eResearch | On July 3, 2019, Canopy Growth Corp. (TSX: WEED; NYSE: CGC) announced the termination of Bruce Linton as co-CEO. Linton will also be stepping down as chairman and director for Canopy’s investment arm, Canopy Rivers Inc. (CVE: RIV).
Co-founder, previous co-CEO and now current CEO, Mark Zekulin, commented to media that he would only serve as CEO until a suitable replacement was found.
Rade Kovacevic, formally Senior Vice President, Sales & Operations for Canopy, will assume the role of President, while the board searches for a new leader to guide the team and Company strategy.
Canopy started in 2013 in Smith Falls, Canada, and is now a world-leading diversified cannabis, hemp, and cannabis device company. The Company has led the cannabis industry as the first federally regulated, licensed, and publicly traded cannabis company in North America. Canopy has since become the first C$1 billion cannabis company by market capitalization as they experienced rapid growth from a series of more than 20 acquisitions over the past 5 years and after Canada legalized cannabis for recreational use in October 2018.
In July 2018, Constellation Brands Inc. (NYSE: STZ) invested C$5 billion into Canopy to support strategic growth, in addition to the development of cannabis-infused beverages. This investment was the first of its kind by a large multi-national company into the cannabis industry, which provided support and credibility to the new sector. Constellation currently controls 38 percent of Canopy with additional warrants that could increase its ownership to above 50 percent.
Last month, Constellation’s CEO mentioned that they were “not pleased” with Canopy’s recent year-end results, a net loss of C$670 million in F2018 compared with a net loss of C$54 million in F2017. Even though revenue increased 13% to C$94 million for the three months ended March 31, 2019 (FQ4/2019) compared with FQ4/2018, gross margins decreased to 16% compared with 34%.
Canopy attributed the high expenses and decrease in margins to increased spending on marketing, SG&A, and stock compensations.
The termination of Bruce Linton from Canopy’s executive team followed a month after Canopy’s earnings report that disappointed investors. As for the future of Canopy, Linton said he has no doubt the Company will continue to expand and remain one of the world’s biggest cannabis sellers.
Canopy’s stock price is up almost 30% over the past year to $53.52 compared with the S&P 500, up 12% and the TSX, up 10%. Canopy currently trades at more than 20x analysts’ estimated revenue for F2020 of C$728 million.
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Constellation Brands Inc (NYSE: STZ)
Headquartered in New York, United States, Constellation is a Fortune 500 company that distributes and markets beer, wine, and spirits. Constellation is the largest beer importer in the U.S. and is the third largest company by market capitalization of all major beer suppliers. STZ is currently trading at US$199.90 per share with a market capitalization of US$38.13 billion.
Canopy Growth Corp. (TSX: WEED) (NYSE: CGC)
Headquartered in Ontario, Canada, Canopy Growth Corp. is the world’s largest cannabis company, based on market capitalization. Canopy was the first to export cannabis to Germany, the first to make a partnership with a global beverage company, and the first to have an agreement to acquire a U.S. based cannabis company. WEED is currently trading at C$53.52 per share with a C$18.51 billion market capitalization.
Aurora Cannabis Inc. (TSX: ACB) (NYSE: ACB)
Headquartered in Edmonton, Canada, Aurora is the second largest cannabis company in the world, based on market capitalization. Aurora is currently trading at C$10.00 per share with a C$10.17 billion market capitalization.
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