Canopy Growth Corporation (TSE: WEED) today announced that co-CEO Bruce Linton has stepped down as chief executive and board member.
However, Linton, who co-founded the company in 2013, called into CNBC to clarify that he was fired from the world’s largest cannabis company.
“I think stepping down might not be the right phrase,” he said. “I was terminated.”
Speaking to Kevin O’Leary of Shark Tank fame during the interview, Linton hinted at possibly remaining in the cannabis space outside of Canada.
“I would hope by the end of the day I’ve figured out what’s up next, and it won’t be in cannabis in Canada, but there’s a pretty big world out there,” he said.
Mark Zekulin, who had been co-CEO with Linton, will takeover as the sole CEO, while Canopy works to identify a replacement.
Last August, Constellation Brands upped its investment in the company, spending $4 billion to acquire 104.5 million shares of Canopy, raising its stake to about 38 percent.
In April, it struck a deal with Acreage Holdings, agreeing to acquire the New York-based cannabis company for $3.4 billion when marijuana becomes federally legal in the U.S.
Linton had a knack for deal making, and helped lead a company that was growing revenue at a healthy clip, but Canopy last month reported a record low gross margin of 16 percent during the fourth quarter of fiscal 2019, and an EBITDA loss of $98 million.
“While we appreciate the nascent stage of the industry, WEED will clearly need to start showing expense discipline and operating leverage to maintain investor confidence,” Cowen analyst Vivien Azer wrote following last month’s earnings report.
Meanwhile, during Constellation Brands’ first quarter earnings call, CEO Bill Newlands said the company was “not pleased” with Canopy’s recent financial results.
Azer, who issued a report on today’s news, called the move “constructive,” and said it reflected Constellation’s “financial stewardship” of the Canadian cannabis company.
“The magnitude of losses for WEED has expanded far more than we had expected,” she wrote.”While we commend Linton for his vision in establishing the world’s leading cannabis company, we believe new leadership will be a welcome change.”
As of press time, Canopy stock had rebounded from initial losses following the announcements and was up more than 2 percent.
Additional information is available in Canopy’s press release.