Ontario Cannabis Store appoints sixth president in three years, raising industry concern

Toronto marijuana

The executive turntable at the Ontario Cannabis Store (OCS) is spinning again, with the provincial wholesale monopoly and online retailer about to get its sixth president in three years.

The rapid executive turnover has some industry watchers concerned the organization might be lacking executive continuity.

Thomas Haig, who was appointed interim president in September 2020, is stepping down when his contract comes to an end later this month, the OCS announced last week.

He will be replaced next week on an interim basis by David Lobo, who is currently the OCS’ chief merchandising officer.

Haig took over on a temporary basis last September from Cal Bricker, who had been installed as interim CEO about a year earlier.

Lobo will be the organization’s third straight temporary chief executive since September 2019.

The turnover is leading some business sources to question the direction – or lack thereof – of an organization that plays a pivotal role in the industry as the sole online retailer and wholesaler of adult-use marijuana in Canada’s largest consumer market.

Of the six presidents appointed since mid-2018 – including Lobo, when he takes the OCS helm – the first two did not carry the title of CEO and four were either “acting” or interim.

The latter four were both president and CEO. No one held the role longer than just over one year.

“I believe the number of CEOs to date – and the interim tag on a number of them – points to a lack of clarity and alignment as to the role of the OCS,” corporate adviser and former Bacardi Canada President Rob McPherson told Marijuana Business Daily.

“It’s hard to attract and retain good talent when there is no mandate to action against.”

However, one former top executive downplayed the turnover when reached for comment by MJBizDaily, saying he’s “not aware of any issues” and each appointment and departure reflected unique circumstances.

Corporate discontinuity?

Some industry sources are concerned the level of churn among executives could impact the organization’s ability to execute on its ongoing projects, roll out new ones and deal with unexpected issues.

Krista Raymer, co-founder of cannabis retail consultancy Vetrina Group in Toronto, said the frequent turnover raises questions about organizational goals.

As an example, Raymer cited the OCS’ commitment to achieving 100% fill rates by its suppliers, meaning consistent inventory is required so products are “always in stock.”

“This could be totally turned on its head if the new CEO is all about e-commerce development of that business,” she said. “What does (the CEO churn) indicate in terms of where that priority is.

“It is important to understand how the organization plans to balance the development of its distribution and e-commerce business. The CEO and their skills can be a good indication of this.”

Matt Maurer, co-chair of the cannabis practice at Toronto law firm Torkin Manes, expressed some concern.

“From a purely objective industry perspective, it is somewhat concerning to see the wholesaler of the largest market in the country undergo three leadership changes within a relatively short time period,” said Maurer, adding that could not speak to any specifics about Haig’s departure.

“Given that the industry is still in its infancy and there are a lot of unexpected issues that arise and need to be sorted out on an ongoing basis, one would think there would be great benefit to continuity of leadership and vision,” he said.

Turnover at the OCS is high even for the cannabis industry.

“I think most people would look at turnover at the top level of a business in any other industry as reason for pause. And I don’t think people look at this specific instance any differently,” Maurer said.

Most large Canadian licensed producers have replaced either CEOs or chief financial officers over the past year for a variety of reasons.

Smiths Falls, Ontario-based Canopy Growth and Edmonton, Alberta-headquartered Aurora Cannabis replaced their CEOs while the businesses were reporting billions of dollars in losses.

Executive churn

Patrick Ford, who led the OCS from mid-2018 to September 2019, said each executive appointment had unique circumstances.

“There’s been some turnover, but don’t forget this follows a significant policy shift when new government came in – and a rapidly changing marketplace,” he told MJBizDaily.

Ford said, in his case, retirement had been planned for some time.

“I’m not aware of any issues, and my impression of the board is they’re very strong and committed to supporting a rapidly growing market,” he said.

“Their appointment of David Lobo as interim CEO also underscores a commitment to stability.”

Nancy Kennedy was originally chosen to lead the organization as president in April 2018, but she moved to another government position months later.

Kennedy told MJBizDaily the corporation’s leadership evolved along with its business model.

She said her expertise was in setting up agencies, regulatory diligence and financial aspects.

“Legalization was quite complex. They needed more business expertise after that,” she said.

David Phillips took over from Kennedy in an acting capacity before being replaced by Ford.

McPherson, the former Bacardi executive, said the OCS will have to pay up to attract the right person.

“It could be a really forward-thinking role and organization, if they let it – but they need the right leader and give them the right support to define, develop and deliver,” he said.

The OCS said its compensation structure is subject to the Broader Public Sector Executive Compensation Act, 2014 – an Ontario law – meaning salaries above 100,000 Canadian dollars ($80,000) must be included on the public-sector salary-disclosure list.

To date, no OCS president or CEO has appeared on the list.

Search already started

The OCS disclosed that its board would undertake a national search for a permanent replacement.

MJBizDaily asked the organization why it waited until now to look for Haig’s successor, rather than six months ago when he took up the position on a temporary basis.

The OCS said the process to find a permanent CEO actually began early this year and is expected to unfold in the months ahead.

“As the OCS continues to move through the scaling-up phase of its business towards a more stable steady-state of maturity, the board believes a comprehensive search for a permanent President and Chief Executive Officer is required,” according to a statement provided on behalf of the organization.

“Thomas Haig was brought in to help leverage his 50+ years of retail experience to assist the OCS in working with the AGCO to rapidly increase the number of opened authorized retail stores in Ontario.

“As Thomas completes his contract, we thank him for delivering on this top priority of the organization.”

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at matt.lamers@mjbizdaily.com.