Mr. Barry Lee reports

CANNEX COMPLETES $48.2 MILLION SUBSCRIPTION RECEIPT OFFERING AND ANNOUNCES CONDITIONAL APPROVAL TO LIST ON THE CANADIAN SECURITIES EXCHANGE

Further to Arco Resources Corp.'s news release dated Oct. 10, 2017, Cannex Capital Group Inc. has completed its previously announced subscription receipt offering, pursuant to which it has issued and sold 48,219,872 subscription receipts of Cannex at a subscription price of $1 per subscription receipt for gross proceeds of $48,219,872. The offering was completed on a private placement basis through a syndicate of agents led by Beacon Securities Ltd. (as lead agent and sole bookrunner), Mackie Research Capital Corp. and Echelon Wealth Partners Inc.

Anthony Dutton, chief executive officer of Cannex, commented: "The financing was originally planned for gross proceeds of up to $25-million. Due to overwhelming demand, we nearly doubled the initial size of the financing and closed on approximately $48.2-million. We have put together a platform to provide a range of opportunities for licensed cannabis cultivators, processors and dispensaries throughout the United States and Canada, including providing turnkey real estate with operational infrastructure as well as long-term advisory and consulting services. We look forward to closing our initial acquisition and implementing our business plan."

Each subscription receipt purchased in the offering entitles the holder thereof to receive, for no additional consideration and without further action on the part of the holder thereof, on or about the date that the escrow release conditions have been satisfied or waived: (i) one common share of Cannex; and (ii) one-half of one common share purchase warrant of Cannex. Each warrant shall entitle the holder thereof to acquire one common share of Cannex at a price of $1.50 per warrant share at any time during the period commencing on the escrow release time (as defined in the subscription receipt agreement) and ending on the date which is 24 months from the escrow release time. As contemplated in the definitive amalgamation agreement with Arco (see the section "definitive agreements" herein for additional details), the common shares, warrants and warrant shares will be converted into equivalent common shares, warrants and warrant shares of the resulting issuer (as defined herein) upon completion of the transaction.

The warrants may be accelerated by Arco, as the resulting issuer, at its sole option, at any time in the event that the volume-weighted average closing price of the common shares of the resulting issuer on the Canadian Securities Exchange or such other exchange on which the common shares of the resulting issuer may primarily trade from time to time, is greater than or equal to $2.25 for a period of 20 consecutive trading days.

The total gross proceeds of the offering (excluding sales to president's list purchasers), less certain expenses of the agents and 50 per cent of the cash commission payable to the agents in connection with the offering, have been deposited in escrow with the subscription receipt agent for the subscription receipts pending notice being given by Cannex, Arco and Beacon to the subscription receipt agent that the escrow release conditions (as defined in the subscription receipt agreement) have been satisfied. Cannex and Arco expect to satisfy all escrow release conditions prior to March 21, 2018.

If the escrow release conditions are not satisfied prior to March 21, 2018, or if Cannex announces to the public by news release that it does not intend to satisfy the escrow release conditions (each a termination event), then: (i) the subscription receipt agent shall return the escrowed proceeds to the holders of the subscription receipts in an amount equal to the aggregate subscription price for the subscription receipts held by such holder, together with a pro rata portion of the interest earned on the escrowed proceeds; and (ii) the subscription receipts shall be cancelled with no further force or effect.

Upon conversion of the subscription receipts, the underlying securities will not be subject to a Canadian hold period.

CSE conditional approval

Arco has received conditional approval from the CSE to list the resulting issuer's common shares on the CSE. Final approval of the listing on the CSE is subject to the resulting issuer satisfying certain customary conditions required by the CSE. Arco and Cannex expect to be able to satisfy all conditions by mid-March, 2018, and will provide an update once the CSE has issued a bulletin confirming the date on which trading on the CSE will commence. Following completion of all listing requirements, Arco's common shares will be voluntarily delisted from NEX and will begin trading on the CSE under the symbol CNNX. In addition, Arco will change its name from Arco Resources Corp. to Cannex Capital Holdings Inc.

Definitive agreements

Cannex entered into a definitive contribution agreement dated effective Dec. 7, 2017, among Cannex, BrightLeaf Development LLC (BLD) and certain affiliates of BLD. Under the contribution agreement, the acquisition of BLD will be satisfied by way of cash consideration to BLD, concurrent with the use of such consideration to satisfy certain debts of BLD and the redemption of other members of BLD. Aggregate required consideration for the BLD acquisition is $36-million (U.S.), subject to reduction for certain debts remaining with BLD. The consideration will be satisfied with a minimum cash payment of $10-million (U.S.), with the balance to be settled by way of one or more 24-month interest-bearing convertible vendor notes. The vendor notes shall bear interest at 12 per cent per year to be paid monthly and shall include an exclusive vendor option to convert all of the outstanding balance of the vendor notes, or a portion thereof, into Class A restricted convertible voting shares of the resulting issuer at a deemed price of $1 per Class A share. BLD is a Washington State limited liability company that holds real estate assets, property leases, brands, intellectual property and material supply agreements with Northwest Cannabis Solutions, Washington State's and the Pacific Northwest's largest full-line cannabis producer/processor.

Cannex, Arco and a wholly owned subsidiary of Arco (Arco Subco) entered into a definitive amalgamation agreement dated effective Dec. 7, 2017. Pursuant to the terms of the amalgamation agreement, Cannex and Arco Subco will amalgamate by way of a three-cornered amalgamation and the issued and outstanding securities of Cannex will be exchanged for securities of Arco (as the resulting issuer). As a result of the amalgamation, Cannex will become a wholly owned subsidiary of Arco (as the resulting issuer).

For further background on the BLD acquisition and the amalgamation, see the joint news release of Arco and Cannex dated Oct. 10, 2017, a copy of which is available under Arco's SEDAR profile.

The closing of the transactions contemplated herein are subject to, among other things, regulatory approval, including from the NEX board of the TSX Venture Exchange and the CSE.

Further information

The common shares of Arco are currently halted from trading pending completion of the transaction.

Further details about the transaction and the resulting issuer will be provided in a CSE listing statement prepared and filed by Arco in respect of the transaction.

Investors are cautioned that, except as disclosed in the listing statement (or other disclosure document prepared by Arco) in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon.

We seek Safe Harbor.