Marijuana firm Cronos replaces CEO with consumer packaged goods veteran

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Cronos Group has become the latest Canadian cannabis company to shake up its top ranks, replacing former CEO Mike Gorenstein with experienced consumer packaged goods executive Kurt Schmidt.

The announcement comes one day after major Canadian producer Aurora Cannabis appointed its new CEO.

Schmidt’s appointment was the result of a yearlong search for “an experienced consumer focused executive who shares the company’s values and can help take us to the next level,” Gorenstein said in a news release issued Wednesday.

Gorenstein has been appointed executive chair of Cronos’ board of directors.

Schmidt’s CPG experience includes leadership roles at pet food producer Blue Buffalo Co. as well as Nestlé, Gerber and Kraft Foods.

In a note to clients Wednesday, analyst Owen Bennett of New York-based investment bank Jefferies wrote that he continues to “have (his) doubts around the long term value creation of the Cronos strategy, (but) today’s announcement is certainly a positive with regards to its ability to execute on it.”

Toronto-based Cronos Group reported a loss for the quarter ended June 30, with net revenue of $9.9 million.

The company wrote down $3.1 million of cannabis in Canada during the quarter and said it expects further write-downs.

However, Cronos remains flush with liquidity, with more than $1.1 billion of cash and cash equivalents and almost $214 million in short-term investments on hand at the end of the previous quarter.

“(Given) the highly acquisitive nature of companies where Schmidt had held executive positions before, we can also expect him to be well placed to put Cronos’ … cash pile to use effectively,” Bennett wrote.

Cronos trades as CRON on the Toronto Stock Exchange and the Nasdaq.