There are no bitter feelings when it comes to the way former Canopy Growth (CGC) co-CEO Bruce Linton is rating the company’s pick to replace him at the helm of the world’s most valuable cannabis company.
Despite being fired by Canopy’s board in July, Linton had nothing but positive things to say about the company’s decision to tap Constellation Brands Chief Financial Officer David Klein as its new head after a five month search. The announcement sent Canopy shares spiking as much as 14% Monday.
“I think he’s a perfect pick,” Linton told Yahoo Finance in an exclusive interview with YFi PM. “If I had my choice on the third of July I would have picked him then.”
Canopy selecting Klein, who will officially step down as board chair and take over as CEO in January 2020, marks another top spot at the cannabis company going to an executive at alcohol giant Constellation Brands (STZ), which invested more than $4 billion dollars into Canopy last year. Linton previously cited differences of opinion with Canopy’s board, which had become mostly controlled by Constellation Brands alumni, as a reason he was forced out. Two reasons, however, stopped Linton short of grading Canopy’s search process as perfect.
“The only reason I give it anything less than an A+ are two things: One is five months is a long time [to search] and so that could’ve happened sooner,” he said, adding that his second reason was a lack of clarity surrounding how the company was thinking about Klein’s compensation.
“If he’s still carrying some kind of valuable (compensation) tied to Constellation on this... you don’t have alignment,” he said. “I don’t know if that’s the case, but if that piece is square, perfect.”
Canopy Growth did not immediately respond to Yahoo Finance’s request for comment.
Linton, who previously told Yahoo Finance he was buying more Canopy shares in August after sensing a bottom, also shared his optimism stemming from newfound alignment with the board that could help Klein effectively put Canopy’s massive $2 billion cash pile to use.
“You can’t solve everything with one person and one person can’t create every issue, but I do think David recognizes he has a lot of leverage,” he said. “He should have very good leverage and an ability to make moves when others are contained—and I think he will make moves. Before he was CFO at Constellation, he was running M&A and how did they grow, right? So I feel optimistic with that kind of positioning relative to others and background he’ll kill it.”
Cowen analyst Vivien Azer, who has an Outperform rating on Canopy, echoed that sentiment in a new note out Monday, highlighting that “Under Klein’s tenure (Constellation’s) beer segment is delivering best in class gross margins.”
“David Klein meaningfully upgrades the CEO capabilities” at Canopy, Azer wrote, adding that the update is “critical given the negative revision cycle that we have experienced in 2019.”