The announcement of Canopy Growth’s (WEED.TO)(CGC) new CEO was met with rallying shares and warm words from the company’s ousted CEO and co-founder on Monday.
However, the decision to tap David Klein, the chair of Canopy Growth’s board since October, and chief financial officer of major stakeholder Constellation Brands (STZ), was a somewhat anti-climactic end to the months-long search for new leadership.
Bruce Linton, who was fired in July from the top job at the Smith’s Falls, Ont. cannabis company he co-founded, primed expectations for a splashy appointment over the summer. He suggested shortly after his departure that a woman with tech background should replace Mark Zekulin, who announced he would step down as CEO before the end of 2019.
Linton changed his tune on Monday, telling Yahoo Finance that Klein, a 14-year veteran at the New York-based Corona beer-maker, is the “perfect pick,” and the man he would have chosen on the day he was dismissed.
Craig Wiggins of the cannabis sector analysis team TheCannalysts agrees Klein is a solid choice. Canopy Growth has reported deep losses in recent quarters. Shares have fallen more than 28 per cent year-to-date, helped somewhat by Monday’s rally. Wiggins said those financial woes may have scared off big-name candidates from applying.
“Those hoping for a superstar CEO to come waltzing into cannabis from CPG (consumer packaged goods), pharma, or another industry just got a dose of reality,” he wrote in a recent editorial.
“There were likely dozens of ‘superstars’ approached by Canopy Growth, but the monumental task of turning around the operations... was likely too daunting to attract someone (from outside) with the competencies to turn Canopy Growth around.”
Wiggins said while Klein is not a “sexy pick,” he is a “very good” one. Like many other analysts, he thinks the new leader will bring increased financial discipline likely to reward shareholders, including Linton, who has a sizable position in the company.
He believes there will be a time for a different kind of CEO at Canopy Growth. But that time is not now.
“CFOs are good watchdogs but expanding industries do need strategic visionaries. Preferably ones that can build on a solid foundation, versus the leaky operational assets that Bruce Linton cobbled together in a hurried race to be number one,” he wrote. “I would expect a superstar will then step forward once hard evidence of a more stable horizon is within sight.”
Note: Wiggins said he does not have a position in Canopy Growth, and does not intend to start one in the next five days.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.