Canadian cannabis company Canopy Growth Corporation (CGC, WEED.TO) unexpectedly announced Wednesday that Bruce Linton would be stepping down as co-chief executive officer and board member of the firm.
Mark Zekulin, currently president and co-chief executive officer, will remain on as CEO of Canopy, the world’s largest publicly traded cannabis company by market capitalization. Zekulin will work with the board of directors to identify a new leader for the company in a search that will include both internal and external candidates, Canopy said in the statement.
Rade Kovacevic, current head of Canadian operations and recreational strategy, will fill the role as president. Each of the executive changes is effective immediately.
"The Board decided today, and I agreed, my turn is over. Mark has been my partner since this Company began and has played an integral role in Canopy's success,” Linton said in a statement. “While change is never easy, I have full confidence in the team at Canopy – from Mark and Rade's leadership to the full suite of leadership – as we progress through this transition and into the future."
In an interview with CNBC Wednesday morning, Linton said he was “terminated” from the company.
Shares of Canopy fell 7% to $37.24 each as of 7:49 a.m. ET on the New York Stock Exchange.
Linton, a co-founder of Canopy, had been a leader at the company since its inception in 2013, when it was first known as Tweed Marijuana. Canopy became the first publicly traded cannabis company in North America in April 2014.
In 2018, Canopy received a $4 billion investment from Corona-owner Constellation Brands (STZ), giving the beverage-maker an about 40% stake in the company. Constellation Brands’ CEO Bill Newlands and CFO David Klein serve as members of Canopy’s board of directors.
“We fully support the decision made by Canopy Growth’s Board of Directors to appoint Mark Zekulin as the company’s sole CEO,” a spokesperson from Constellation Brands said in a statement to Yahoo Finance. “The future of Canopy Growth remains very bright and we look forward to the company’s continued success for many years to come.”
In a note to clients Wednesday, Cowen analyst Vivien Azer said Linton’s exit was unsurprising given recent dynamics between Constellation and Canopy. The beverage company recently installed former Constellation senior executive Mike Lee as Canopy’s acting CFO. And during a call with investors in late June, Constellation CEO Newlands said he was “not pleased” with Canopy’s year-end results.
For the fiscal year ending in March, Canopy posted net revenue of $226.3 million. Its adjusted EBITDA amounted to an annual loss of $257.0 million.
“The magnitude of losses for [Canopy] has expanded far more than we had expected, and while we commend Linton for his vision in establishing the world's leading cannabis company, we believe new leadership will be a welcome change,” Azer wrote in the note.
Canopy in June said its shareholders had approved a deal to acquire the right to purchase U.S. multi-state cannabis operator Acreage Holdings for $3.4 billion, with the transaction contingent on the U.S. legalizing cannabis production and sales at the national level. An Acreage Holdings spokesperson declined to comment on the executive changes announced Wednesday.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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