Constellation Brands CFO Named New CEO of Canopy Growth

Canadian Cannabis company Canopy Growth Corporation announced today the appointment of David Klein as CEO, effective January 14, 2020.

Klein has served as the chief financial officer of Constellation Brands since mid-2015. Klein’s appointment as chief executive comes just two months after he was named chairman of the Canadian cannabis company’s board of directors. He will step down from his CFO role at Constellation upon assuming the Canopy CEO role.

“Canopy Growth sits at the forefront of one of the most exciting new market opportunities in our lifetime,” Klein said in a press release. “I look forward to working with the team to build on the foundation that has been laid, to develop brands that strongly resonate with consumers, and to capture the market opportunity before us.”

“David Klein is a first-rate leader and developer of talent who has made significant contributions to our company’s success,” Constellation Brands president CEO Bill Newlands added in the release. “This is a great career opportunity for David and a great choice by Canopy Growth. As a major shareholder we fully support this decision and look forward to seeing David and the Canopy team drive the company forward.”

Canopy Growth and Constellation Brands have been intertwined since the New York-headquartered beer, wine and spirits company made its first investment of $191 million in the cannabis company in October 2017. All in, Constellation Brands has invested $4 billion in Canopy Growth for a 38% ownership stake in the company.

The move comes a week before THC-infused beverages and edibles will become legal in Canada on December 17.

Klein’s ascension to CEO follows a turbulent run for Canopy as the company’s financial results continued to underperform. Canopy announced in June that co-founder and co-CEO Bruce Linton had stepped down as CEO. Linton, however, told CNBC at the time that he was “terminated.”

After Linton’s departure, co-founder and co-CEO Mark Zekulin took over as the lone chief executive, while the company sought a permanent replacement. Effective December 20, Zekulin will step down from the CEO role and resign from his seat on the board of directors.

Constellation has recorded more than $590 million in losses on its $4 billion investment in Canopy, though CEO Bill Newlands expressed confidence in Canopy’s plans during Constellation’s third-quarter earnings call.

Since then, the company has struck a partnership with Toronto-based rapper Drake to develop a line of cannabis products called More Life. Drake, whose full name is Aubrey Drake Graham, owns a 60% stake in More Life. Canopy owns the remainder and will control distribution rights and manage operations and maintenance at the More Life facility.

In April, Canopy reached an agreement to acquire Acreage Holdings, a New York-based cannabis company with licenses in 20 states and 87 dispensaries and 22 cultivation and processing sites, if federal legalization is reached in the U.S.

Canada legalized recreational cannabis in October 2018.

Meanwhile, Constellation Brands has named Garth Hankinson as Klein’s replacement, effective January 13, 2020.

Hankinson joined Constellation Brands in 2001 and has held several senior leadership roles. In his new post, Hankinson will be tasked with overseeing all of Constellation’s financial operations, including planning, analysis, treasury, investor relations, information technology, and corporate development.

Hankinson will also serve on Constellation’s executive management committee.

“Garth has worked very closely with David as part of our finance leadership team for many years,” Newlands said in the release. “He has a solid understanding of our company financials, strong strategic orientation and decision-making capabilities, and extensive industry knowledge that will benefit our company as we look to continue driving industry-leading growth and shareholder value.”

Klein’s exit and Hankinson’s promotion comes during a year of major executive changes at Constellation Brands.

In March, Rob Sands stepped down as CEO, handing over the role to Newlands. Sands remains with the company as executive chairman.

In addition to Sands exiting the day-to-day operations, legendary beer executive Bill Hackett retired from his role as chairman of beer in March.

Also in March, Tiffanie De Liberty was promoted to senior VP, general counsel and chief compliance officer.

In February, the company also promoted Karena Breslin to senior vice president of digital and media, and Mike McGrew to senior vice president of corporate communications. In April, the company promoted Matt Stanton as senior vice president of public affairs.

In October, Constellation promoted Mallika Monteiro to executive vice president and chief growth and strategy officer.

2019 was also a year of major divestments for Constellation, including last week’s announcement that the Ballast Point craft beer brand would be sold to upstart Illinois beer company Kings & Convicts, whose lead investor, Richard Mahoney, is the chairman of the board of The Wine Group.

In August, Constellation sold the Black Velvet Canadian Whisky brand, its production facility in Alberta, Canada, and a small portfolio of other Canadian whiskeys to Heaven Hill Brands, based in Louisville, Kentucky, for $266 million.

Earlier in the year, Constellation agreed to sell about 30 down-market wine and spirits brands and associated production facilities in New York, California and Washington to E. & J. Gallo Winery for $1.7 billion. The close of that deal has been delayed and is still awaiting federal regulatory approval.

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