‘The board decided’: Marijuana giant Canopy Growth fires Bruce Linton as CEO 

Canopy Growth CEO Bruce Linton (Photo by Justin Tang)

Canadian cannabis producer Canopy Growth on Wednesday announced the departure of Bruce Linton as co-chief executive, a surprise move that analysts say could be tied to the company’s disappointing earnings.

Effective immediately, Linton is stepping down and co-CEO Mark Zekulin will become the sole interim chief executive as the board looks for a permanent leader.

“The Board decided today, and I agreed, my turn is over,” Linton said in a statement.

He later told CNBC: “I was terminated.”

Linton spent over five years building what is now the largest cannabis company in the world.

However, Canopy recently reported a quarterly loss of 98 million Canadian dollars ($70 million), on an adjusted basis, before interest, taxes, depreciation and amortization (EBITDA). The shortfall was much worse than analysts expected.

That prompted the CEO of Constellation Brands – which has a large stake in Canopy – to say during a conference call with analysts last week he was “not pleased” with the Canadian company’s performance.

Rod Elliot, senior vice president for Global Public Affairs and head of the consultancy’s cannabis practice, said Linton’s ouster is part of a company – and industry – coping with rapid growth.

“At this point it’s important to remember that Canada is currently made up of 180 domestic startup/scale-up companies, and we are going to see some growing pains in the industry as these companies try and execute their business plans and begin to generate revenue and actual sales of cannabis to medical and recreational cannabis consumers,” he told Marijuana Business Daily.

Canopy has said it expects to reach CA$1 billion in revenue in 2020, more than five times last quarter’s total of CA$94 million.

But growing pains are evident.

Sales volumes failed to increase after Canada legalized recreational cannabis last October, owing partly to the lack of storefronts in places such as Ontario.

Canopy sold 8,288 kilograms (18,272 pounds) and kilogram equivalents of adult-use cannabis in the third fiscal quarter, but that total fell to 7,963 kilograms and kilogram equivalents the following quarter.

Canopy’s medical cannabis revenue took a hit in the most recent period.

The company earned CA$11.5 million in medical cannabis revenue in Canada in the quarter, down 40% from CA$19.5 million in the same period a year earlier.

In a note to investors, Vivien Azer, managing director and senior research analyst at Cowen, wrote that the move was not surprising given the magnitude of Canopy’s recent losses.

“The company’s biggest shareholder, having vocally expressed their ‘disappointment’ with (Canopy’s) most recently reported earnings, and having already installed an (Constellation Brands) alum as CFO, we are not surprised by this move,” she said.

Canopy trades on the New York Stock Exchange as CGC.

Matt Lamers can be reached at [email protected]

4 comments on “‘The board decided’: Marijuana giant Canopy Growth fires Bruce Linton as CEO 
  1. Maxcatski on

    And so it begins. It seems that generally accepted business standards WILL apply to the cannabis industry after all. The honeymoon is over, for Mr. Linton at least.

    Market valuations cannot be far behind.

    Reply
  2. Boom and Busted on

    All speculation and no substance- including investment money in quarterly revenue reports effectively disguises how bad these companies really are at profitably producing and selling cannabis. Get someone real like Constellation involved and the first thing they’ll do is start cleaning house- buyer’s remorse perhaps?

    Reply
  3. Mike Johnson on

    The bubble will burst. Investments were made on the incorrect assumption that an easily grown plant could be controlled. Grown only by special companies with government-approved permits and nobody else. But it is a plant easily grown in most peoples’ backyards. And it has a long anti-authoritarian spirit connected to it. You will never stop the black market without severe heavy-handed tactics…as you “legalize” it for corporate-only sales. The shareholders were fooled. This is not a normal farm commodity. The public resistance to corporate control cannot be projected in a graph or software model. Profits will remain elusive for many years.

    Reply

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