time, will be and will be deemed to be transferred to the Resulting Issuer by the applicable Cannex Shareholder, and the holder's name will be removed from the register of holders of such Cannex Share, and in consideration therefor, the holder thereof will receive fully paid and non-assessable Resulting Issuer Subordinate Voting Shares and Resulting Issuer Proportionate Voting Shares, respectively, on the basis of the Cannex Share Exchange Ratio (rounded down to the nearest whole number); and

(i) each Cannex Shareholder shall cease to be the holder of such Cannex Shares and to have any rights as a holder of such Cannex Shares other than the right to the Resulting Issuer Shares pursuant to this step six;

(ii) the Resulting Issuer shall be, and shall be deemed to be, the transferee of such Cannex Shares; and

(iii) the Resulting Issuer and Cannex shall make the appropriate entries in their securities registers to reflect the matters referred to in this step six;

7. concurrently with step six above, each Cannex PP Warrant will be and will be deemed to be terminated and cancelled and each holder of Cannex PP Warrants will be entitled to receive, from the Resulting Issuer, a Resulting Issuer PP Warrant in exchange for the termination of the rights and release of claims in respect of each Cannex PP Warrant terminated and cancelled. Each Resulting Issuer PP Warrant will be exercisable for Resulting Issuer Subordinate Voting Shares based on the Cannex Share Exchange Ratio (such that, upon exercise, in lieu of each Cannex Share to which such holder was theretofore entitled upon such exercise and for the same aggregate consideration payable therefor, the holder will receive Resulting Issuer Subordinate Voting Shares based on the Cannex Share Exchange Ratio). The Resulting Issuer PP Warrants will provide for an exercise price per Resulting Issuer Warrant equal to the exercise price per Cannex PP Warrant, and any document evidencing a Cannex PP Warrant will thereafter evidence and be deemed to evidence such Resulting Issuer PP Warrant. Except as explicitly provided in the Plan of Arrangement, all terms and conditions of a Resulting Issuer PP Warrant to be issued in exchange for a Cannex PP Warrant, including the term to expiry, conditions to and manner of exercising, will be the same as those of the corresponding Cannex PP Warrant for which it was exchanged, and will be governed by the terms of the Resulting Issuer PP Warrant and the former holder of such Cannex PP Warrants will cease to be the holder thereof or to have any rights as a holder of such Cannex PP Warrants;

8. concurrently with step six above, the Cannex PP Warrants exchanged pursuant to step seven shall be cancelled without payment;

9. concurrently with step six above, each Cannex GG Warrant shall be and shall be deemed to be terminated and cancelled and each holder of Cannex GG Warrants shall be entitled to receive, from the Resulting Issuer, a Resulting Issuer GG Warrant in exchange for the termination of the rights and release of claims in respect of each Cannex GG Warrant terminated and cancelled. Each Resulting Issuer GG Warrant shall be exercisable for Resulting Issuer Proportionate Voting Shares based on the Cannex Share Exchange Ratio and the exercise price per Resulting Issuer GG Warrant shall be adjusted accordingly (such that, upon exercise, in lieu of each Cannex Share to which such holder was theretofore entitled upon such exercise and for the same aggregate consideration payable therefor, the holder shall receive Resulting Issuer Proportionate Voting Shares based on the Cannex Share Exchange Ratio). All terms and conditions of the Resulting Issuer GG Warrant to be issued in exchange for a Cannex GG Warrant shall be governed by the terms of the certificate evidencing the Resulting Issuer GG Warrant and, upon exchange, the former holder of such Cannex GG Warrants will cease to be the holder thereof or to have any rights as a holder of such Cannex GG Warrants;

10. concurrently with step six above, the Cannex GG Warrants exchanged pursuant to step nine above shall be cancelled without payment;

11. concurrently with step six above, each Cannex Note shall be and shall be deemed to be terminated and cancelled and each holder of Cannex Notes shall be entitled to receive, from the Resulting Issuer, a Resulting Issuer Note in exchange for the termination of the rights and release of claims in respect of each Cannex Note terminated and cancelled. Each Resulting Issuer Note shall be convertible into Resulting Issuer Proportionate Voting Shares in accordance with the Cannex Share Exchange Ratio (such that, upon conversion, in lieu of each Cannex Share to which such holder was theretofore entitled upon such conversion, the holder will receive Resulting Issuer Proportionate Voting Shares based on the Cannex Share Exchange Ratio) and any document evidencing a Cannex Note shall thereafter cease and terminate and will be replaced by a Resulting Issuer Note. All terms and conditions of a Resulting Issuer Note, shall be governed by the terms of the certificate evidencing the Resulting Issuer Note, and the former holder of such Cannex Note will cease to be the holder thereof or to have any rights as a holder of such Cannex Note;

12. concurrently with step six above, the Cannex Notes exchanged pursuant to Subsection step eleven shall be cancelled without payment;

13. concurrently with step six above, each Cannex Option shall be terminated and cancelled and each holder of Cannex Options shall be entitled to receive, from the Resulting Issuer, Resulting Issuer Replacement Options in exchange for the termination of the rights and release of claims in respect of each Cannex Option terminated and cancelled, on the basis of the Cannex Option Exchange Ratio (provided that if the foregoing would result in the issuance of a fraction of a Resulting Issuer Replacement Option, then the number of Resulting Issuer Replacement Options otherwise issued shall be rounded down to the nearest whole number). Such Resulting Issuer Replacement Options shall provide for an exercise price per Resulting Issuer Replacement Option (rounded up to the nearest whole cent) equal to the quotient obtained when: (i) the exercise price per Cannex Share that would otherwise be payable pursuant to the Cannex Option it replaces is divided by (ii) the Cannex Share Exchange Ratio, and any document evidencing a Cannex Option shall thereafter evidence and be deemed to evidence such Resulting Issuer Replacement Options. Except as explicitly provided herein, all terms and conditions of a Resulting Issuer Replacement Option, including the term to expiry, conditions to and manner of exercising, will be the same as those of the corresponding Cannex Option for which it was exchanged, and shall be governed by the terms of the applicable Resulting Issuer Equity Incentive Plan and the former holder of such Cannex Options will cease to be the holder thereof or to have any rights as a holder of such Cannex Options and the exchange shall not provide any optionee with any additional benefits as compared to those under his or her original Cannex Option. It is intended that subsection 7(1.4) of Tax Act and U.S. Treas. Reg. Secs. 1.424-1(a)(5) and 1.409A-1(b)(5)(v)(D), as applicable, apply to such exchange of Cannex Options. Accordingly, and notwithstanding the foregoing, if required, the exercise price of a Resulting Issuer Replacement Option will be increased such that the In-The-Money Amount of the Resulting Issuer Replacement Option immediately after the exchange does not exceed the In-The-Money Amount of the Cannex Option (or a fraction thereof) exchanged for such Resulting Issuer Replacement Option immediately before the exchange;

14. concurrently with step six above, the Cannex Options exchanged pursuant to step thirteen shall be cancelled without payment; and

15. one minute after step six above, the Cannex Windup shall be, and shall be deemed to be, effected;

provided that none of the foregoing events or transactions shall occur or be deemed to occur unless all of the foregoing occur or is deemed to occur.

As of the Effective Date, each Nevada Holdco Share (other than Nevada Holdco Shares held immediately prior to such time by Nevada Holdco Dissenting Shareholders), and any certificates deemed to represent such Nevada Holdco Shares, will only represent the right to receive in exchange therefor the corresponding Resulting Issuer Proportionate Voting Shares that the holder is entitled to receive in accordance with the Plan of Arrangement. Each Cannex Share (other than Cannex Shares held immediately prior to such time by Cannex Dissenting Shareholders) and any certificates deemed to represent such Cannex Shares will represent only the right to receive in exchange therefor the corresponding the Resulting Issuer Subordinate Voting Shares and/or the Resulting Issuer Proportionate Voting Shares that the holder is entitled to receive in accordance with the Plan of Arrangement.

Upon completion of the Business Combination, the directors of the Resulting Issuer are expected to be Josh Rosen, Leo Gontmakher, Anthony Dutton (or such other director as Cannex and 4Front may mutually agree upon), Eric Rey and David Daily.

Recommendation of the Cannex Board

The Cannex Board, having taken into account the Cannex Fairness Opinion and such other matters as it considered relevant, including the factors set out below under the heading "The Business Combination - Reasons for the Business Combination", and after consultation with its financial and legal advisors has unanimously determined that the Business Combination is in the best interests of Cannex and the Cannex Securityholders.

Accordingly, the Cannex Board unanimously recommends that Cannex Securityholders vote FOR the Cannex Component of the Business Combination Resolution.

The Cannex Board also unanimously recommends that Cannex Shareholders vote FOR the approval of the Resulting Issuer Equity Incentive Plans.

Cannex Fairness Opinion

On February 27, 2019, Beacon delivered to the Cannex Board its opinion, that, as of such date, and subject to the assumptions, limitations, qualifications and factors set out in the Cannex Fairness Opinion, the Consideration to be received by the Cannex Shareholders under the Business Combination is fair, from a financial point of view, to the Cannex Shareholders. The full text of the Cannex Fairness Opinion, which sets out, among other things, the assumptions made, information received and matters considered by Beacon in rendering the Cannex Fairness Opinion, as well as the limitations and qualifications the opinion is subject to, is attached as Appendix D to this Circular. Cannex Shareholders are urged to read the Cannex Fairness Opinion in its entirety. The summary of the Cannex Fairness Opinion described in this Circular is qualified in its entirety by reference to the full text of the Cannex Fairness Opinion.

Beacon has consented to the inclusion in this Circular of the Cannex Fairness Opinion in its entirety, together with the summary herein and other information relating to Beacon and the Cannex Fairness Opinion. The Cannex Fairness Opinion addresses only the fairness of the consideration to be received by the Cannex Shareholders under the Business Combination Agreement from a financial point of view and does not and should not be construed as a valuation of Cannex, 4Front or the Resulting Issuer or their respective assets or securities and does not constitute a recommendation to any Cannex Shareholder as to whether to vote in favour of the Cannex Component of the Business Combination Resolution. The Cannex Fairness Opinion may not be used by any other person or relied upon by any other person other than and the Cannex Board.

See "The Business Combination -- Cannex Fairness Opinion".

Cannex Shareholder Voting Agreements

See "The Business Combination - Cannex Shareholder Voting Agreements".

Cannex, 4Front and the Resulting Issuer

Cannex

Cannex, through its wholly owned subsidiaries, provides a range of comprehensive and flexible growth options for licenses cannabis cultivators processors and dispensaries in the United States, including: (1) turn-key real estate with operational infrastructure; (2) cannabis growing-related consulting services; (3) purchasing agent services; and (4) sales of packaging and other non-cannabis product inputs, such as soil, indoor lighting and packaging. Cannex has operations in Washington State and a corporate head office in Vancouver, British Columbia, Canada.

See "Information Concerning Cannex".

4Front

4Front is a U.S. cannabis based retailer and brand development company, as it operates dispensaries in Illinois, Maryland, Massachusetts, and Pennsylvania. 4Front provides consulting services in areas related to the cannabis sector, including cultivation, retail distribution, production, and technology.

See "Information Concerning 4Front".

The Resulting Issuer

The head office of the Resulting Issuer will be located at 5060 North 40^th Street, Suite 120, Phoenix, Arizona, 85018 and the registered office of the Resulting Issuer will be at 1241 Alberni Street, Vancouver, British Columbia V6E 4R4. Upon completion of the Business Combination, the Resulting Issuer expects that it will become a reporting issuer in British Columbia, Alberta and Ontario and will be approximately capitalized with US$35 million in working capital.

See "Information Concerning the Resulting Issuer".

Conditions to the Business Combination

In order for the Business Combination to become effective, certain conditions must have been satisfied or waived, at or before the Effective Time including but not limited to:

the Pre-Arrangement Transactions shall have been completed;
the Nevada Holdco Continuance Resolution shall have been approved and adopted by the Nevada Holdco Shareholders at the Nevada Holdco Meeting;
the Continuance shall be made effective;
the Nevada Holdco Business Combination Resolution shall have been approved and adopted by the Nevada Holdco Shareholders at the Nevada Holdco Meeting in accordance with the Interim Order and the Business Combination Agreement;
written consent to the Business Combination and other transactions contemplated in the Business Combination Agreement shall have been received from the Cannex Noteholders in form and substance satisfactory to the Parties, acting reasonably;
the Cannex Component of the Business Combination Resolution shall have been approved and adopted by the Cannex Securityholders at the Cannex Meeting in accordance with the Interim Order and the Business Combination Agreement;
the Resulting Issuer Equity Incentive Plans shall have been approved and adopted by (i) the Nevada Holdco Shareholders at the Nevada Holdco Meeting, and (ii) the Cannex Shareholders at the Cannex Meeting;
the Interim Order and the Final Order shall each have been obtained on terms consistent with the Business Combination Agreement, and shall not have been set aside or modified in a manner unacceptable to either of the Transacting Parties, each acting reasonably, on appeal or otherwise;
no Governmental Entity shall have enacted, issued, promulgated, enforced or entered any Law which is then in effect and has the effect of making the transactions contemplated herein, in the Contemporaneous Agreements, in the Pre-Arrangement Agreements or in connection with the Business Combination illegal or otherwise preventing or prohibiting consummation of any such transactions;
there shall not be pending or threatened in writing any Action by any Governmental Entity or any other Person that is reasonably likely to result in:

any prohibition or restriction on the consummation of the transactions contemplated herein, in the Contemporaneous Agreements, in the Pre-Arrangement Agreements or in connection with the Business Combination or a Person obtaining from any Party any damages that would result in a 4Front Material Adverse Effect, Cannex Material Adverse Effect, BC Newco Material Adverse Effect or Nevada Holdco Material Adverse Effect as applicable, directly or indirectly in connection with the Business Combination;
any prohibition or material limit on the ownership by the Resulting Issuer of any of the Parties or any material portion of their respective business;
the imposition of limitations on the ability of U.S. Co to acquire or hold, or exercise full rights of ownership of the membership interests of 4Front to be obtained as a result of consummation of the transactions contemplated in the Pre-Arrangement Agreements, including the right to vote such shares or membership interests; or
the unavailability of the Section 3(a)(10) Exemption or the Intended Tax Treatment contemplated by the Business Combination Agreement;

all Required Regulatory Approvals shall have been obtained on terms and conditions satisfactory to each of the Parties, acting reasonably;
holders of no more than 5% (or such lower percentage so as not to have a material adverse effect on the Intended Tax Treatment set forth in the Business Combination Agreement) of the Nevada Holdco Shares shall have exercised Nevada Holdco Dissent Rights;
holders of no more than 5% (or such lower percentage so as not to have a material adverse effect on the Intended Tax Treatment set forth in the Business Combination Agreement) of the Cannex Shares shall have exercised Cannex Dissent Rights;
the Cannex CSE Approval shall have been obtained;
the issuance of the Resulting Issuer Subordinate Voting Shares, the Resulting Issuer Proportionate Voting Shares, the Resulting Issuer Multiple Voting Shares, the Resulting Issuer Replacement Options, Resulting Issuer NH Replacement Options, the Resulting Issuer Notes, and the Resulting Issuer Warrants and the issuance of Resulting Issuer Subordinate Voting Shares upon conversion of the Resulting Issuer Proportionate Voting Shares or Resulting Issuer Multiple Voting Shares shall be exempt from the prospectus and registration requirements of applicable Canadian Securities Laws by virtue of applicable exemptions under Canadian Securities Laws and shall not be subject to resale restrictions under applicable Canadian Securities Laws (other than as applicable to control persons or as imposed by the CSE);
the Escrow Agreements, if required by the CSE or pursuant to Securities Law shall have been fully executed by the parties thereto;
the Board Nominees shall have been appointed to the Resulting Issuer Board;
the Key Employees shall have executed and delivered employment, non-solicitation, and non-competition agreements, relating to the Resulting Issuer;
any applications, notices, consents and documentation required under the HSR Act, prior to the consummation of the Business Combination shall have been given and/or obtained and all waiting periods thereunder shall have expired or been terminated;
there is no adoption, implementation, promulgation, repeal, modification, amendment or change in applicable Law (including with respect to U.S. Treasury Regulations under Section 7874 of the Code) after the date hereof, such that the Resulting Issuer should not be treated as a U.S. domestic corporation under Section 7874 of the Code, taking into account any action taken pursuant to the Business Combination Agreement); and
the Business Combination Agreement shall not have been terminated.

The Business Combination Agreement also provides that the respective obligations of Cannex, BC Newco, 4Front, and Nevada HoldCo to complete the Business Combination are subject to the satisfaction or waiver of certain additional conditions precedent, including, but not limited to, there having not occurred any Material Adverse Effect in respect of either 4Front or Cannex.

See "The Business Combination - The Business Combination - Conditions to the Business Combination Becoming Effective".

Non-Solicitation and Right to Match

Pursuant to the Business Combination Agreement, Cannex has agreed, among other things, it shall not directly or indirectly solicit, initiate, encourage or facilitate any inquiries, proposals, from any other Persons (including any of its shareholders, officers or employees) relating to any Cannex Acquisition Proposal, or engage in any discussions, negotiations, or provide any information to assist any other Persons to make or complete any Cannex Acquisition Proposal. However, the Cannex Board does have the right to consider and accept a Cannex Superior Proposal under certain conditions and 4Front has the right to make such adjustments to the terms and conditions of the Business Combination Agreement and the Business Combination as 4Front deems appropriate that would enable 4Front to improve the terms of the Business Combination. The Cannex Board, acting in good faith, shall reasonably determine whether the Cannex Superior Proposal is a Superior Proposal to 4Front's amended Business Combination Agreement. If Cannex terminates the Business Combination Agreement in order to accept the Cannex Superior Proposal, as well as in certain other circumstances described in further detail herein and in the Business Combination Agreement, Cannex must pay 4Front the Termination Fee. Cannex's right to consider Cannex Superior Proposal(s) continues only until Cannex Securityholder approval has been obtained.

See "The Business Combination - The Business Combination Agreement - Non-Solicitation Covenant", "- Right to Match" and "The Business Combination - The Business Combination Agreement - Termination - Termination Fee".

Termination of Business Combination Agreement

The Business Combination Agreement may be terminated prior to the Effective Date in certain circumstances. Many of such termination events lead to consequences such as payment by Cannex to 4Front of the Termination Fee.

See "The Business Combination - The Business Combination Agreement - Termination".

Procedure for Exchange of Cannex Securities

Cannex Shares

Alliance Trust Company is acting as the depositary (the "Depositary") for Cannex. The Depositary will receive deposits of certificates or DRS Statements representing Cannex Shares and an accompanying Letter of Transmittal, at the office specified in the Letter of Transmittal and will be responsible for issuing and registering the Consideration to which Cannex Shareholders are entitled to under the Business Combination.

At the time of sending this Circular to each Cannex Shareholder, Cannex is also sending to each Registered Cannex Shareholder the Letter of Transmittal. The Letter of Transmittal is for use by Registered Cannex Shareholders only and is not to be used by Non-Registered Holders. Non-Registered Holders should contact their broker or other intermediary for instructions and assistance in receiving the Consideration in respect of their Cannex Shares.

Cannex Notes

Cannex Noteholders are not required to take any action in order to receive the Resulting Issuer Notes following completion of the Business Combination. Upon completion of the Business Combination, the Resulting Issuer Notes to be issued to the Cannex Noteholders will automatically be issued and registered in accordance with registration information previously provided by the Cannex Noteholder.

Cannex Options

Cannex Optionholders are not required to take any action in order to receive the Resulting Issuer Replacement Options following completion of the Business Combination. Upon completion of the Business Combination, the Resulting Issuer Replacement Options to be issued to the Cannex Optionholders will automatically be issued and registered in accordance with registration information previously provided by the Cannex Optionholder.

Cannex Warrants

Cannex GG Warrantholders and Cannex PP Warrantholders are not required to take any action in order to receive the Resulting Issuer GG Warrants and Resulting Issuer PP Warrants respectively, following completion of the Business Combination. Upon completion of the Business Combination, the Resulting Issuer GG Warrants and Resulting Issuer PP Warrants to be issued to the Cannex GG Warrantholders and Cannex PP Warrantholders respectively will automatically be issued and registered in accordance with registration information previously provided by the Cannex GG Warrantholders and Cannex PP Warrantholders.

See "The Business Combination - Procedure for Exchange of Cannex Securities".

Dissent Rights

Registered Cannex Shareholders have dissent rights to the Cannex Component of the Business Combination Resolution.

Pursuant to the Interim Order, each Registered Cannex Shareholder may exercise Dissent Rights under Division 2 of Part 8 of the BCBCA as modified by the Plan of Arrangement, the Interim Order and the Final Order. Each Dissenting Cannex Shareholder is entitled to be paid by Cannex the fair value (determined as of the close of business on the last Business Day before the Cannex Component of the Business Combination Resolution was adopted at the Meeting) of all, but not less than all, of such holder's Cannex Shares, provided that the holder duly dissents to the Cannex Component of the Business Combination and the Business Combination becomes effective. A Non-Registered Holder who wishes to dissent with respect to its Cannex Shares should be aware that only Registered Cannex Shareholders are entitled to exercise Dissent Rights. A Registered Cannex Shareholder such as an intermediary who holds Cannex Shares as nominee for Non-Registered Holders, some of whom wish to dissent, shall exercise Cannex Business Combination Dissent Rights on behalf of such Non-Registered Holders with respect to the Cannex Shares held for such Non-Registered Holders. The Dissent Rights must be strictly complied with in order for a Registered Cannex Shareholder to receive cash representing the fair value of Cannex Shares held.

To exercise the Dissent Rights a written notice of objection to the Cannex Component of the Business Combination Resolution must be received by Cannex, Attn: James Munro, Royal Centre, Suite 1500 1055 West Georgia Street, PO Box 1117 Vancouver, British Columbia Canada V6E 4N7, by 5:00 p.m., April 16, 2019 or two business days prior to any adjournment of the Cannex Meeting.

See "Dissent Rights of Cannex Shareholders".

Income Tax Considerations

Summary of Certain Canadian Federal Income Tax Considerations

Resident Shareholders

A Resident Shareholder, other than a Dissenting Resident Shareholder, who receives Resulting Issuer Shares in exchange for Cannex Shares pursuant to the Cannex Component of the Business Combination will be deemed not to realize any capital gain (or capital loss) as a result of the exchange pursuant to section 85.1 of the Tax Act, unless such Resident Shareholder chooses to recognize a capital gain (or capital loss) as described in the immediately following paragraph. Such Resident Shareholder will be deemed to dispose of its Cannex Shares for proceeds of disposition equal to the adjusted cost base of such Cannex Shares immediately before the Cannex Component of the Business Combination and to have acquired the Resulting Issuer Shares at an aggregate cost equal to such proceeds of disposition.

A Resident Shareholder who exchanges Cannex Shares for Resulting Issuer Shares pursuant to the Cannex Component of the Business Combination and who chooses to recognize the full amount of the capital gain (or capital loss) in respect of the exchange may do so by including the amount of such capital gain (or capital loss) in computing its income for the taxation year in which the exchange takes place. In such circumstances, the Resident Shareholder will realize a capital gain (or a capital loss) equal to the amount, if any, by which the fair market value of the Resulting Issuer Shares received exceeds (or is less than) the aggregate of the adjusted cost base of the Cannex Shares to the Resident Shareholder, determined immediately before such exchange, and any reasonable costs of disposition. For a description of the tax treatment of capital gains and capital losses, see "Certain Canadian Federal Income Tax Considerations - Taxation of Capital Gains and Capital Losses" below. The cost of the Resulting Issuer Shares acquired on the exchange will be equal to the fair market value thereof in these circumstances.

For the purpose of determining at any time the adjusted cost base of Resulting Issuer Shares of a particular class acquired by a Resident Shareholder on the Cannex Component of the Business Combination, the cost of such shares must be averaged with the adjusted cost base to the Resident Shareholder of all other Resulting Issuer Shares of such class held by the Resident Shareholder as capital property at that time.

Non-Resident Shareholders

A Non-Resident Shareholder, other than a Non-Resident Shareholder who exercises its Dissent Rights, who receives Resulting Issuer Shares in exchange for Cannex Shares pursuant to the Cannex Component of the Business Combination will be deemed not to realize any capital gain (or capital loss) as a result of the exchange pursuant to section 85.1 of the Tax Act, unless such Cannex Shares are "taxable Canadian property" and such Non-Resident Shareholder chooses to recognize a capital gain (or capital loss) on its return of income for the year. Such Non-Resident Shareholder will be deemed to dispose of its Cannex Shares for proceeds of disposition equal to the adjusted cost base of such Cannex Shares immediately before the Cannex Component of the Business Combination and to have acquired the Resulting Issuer Shares at an aggregate cost equal to such proceeds of disposition.

For the purpose of determining at any time the adjusted cost base of Resulting Issuer Shares of a particular class acquired by a Non-Resident Shareholder pursuant to the Cannex Component of the Business Combination, the cost of such shares must be averaged with the adjusted cost base to the Non-Resident Shareholder of all other Resulting Issuer Shares of such class held by the Non-Resident Shareholder as capital property at that time.

A Non-Resident Shareholder will not be subject to tax under the Tax Act on any capital gain realized on an exchange or disposition of Cannex Shares unless the Cannex Shares constitute "taxable Canadian property" and the Non-Resident Shareholder is not entitled to relief under an applicable income tax treaty or convention. For a description of the definition of "taxable Canadian property", see "Certain Canadian Federal Income Tax Considerations - Disposition of Resulting Issuer Shares" below.

In the event the Cannex Shares are taxable Canadian property to a Non-Resident Shareholder and the Non-Resident Shareholder chooses to recognize a capital gain (or capital loss) as described in the preceding paragraphs and such Non-Resident Shareholder is not exempt from tax by a tax treaty, the tax consequences described under "Certain Canadian Federal Income Tax Considerations -- Residents of Canada -- Disposition Resulting Issuer Shares" will generally apply. Non-Resident Shareholders who dispose of Cannex Shares that are "taxable Canadian property" (as defined in the Tax Act) should consult their own tax advisors concerning the potential requirement to file a Canadian income tax return depending on their particular circumstances.

A summary of the principal Canadian federal income tax considerations in respect of the proposed Arrangement is included under "Certain Canadian Federal Income Tax Considerations" and the foregoing is qualified in full by the information in such section.

Summary of Certain U.S. Federal Income Tax Considerations

Receipt of Resulting Issuer Shares Pursuant to the Cannex Component of the Business Combination

The parties intend that the Business Combination Agreement be treated as a "plan of reorganization" under Section 368 of the Code, and that the various steps included in the Cannex Component of the Business Combination are treated as a series of interdependent steps integrated into a single transaction qualifying as a tax deferred transaction(s) under Section 368 of the Code. Specifically, Cannex and 4Front intend that the Cannex Component of the Business Combination qualify as a reorganization under Section 368(a)(1)(C) of the Code, and that the Resulting Issuer will be treated as a U.S. domestic corporation under Section 7874 of the Code. Neither Cannex nor 4Front has sought or obtained either a ruling from the IRS or an opinion of counsel regarding any of the tax consequences of the Cannex Component of the Business Combination. Accordingly, there can be no assurance that the IRS will not challenge the status of the Cannex Component of the Business Combination as a Reorganization or that the U.S. courts will uphold the status of the Cannex Component of the Business Combination as a Reorganization in the event of an IRS challenge. Subject to the discussion under "Certain United States Federal Income Tax Considerations - Effect of Code Section 367" and the discussion under "Certain United States Federal Income Tax Considerations - Tax Consequences of the Cannex Component of the Business Combination if Cannex is Classified as a PFIC", and assuming the Cannex Component of the Business Combination qualifies as a Reorganization, then in general:

a U.S. Holder will not recognize income, gain or loss upon the surrender of Cannex Shares and the receipt of Resulting Issuer Shares in the Cannex Component of the Business Combination;
the aggregate tax basis of Resulting Issuer Shares received by a U.S. Holder in the Cannex Component of the Business Combination will be the same as such U.S. Holder's aggregate tax basis in Cannex Shares surrendered in the Cannex Component of the Business Combination, increased by any amount included in the income of such U.S. Holder as a result of Section 367 of the Code, as discussed below; and
the holding period of Resulting Issuer Shares received by a U.S. Holder pursuant to the Cannex Component of the Business Combination will include the holding period of the Cannex Shares held by such U.S. Holder.

If the Cannex Component of the Business Combination fails to qualify as a Reorganization, a U.S. Holder of Cannex Shares generally would be treated as if it had sold such shares in a taxable transaction.

Ownership and Distribution of Resulting Issuer Shares

Distributions of cash or property on Resulting Issuer Shares will constitute dividends for U.S. federal income tax purposes to the extent paid from the Resulting Issuer's current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Upon the sale or other taxable disposition of Resulting Issuer Shares, a U.S. Holder will generally recognize capital gain or loss equal to the difference between (i) the amount realized by such U.S. Holder in connection with such sale or other taxable disposition, and (ii) such U.S. Holder's adjusted tax basis in such stock.

Tax Considerations for Non U.S. Holders Regarding Holding and Disposing of Resulting Issuer Shares

Distributions of cash or property on Resulting Issuer Shares will constitute dividends for U.S. federal income tax purposes to the extent paid from the Resulting Issuer's current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Subject to the discussions under "Certain United States Federal Income Tax Considerations - Information Reporting and Backup Withholding" and under "- FATCA", any gain realized on the sale or other disposition of Resulting Issuer Shares by a Non U.S. Holder generally will not be subject to U.S. federal income tax unless:

• the gain is effectively connected with the Non U.S. Holder's conduct of a trade or business in the U.S. (or, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment, or fixed base, of the Non U.S. Holder);

• the Non U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition, and certain other conditions are met; or

• the rules of the Foreign Investment in Real Property Tax Act of 1980 apply to treat the gain as effectively connected with a U.S. trade or business.

A summary of the principal United States federal income tax considerations in respect of the Cannex Component of the Business Combination is included under "Certain United States Federal Income Tax Considerations" and the foregoing is qualified in full by the information in such section. Investors are advised to consult their own tax advisors as to the U.S. federal income and other tax considerations relating to the Business Combination, the receipt, ownership and disposition of Resulting Issuer Shares in light of their particular circumstances, as well as the effect of any state, local or non-U.S. tax Laws.

Court Approval

The Business Combination requires Court approval under the BCBCA. Prior to the mailing of this Circular, Cannex obtained the Interim Order providing for the calling and holding of the Meeting, the Dissent Rights and certain other procedural matters. Subject to the terms of the Business Combination Agreement, and if the Cannex Component of the Business Combination Resolution is approved by Cannex Securityholders at the Meeting in the manner required by the Interim Order, Cannex intends to make an application to the Court for the Final Order.

Any Cannex Securityholder or any other interested party who wishes to appear or be represented and to present evidence or arguments at that hearing of the application for the Final Order must file and serve a notice of appearance no later than 5:00 p.m. (Vancouver time) two business days prior to the date of the application of the Final Order along with any other documents required, all as set out in the Petition and Interim Order, the text of which are set out in Appendix E to this Circular, and satisfy any other requirements of the Court. Such persons should consult with their legal advisors as to the necessary requirements.

Cannex has been advised by its counsel, McMillan LLP, that the Court has broad discretion under the BCBCA when making orders with respect to the Business Combination and that the Court will consider, among other things, the fairness and reasonableness of the Business Combination, both from a substantive and a procedural point of view. The Court may approve the Business Combination, either as proposed or as amended, on the terms presented or substantially on those terms.

The Court will be advised, at the hearing, that the Court's approval of the Business Combination and determination of the fairness of the exchange of securities contemplated thereby to the Cannex Securityholders will, pursuant to Section 3(a)(10) of the U.S. Securities Act, form the basis for the exemption from the registration requirements of the U.S. Securities Act with respect to the Cannex Share Exchange, the Cannex Warrant Exchange and the Cannex Note Exchange.

See "The Business Combination - Court Approval of the Business Combination".

Regulatory Law Matters and Securities Law Matters

Canadian Securities Law Matters

Cannex is a reporting issuer in British Columbia, Alberta and Ontario. The Cannex Common Shares currently trade on the CSE. Pursuant to the Business Combination, Cannex Shareholders will exchange their Cannex Common Shares and Cannex Class A Shares for Resulting Issuer Subordinate Voting Shares or Resulting Issuer Proportionate Voting Shares, holders of Cannex Warrants will exchange their Cannex Warrants for Resulting Issuer Warrants and holders of Cannex Notes will exchange their Cannex Notes for Resulting Issuer Notes, all in accordance with the Cannex Share Exchange Ratio. Following the Effective Date, the Cannex Common Shares will be delisted from the CSE (anticipated to be effective one to two Business Days following the Effective Date) and the Resulting Issuer expects to apply to the applicable Canadian securities regulators to have Cannex cease to be a reporting issuer.

Upon completion of the Business Combination, the Resulting Issuer expects that it will be a reporting issuer in British Columbia, Alberta and Ontario. It is intended that an application to list the Resulting Issuer Subordinate Voting Shares on the CSE will be made. There can be no assurance as to if, or when, the Resulting Issuer Subordinate Voting Shares will be listed or traded. It is a mutual condition of the Business Combination that the CSE shall have conditionally approved the listing of the Resulting Issuer Subordinate Voting Shares to be issued pursuant to the Business Combination (including any Resulting Issuer Subordinate Voting Shares issuable upon the exercise or conversion of Resulting Issuer Replacement Options, Resulting Issuer Warrants, Resulting Issuer Notes), subject in each case only to compliance with the usual requirements of the CSE, including customary post-closing deliveries. As the Resulting Issuer Subordinate Voting Shares are not currently listed on a stock exchange, unless and until such a listing is obtained, holders of Resulting Issuer Subordinate Voting Shares may not have a market for their shares.

The distribution of the Resulting Issuer Shares will constitute a distribution of securities which is exempt from the prospectus requirements of Canadian securities legislation and is exempt from or otherwise is not subject to the registration requirements under applicable securities legislation. The Resulting Issuer Shares received pursuant to the Business Combination will not be legended and may be resold through registered dealers in each of the provinces of Canada provided that (i) the trade is not a "control distribution" as defined in National Instrument 45-102 - Resale of Securities, (ii) no unusual effort is made to prepare the market or to create a demand for the Resulting Issuer Shares, (iii) no extraordinary commission or consideration is paid to a person in respect of such sale, and (iv) if the selling security holder is an insider or officer of the Resulting Issuer, the selling security holder has no reasonable grounds to believe that the Resulting Issuer is in default of applicable Securities Laws.

Each Cannex Shareholder is urged to consult such Cannex Shareholder's professional advisors to determine the Canadian conditions and restrictions applicable to trades in the Resulting Issuer Shares.

The Restricted Share Rules regulate the creation and distribution of "restricted shares" (as defined in OSC Rule 56-501) and "restricted securities" (as defined in NI 41-101) by reporting issuers in Canada. The definitions of "restricted shares" and "restricted securities" include equity shares which have voting rights exercisable in all circumstances, irrespective of the number or percentage of shares owned, that are less, on a per share basis, than the voting rights attaching to any other shares of an outstanding class of shares of the issuer.

OSC Rule 56-501 provides, among other things, that prospectus exemptions under Ontario securities law are not available in respect of a "stock distribution" (as defined in OSC Rule 56-501), unless either (i) the "stock distribution", or (ii) the "reorganization" (as defined in OSC Rule 56-501) that resulted in the creation of the "restricted shares", received "minority approval" in addition to any other required security holder approval. NI 41-101 prohibits, among other things, the filing of a prospectus under which restricted securities, subject securities (as defined in NI 41-101) or securities that are, directly or indirectly, convertible into, or exercisable or exchangeable for, restricted securities or subject securities, are distributed unless the issuer receives minority approval of its securityholders.

"Minority approval" means, for the purposes of the Restricted Share Rules, approval by a majority of the votes cast by holders of voting shares, and if required by applicable corporate law, by a majority of the votes cast by holders of a class of shares voting separately as a class, other than, in both cases, (A) "affiliates" of the issuer, or (B) "control persons" of the issuer, as those terms are defined in the Restricted Share Rules.

The Resulting Issuer Subordinate Voting Shares and the Resulting Issuer Proportionate Voting Shares will be "restricted shares" (as defined under in OSC Rule 56-501) and "restricted securities" (as defined under NI 41-101). Therefore, so that the Resulting Issuer can utilize the prospectus exemptions under Ontario securities laws and file a prospectus in connection with the distribution of Resulting Issuer Subordinate Voting Shares or Resulting Issuer Proportionate Voting Shares, in connection with (i) completing the Cannex Share Exchange and (ii) future offerings of Resulting Issuer Subordinate Voting Shares or Resulting Issuer Proportionate Voting Shares without having to obtain the approval of Resulting Issuer Shareholders (in accordance with the Restricted Share Rules) for each distribution of Resulting Issuer Subordinate Voting Shares or Resulting Issuer Proportionate Voting Shares, the Cannex Component of the Business Combination must be approved by a majority of the votes cast by Cannex Shareholders other than the votes attaching at the time to Cannex Shares held directly or indirectly by "affiliates" or "control persons" of Cannex.

To the best of the knowledge of management and the Cannex Board, there are no affiliates of Cannex that beneficially own any securities of Cannex, there is no "control person" of Cannex (within the meaning of such term in the Restricted Share Rules (as defined herein)) and, accordingly there are no Cannex Securities which may not be counter for the purpose of approval of the Cannex Component of the Business Combination Resolution for purposes of the Restricted Share Rules.

See "The Business Combination - Regulatory Law Matters and Securities Law Matters".

Regulatory Approvals

Completion of the Business Combination is subject to the condition precedent contained in the Business Combination relating to Required Regulatory Approvals having been fulfilled.

The Parties have identified HSR Clearance as a required Regulatory Approval. Under the HSR Act, certain transactions exceeding prescribed thresholds may not be completed until each party has filed a Notification and Report Form with the DOJ and with the FTC and applicable waiting period requirements have been satisfied. The Business Combination exceeds the prescribed thresholds and therefore is subject to the applicable waiting period requirements of the HSR Act. The Parties filed their respective Notification and Report Forms under the HSR Act on March 19, 2019.

The waiting period under the HSR Act will expire 30 days after the Parties each filed their Notification and Report Form, unless earlier terminated by the FTC or the DOJ or unless the FTC or the DOJ issues a Second Request prior to that time. If within the 30-day waiting period, the FTC or the DOJ were to issue a Second Request, the waiting period with respect to the Business Combination would be extended until 30 days following substantial compliance with the Second Request unless the FTC or the DOJ terminates the waiting period prior to its expiration. The Parties are entitled to complete the Business Combination at the end of the waiting period, provided that the FTC or the DOJ has not taken action that results in a court order stopping the Business Combination. The expiration or termination of the waiting period does not bar the FTC or the DOJ from subsequently challenging the Business Combination. It is a condition to closing of the Business Combination that HSR Clearance be obtained (as it is a Regulatory Approval).

United States Securities Law Matters

The Resulting Issuer Shares, Resulting Issuer Replacement Options, Resulting Issuer Warrants and Resulting Issuer Notes to be issued pursuant to the Business Combination will not be registered under the provisions of the U.S. Securities Act or any applicable U.S. federal or state securities laws in reliance upon the exemption from the registration requirements of the U.S. Securities Act provided by Section 3(a)(10) thereof. However, Section 3(a)(10) of the U.S. Securities Act does not exempt securities issued in connection with the exercise of convertible or derivative securities that were originally exempt from the registration requirements the U.S. Securities Act pursuant to Section 3(a)(10) of the U.S. Securities Act or under applicable securities laws of any state of the United States. Accordingly, Section 3(a)(10) of the U.S. Securities Act does not exempt Resulting Issuer Shares that may be issued upon the exercise of the Resulting Issuer Options and Resulting Issuer Warrants to be issued pursuant to the Business Combination.

The Resulting Issuer Shares to be held by Cannex Shareholders following completion of the Business Combination, and full satisfaction of the conditions set forth by the U.S. Securities and Exchange Commission with respect to an exemption under Section 3(a)(10), will be freely tradable in the U.S. under U.S. federal securities laws, except by persons who are deemed "affiliates" of the Resulting Issuer at the time of their proposed transfer or within 90 days prior to their proposed transfer or who have been "affiliates" of the Resulting Issuer, Nevada Holdco, 4Front or Cannex within 90 days of the Effective Date. Persons who may be deemed to be "affiliates" of an issuer include individuals or entities that control, are controlled by, or are under common control with, the issuer, and generally as well as executive officers, directors, and principal shareholders of the issuer. Any resale of such Resulting Issuer Shares, as applicable, by such an affiliate may be subject to the registration requirements of the U.S. Securities Act and any applicable U.S. federal or state securities laws, absent an exemption therefrom (including the exemption provided by Rule 144). It is not intended for the Resulting Issuer Subordinate Voting Shares to be listed on any United States stock exchange or quoted on an over-the-counter market in the U.S.

Exercise of the Resulting Issuer Replacement Options and the Resulting Issuer Warrants

The Resulting Issuer Replacement Options and the Resulting Issuer Warrants may not be exercised in the United States or by or on behalf of a "U.S. person" (as defined in Rule 902(k) of Regulation S under the U.S. Securities Act), except by a person that qualifies as an "accredited investor" (as defined in Rule 501 under the U.S. Securities Act) or unless the securities are exercised pursuant to another available exemption from registration under the U.S. Securities Act. Prior to the issuance of any shares pursuant to any such exercise, the Resulting Issuer may require the delivery of an opinion of counsel or other evidence or certifications reasonably satisfactory to the Resulting Issuer to the effect that the issuance of such shares does not require registration under the U.S. Securities Act and is in compliance with U.S. federal and/or state securities law. Any such exercise must also comply with applicable state securities laws.

The foregoing discussion is only a general overview of certain requirements of United States Securities Laws applicable to the securities received upon completion of the Business Combination. All holders of such securities are urged to consult with counsel to ensure that the resale of their securities complies with applicable United States Securities Laws.

THE RESULTING ISSUER SHARES AND ANY OTHER SECURITIES, IF ANY, TO WHICH CANNEX SHAREHOLDERS WILL BE ENTITLED PURSUANT TO THE BUSINESS COMBINATION HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR SECURITIES REGULATORY AUTHORITIES IN ANY U.S. STATE, NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORY AUTHORITIES OF ANY STATE PASSED UPON THE FAIRNESS OR MERITS OF THE BUSINESS COMBINATION OR UPON THE ADEQUACY OR ACCURACY OF THIS CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

See "The Business Combination - Regulatory Law Matters and Securities Law Matters".

Selected Unaudited Pro Forma Consolidated Financial Information of the Resulting Issuer

The selected pro forma financial information of the Resulting Issuer set forth below should be read in conjunction with the pro forma financial statements of the Resulting Issuer and the accompanying notes thereto attached as Appendix I to the Circular. The unaudited pro forma consolidated statements of financial position and the unaudited pro forma consolidated statement of operations are comprised of information derived from the financial statements for each of 4Front, Healthy Pharms Inc. and Cannex for the most recently completed interim and annual financial periods.

The unaudited pro forma consolidated statements of financial position gives effect to the Business Combination as if the Business Combination had occurred on September 30, 2018. The unaudited pro forma consolidated statement of operations gives effect to the Business Combination as if the Business Combination had occurred at the beginning of the financial period covered by such statements.

The summary unaudited pro forma consolidated financial information is not intended to be indicative of the results that would actually have occurred, or the results expected in future periods, had the events reflected in the applicable financial statements occurred on the dates indicated. Actual amounts recorded upon consummation of the Business Combination will differ from the pro forma information presented herein. No attempt has been made to calculate or estimate potential synergies between 4Front and Cannex. The unaudited pro forma consolidated financial statement information set forth herein is extracted from and should be read in conjunction with the unaudited pro forma consolidated financial statements and the accompanying notes included in Appendix I to the Circular.

Unaudited Pro forma Consolidated Statements of Financial Position as at September 30, 2018

All figures presented are in $US	4Front Sep 30, 2018	Healthy Pharms Inc. Sep 30, 2018	Cannex Oct 31, 2018	Adjustments	Pro forma Consolidated
Total Assets	24,295,963	7,097,659	43,298,591	274,036,887	348,729,100
Total Liabilities	5,582,238	11,738,365	8,626,475	32,197,669	58,144,747
Total Members' Equity (Deficit)	18,713,725	(4,640,706)	34,672,117	241,839,217	290,584,353

Unaudited Pro forma Interim Consolidated Statement of Operations for the Period Ended September 30, 2018

All figures presented are in $US	4Front nine months ended Sep 30, 2018	Healthy Pharms Inc. nine months ended Sep 30, 2018	Cannex nine months ended Oct 31, 2018	Adjustments	Pro forma Consolidated
Gross (Loss) Profit	(363,496)	1,159,316	5,098,657	-	5,894,477
Loss From Operations	(7,927,355)	1,799	(881,339)	-	(8,806,895)
Net Income (Loss)	(8,660,503)	(1,158,753)	(1,226,496)	-	(11,045,752)
Net Loss Attributable to Members of the Resulting Issuer	(7,833,203)	(1,158,753)	(1,676,223)	-	(10,668,179)

Unaudited Pro forma Consolidated Statement of Operations

All figures presented are in $US	4Front fiscal year Dec 31, 2017	Healthy Pharms Inc. fiscal year Dec 31, 2017	Cannex 12 months ended⁽¹⁾ Jan 31, 2018	Adjustments	Pro forma Consolidated
Gross (Loss) Profit	(318,407)	1,942,087	7,893,611	-	9,517,291
Loss From Operations	(4,656,765)	(336,561)	(1,171,842)	-	(6,165,168)
Net Income (Loss)	(4,339,127)	(1,187,261)	(247,413)	-	(6,423,801)
Net Loss Attributable to Members of the Resulting Issuer	(3,588,870)	(1,837,261)	(285,536)	-	(5,711,667)

Note:

(1) Denotes period beginning with the commencement of Cannex operations on February 22, 2017 and ending January 31, 2018.

Risk Factors

Cannex Securityholders should carefully consider the risk factors relating to the Business Combination. Some of these risks include, but are not limited to: (i) there can be no certainty that all conditions precedent to the Business Combination will be satisfied; (ii) the Business Combination Agreement may be terminated in certain circumstances, including in the event of a change having a Material Adverse Effect on Cannex; (iii) the Termination Fee provided under the Business Combination Agreement if the Business Combination Agreement is terminated in certain circumstances may discourage other parties from attempting to acquire Cannex; (iv) Cannex will incur costs even if the Business Combination is not completed and may have to pay the Termination Fee; (v) Cannex directors and executive officers may have interests in the Business Combination that are different from those of the Cannex Securityholders; (vi) the Resulting Issuer Subordinate Voting Shares may not be listed on any stock exchange; (vii) Cannex will issue a fixed number Cannex Common Shares to 4Front; (viii) 4Front and Cannex may not integrate successfully; (ix) Tax risks if the Resulting Issuer Subordinate Voting Shares are not listed on a designated stock exchange; and (x) Cannex/4Front may incur significant tax liabilities under Section 280E of the Code.

Additional risks and uncertainties, including those currently unknown or considered immaterial by Cannex, may also adversely affect the Resulting Issuer Shares, and/or the business of the Resulting Issuer following the Business Combination. In addition to the risk factors relating to the Business Combination set out in this Circular, Cannex Securityholders should also carefully consider the risk factors associated with the business of the Resulting Issuer included in this Circular, including the documents incorporated by reference therein. For more information, see "Risk Factors".

GENERAL PROXY INFORMATION

Solicitation of Proxies

This Circular is furnished in connection with the solicitation of proxies by the management of Cannex for use at the Meeting, to be held on April 18, 2019 at the time and place and for the purposes set forth in the accompanying Notice of Meeting. While it is expected that the solicitation will be primarily by mail, proxies may be solicited personally or by telephone by the directors, officers and employees of Cannex for no additional compensation.

Voting Options

Voting by Registered Cannex Securityholders

You are a Registered Cannex Securityholder if your Cannex Securities are held in your name or if you have a certificate or DRS Statement for Cannex Securities. As a Registered Cannex Securityholder you can vote in the following ways:

In Person	Attend the Meeting and register with the transfer agent, Alliance Trust Company, upon your arrival. Do not fill out and return your proxy if you intend to vote in person at the Meeting.
Mail	Enter voting instructions, sign the form of proxy and send your completed form to: Alliance Trust Company 1010, 407 - 2^nd Street SW Calgary, Alberta T2P 2Y3.
Fax	403-237-6111 - Please scan and fax both pages of your completed, signed form of proxy.
Internet	Go to www.alliancetrust.ca/shareholders. Enter your 12-digit control number printed on the form of proxy and follow the instructions on the website to vote your Cannex Securities.
Questions?	Contact Alliance Trust Company 403-237-6111 or toll free 1-877-537-6111

Voting for Non-Registered Holders

If your Cannex Securities are not registered in your own name, they will be held in the name of a "nominee", usually a bank, trust company, securities dealer or other financial institution ("Intermediary") and, as such, your nominee will be the entity legally entitled to vote your Cannex Securities and must seek your instructions as to how to vote your Cannex Securities.

Accordingly, Non-Registered who have not waived the right to receive the Notice of Meeting, Circular, and form of proxy will either:

(a) be given a voting instruction form which is not signed by the Intermediary and which, when properly completed and signed by the Non-Registered Holder and returned to the Intermediary or its service company, will constitute voting instructions (often called a "VIF") which the Intermediary must follow. Typically, the VIF will consist of a one page pre-printed form. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. ("Broadridge") in Canada and in the United States. Broadridge typically prepares a machine-readable VIF, mails those forms to Non-Registered Holders and asks Non-Registered Holders to return the forms to Broadridge or otherwise communicate voting instructions to Broadridge (by way of the Internet or telephone, for example). Additionally, Cannex may utilize Broadridge's QuickVoteTM service to assist eligible Cannex Securityholders with voting their shares directly over the phone. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of the Cannex Securities to be represented at the Meeting. Sometimes, instead of the one-page pre-printed form, the VIF will consist of a regular printed proxy form accompanied by a page of instructions which contains a removable label with a bar-code and other information. In order for this form of proxy to validly constitute a voting instruction form, the Non-Registered Holder must remove the label from the instructions and affix it to the form of proxy, properly complete and sign the form of proxy and submit it to the Intermediary or its service company in accordance with the instructions of the Intermediary or its service company; or

(b) be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature), which is restricted as to the number of Cannex Securities beneficially owned by the Non-Registered Holder but which is otherwise not completed by the Intermediary. Because the Intermediary has already signed the form of proxy, this form of proxy is not required to be signed by the Non-Registered Holder when submitting the proxy. In this case, the Non-Registered Holder who wishes to submit a proxy should properly complete the form of proxy and deposit it with Alliance Trust Company.

In either case, the purpose of these procedures is to permit Non-Registered Holder to direct the voting of their Cannex Securities. Should a Non-Registered Holder who receives either a voting instruction form or a form of proxy wish to attend the Meeting and vote in person (or have another person attend and vote on behalf of the Non-Registered Holder), the Non-Registered Holder should strike out the names of the persons named in the form of proxy and insert the Non-Registered Holder (or such other person's) name in the blank space provided or, in the case of a voting instruction form, follow the directions indicated on the form. In either case, Non-Registered Holder should carefully follow the instructions of their intermediaries and their service companies, including those regarding when and where the voting instruction form or the proxy is to be delivered. Please register with the transfer agent, Alliance Trust Company of Canada, upon arrival at the Meeting.

The Notice of Meeting and this Circular are being sent to both registered and non-registered owners of Cannex Securities and to non-objecting beneficial owners under NI 54-101. Management of Cannex does not intend to pay for intermediaries to forward to objecting beneficial owners under NI 54-101 the proxy-related materials and Form 54-101F7 - Request for Voting Instructions Made by Intermediary to objecting Non-Registered Holders and that in the case of an objecting beneficial owner, the objecting beneficial owner will not receive the materials unless the objecting beneficial owner's intermediary assumes the cost of delivery. Please carefully review and return your voting instructions as specified in the request for voting instructions form or form of proxy.

If you have any questions or require more information with respect to voting your Cannex Securities at the Meeting, please contact us by telephone at (604) 628-9338 or by e-mail at info@cannexcapital.com.

How a Vote is Passed

At the Meeting, Cannex Securityholders will be asked, among other things, to consider and to vote to approve the Cannex Component of the Business Combination Resolution approving the Cannex Component of the Business Combination. To be effective, the Cannex Component of the Business Combination must be approved by a resolution passed by: (i) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Class A Shares present in person or by proxy at the Cannex Meeting voting as a class pursuant to section 289(1)(b) of the BCBCA; (ii) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Common Shares present in person or by proxy at the Cannex Meeting voting as a class pursuant to section 289(1)(b) of the BCBCA; (iii) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Class A Shares and Cannex Common Shares present in person or by proxy at the Cannex Meeting voting together pursuant to section 289(1)(a) of the BCBCA; (iv) the majority of votes cast by minority shareholders of Cannex, as defined and contemplated in the Restricted Share Rules; (v) a majority in number of the Cannex Noteholders who represent at least 3/4 in value of the Cannex Notes or class of noteholders pursuant to section 289(1)(d) of the BCBCA; (vi) a simple majority of the votes cast by holders of Cannex Common Shares excluding the votes of Cannex Common Shares held or controlled by "interested parties" as defined under MI 61-101; and (vii) a simple majority of the votes cast by holders of Cannex Class A Shares excluding the votes of Cannex Class A Shares held or controlled by "interested parties" as defined under MI 61-101. See "The Business Combination -- Regulatory Law Matters and Securities Law Matters -- Canadian Securities Law Matters".

The resolution to approve the Resulting Issuer Equity Incentive Plans must be approved by a majority of the votes cast in person or by proxy by the Cannex Shareholders at the Cannex Meeting. See "Other Matters to be Considered at the Meeting - Approval of the Resulting Issuer Equity Incentive Plans".

The quorum for the transaction of business at the Meeting is at least one person who is a Cannex Shareholder, or who represents by proxy, and is entitled to vote at least 5% of the Cannex Shares at the Meeting.

Who can Vote?

If you were a Registered Cannex Securityholder as of the close of business on March 19, 2019, you are entitled to attend the Meeting and cast one vote for each Cannex security registered in your name on all resolutions put before the Meeting. If Cannex Securities are registered in the name of a corporation, a duly authorized officer of the corporation may attend on its behalf, but documentation indicating such officer's authority should be presented at the Meeting. If you are a Registered Cannex Securityholder but do not wish to, or cannot, attend the Meeting in person you can appoint someone who will attend the Meeting and act as your proxyholder to vote in accordance with your instructions. If your Cannex Securities are registered in the name of a "nominee" (usually a bank, trust company, securities dealer or other financial institution) you should refer to the section entitled "Voting for Non-Registered Holders" set out above.

It is important that your Cannex Securities be represented at the Meeting regardless of the number of Cannex Securities you hold. If you will not be attending the Meeting in person, we invite you to complete, date, sign and return your form of proxy as soon as possible so that your Cannex Securities will be represented.

Appointment of Proxies

If you do not come to the Meeting, you can still make your vote(s) count by appointing someone who will be there to act as your proxyholder at the Meeting. You can appoint the persons named in the enclosed forms of proxy, who are executive officers of Cannex. Alternatively, you can appoint any other person or entity (who need not be a Cannex Securityholder) other than the persons designated on the enclosed form of proxy to attend the Meeting and act on your behalf. Regardless of who you appoint as your proxyholder, you can either instruct that person or company how you want to vote or you can let him or her decide for you. You can do this by completing a form of proxy. In order to be valid, you must return the completed form of proxy 48 hours, excluding Saturdays, Sundays and holidays, prior to the time of the Meeting to the transfer agent, Alliance Trust Company, #1010, 407 2nd Street S.W. Calgary, Alberta T2P 2Y3 or by fax number 1-403-237-6181.

What is a Proxy?

A form of proxy is a document that authorizes someone to attend the Meeting and cast your votes for you. We have enclosed a form of proxy with this Circular. You should use it to appoint a proxyholder, although you can also use any other legal form of proxy.

Appointing a Proxyholder

The persons named in the enclosed forms of proxy are directors and officers of Cannex. A Cannex Securityholder who wishes to appoint some other person to represent such Cannex Securityholder at the Meeting may do so by crossing out the name on the form of proxy and inserting the name of the person proposed in the blank space provided in the enclosed form of proxy. Such other person need not be a Cannex Securityholder. To vote your Cannex Securities, your proxyholder must attend the Meeting. If you do not fill a name in the blank space in the enclosed form of proxy, the persons named in the form of proxy are appointed to act as your proxyholder.

Instructing your Proxy and Exercise of Discretion by your Proxy

You may indicate on your form of proxy how you wish your proxyholder to vote your Cannex Securities. To do this, simply mark the appropriate boxes on the form of proxy. If you do this, your proxyholder must vote your Cannex Securities in accordance with the instructions you have given.

If you do not give any instructions as to how to vote on a particular issue to be decided at the Meeting, your proxyholder can vote your Cannex Securities as he or she thinks fit. If you have appointed the persons designated in the form of proxy as your proxyholder they will, unless you give contrary instructions, vote your Cannex Securities at the Meeting as follows:

✓ FOR the Cannex Component of the Business Combination Resolution

✓ FOR the approval of the Resulting Issuer Equity Incentive Plans

Further details about these matters are set out in this Circular. The enclosed forms of proxy give the persons named on the form the authority to use their discretion in voting on amendments or variations to matters identified on the Notice of Meeting. At the time of printing this Circular, the management of Cannex is not aware of any other matter to be presented for action at the Meeting. If, however, other matters do properly come before the Meeting, the persons named on the enclosed forms of proxy will vote on them in accordance with their best judgment, pursuant to the discretionary authority conferred by the form of proxy with respect to such matters.

Changing your mind

If you want to revoke your proxy after you have delivered it, you can do so at any time before it is used. You may do this by (a) attending the Meeting and voting in person if you were a Registered Cannex Securityholder at the Record Date; (b) signing a proxy bearing a later date and depositing it in the manner and within the time described above under the heading "Appointment of Proxies"; (c) signing a written statement which indicates, clearly, that you want to revoke your proxy and delivering this signed written statement to the registered office of Cannex at 1241 Alberni Street, Vancouver, British Columbia V6E 4R4; or (d) in any other manner permitted by law.

Your proxy will only be revoked if a revocation is received by 5:00 p.m. (Vancouver time) on the last Business Day before the day of the Meeting, or delivered to the person presiding at the Meeting before it commences. If you revoke your proxy and do not replace it with another that is deposited with us before the deadline, you can still vote your Cannex Securities, but to do so you must attend the Meeting in person.

Voting Securities and Principal Holders

The authorized capital of Cannex consists of an unlimited number of Cannex Common Shares and an unlimited number of Cannex Class A Shares. Each Cannex Shareholder is entitled to one vote for each Cannex Share registered in his or her name at the close of business on March 19, 2019, the date fixed by the directors as the Record Date for determining who is entitled to receive notice of and to vote at the Meeting with respect to the Cannex Component of the Business Combination Resolution.

At the close of business on March 19, 2019, there were 87,492,204 Cannex Common Shares, 96,521,734 Cannex Class A Shares, and US$32,000,000 aggregate principal amount of Cannex Notes issued and outstanding. As at the date hereof, to the knowledge of the directors and executive officers of Cannex, as of March 19, 2019, no persons or corporations beneficially own, directly or indirectly, or exercise control or direction over securities carrying in excess of 10% of the voting rights attached to any class of outstanding voting securities of Cannex other than as follows:

Holder	Number of Cannex Common Shares Beneficially Owned	Number of Cannex Class A Shares Beneficially Owned	Percentage of Cannex Common Shares	Percentage of Cannex Class A Shares
Leo Gontmakher	4,342,457	25,606,400	4.98%	26.53%
Vlad Orlovskii⁽¹⁾	4,067,598	23,985,625	4.67%	24.85%
Roman Tkachenko	2,057,770	12,134,161	2.36%	12.57%
Arkadi Gontmakher	2,485,596	14,656,952	2.85%	15.19%
Oleg Orlovskii	2,105,711	12,416,857	2.42%	12.86%

Note:

(1) Vlad Orlovskii holds Cannex Shares directly and indirectly through Olan LLC.

THE BUSINESS COMBINATION

At the Meeting, Cannex Securityholders will be asked to consider and, if thought advisable, to pass, the Cannex Component of the Business Combination Resolution to approve the Cannex Component of the Business Combination, including the Plan of Arrangement, under the BCBCA pursuant to the terms of the Business Combination Agreement. The Business Combination, the Plan of Arrangement and the terms of the Business Combination Agreement are summarized below. This summary does not purport to be complete and is qualified in its entirety by reference to the Business Combination Agreement, which has been filed by Cannex under its profile on SEDAR at www.sedar.com, and the Plan of Arrangement, which is attached to this Circular as Appendix C.

In order to implement the Cannex Component of the Business Combination, the Cannex Component of the Business Combination Resolution must be approved by: (i) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Class A Shares present in person or by proxy at the Cannex Meeting voting as a class pursuant to section 289(1)(b) of the BCBCA; (ii) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Common Shares present in person or by proxy at the Cannex Meeting voting as a class pursuant to section 289(1)(b) of the BCBCA; (iii) 66⅔% of the votes cast on the Cannex Component of the Business Combination Resolution by holders of Cannex Class A Shares and Cannex Common Shares present in person or by proxy at the Cannex Meeting voting together pursuant to section 289(1)(a) of the BCBCA; (iv) the majority of votes cast by minority shareholders of Cannex, as defined and contemplated in the Restricted Share Rules; (v) a majority in number of the Cannex Noteholders who represent at least 3/4 in value of the Cannex Notes or class of noteholders pursuant to section 289(1)(d) of the BCBCA; (vi) a simple majority of the votes cast by holders of Cannex Common Shares excluding the votes of Cannex Common Shares held or controlled by "interested parties" as defined under MI 61-101; and (vii) a simple majority of the votes cast by holders of Cannex Class A Shares excluding the votes of Cannex Class A Shares held or controlled by "interested parties" as defined under MI 61-101. See "The Business Combination -- Regulatory Law Matters and Securities Law Matters -- Canadian Securities Law Matters". A copy of the Cannex Component of the Business Combination Resolution is set out in Appendix B of this Circular.

Unless otherwise directed, it is management's intention to vote FOR the Cannex Component of the Business Combination Resolution. If you do not specify how you want your Cannex Securities voted, the persons named as proxyholders will cast the votes represented by your proxy at the Meeting FOR the Cannex Component of the Business Combination Resolution.

If the Cannex Component of the Business Combination is approved at the Meeting and the Final Order approving the Business Combination is issued by the Court and the applicable conditions to the completion of the Business Combination are satisfied or waived, the Business Combination will take effect at the Effective Time (anticipated to be 10:00 a.m. (Vancouver time) on the Effective Date). The Effective Date is expected to occur on or before April 23, 2019, or such later date as is agreed to by the parties.

If you hold your Cannex Securities through a broker or other person, please contact that broker or other person for instructions and assistance in receiving the Consideration under the Business Combination Agreement. In order to receive the Consideration to be distributed pursuant to the Business Combination, a Registered Cannex Securityholder must complete, sign, date and return the enclosed Letter of Transmittal and all documents required thereby in accordance with the instructions set out therein.

On completion of the Business Combination contemplated by the Business Combination Agreement: (i) former holders of Cannex Common Shares are expected to hold approximately 78.4% of the outstanding Resulting Issuer Subordinate Voting Shares (on an undiluted basis); and (ii) former holders of Cannex Class A Shares are expected to hold approximately 24.3% of the outstanding Resulting Issuer Proportionate Voting Shares (on an undiluted basis). In aggregate, Cannex Shareholders are expected to hold approximately 36.6% of the outstanding Resulting Issuer Shares (on an as-converted, undiluted basis). The Resulting Issuer will also have a class of Resulting Issuer Multiple Voting Shares held by certain former equity holders of 4Front. The Resulting Issuer Multiple Voting Shares will provide such former holders with voting control of the Resulting Issuer, as such shares represent 62.4% of the aggregate votes represented by the Resulting Issuer Multiple Voting Shares and Resulting Issuer Shares together.

Principal Steps of the Business Combination

Under the Plan of Arrangement, commencing at the Effective Time, the following shall occur and shall be deemed to occur, except to the extent otherwise indicated, in the following order without any further act or formality: