The resignation might be a sign that not all is well in the wake of the Constellation deal.
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This story originally appeared on Benzinga
Bruce Linton founded Canopy Growth Corp in 2013 and was the public face of the Canadian cannabis company until his resignation Wednesday.
Canopy Growth announced Linton will step down as co-CEO and board member, effective immediately. The company’s other co-CEO, Mark Zekulin, will become sole CEO and will be tasked with finding a new leader to help the company through its next phase of growth.
Rade Kovacevic, Canopy’s head of all Canadian operations and recreational strategy, will become president of Canopy. The board also named John Bell as chair and this will be reviewed at the company’s annual meeting in September.
Why It’s Important
Linton said he agrees with the board’s assessment that “my turn is over.” Zekulin has been Linton’s business partner from the beginning and played an “integral role in Canopy’s success.”
“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,” said Linton.
Constellation Brands, Inc.’s multi-billion dollar investment in Canopy gave the alcohol maker control of the cannabis company and its board of directors, 420 Investor’s Alan Brochstein told Benzinga. Constellation’s shareholders have been “critical” of the deal and Constellation’s stock hasn’t moved since the initial investment nearly two years ago.
Brochstein said Constellation made an “extremely unusual” move of criticizing Canopy on its earnings conference call in what could be seen as a signal it isn’t happy with Canopy’s management. The partnership with Canopy is unlikely to generate the results Constellation expected, which Brochstein said is “likely a big disappointment” after management reiterated expectations for Canopy to help generate sales of more than $1 billion.
Canopy’s strategy moving forward will remain the same as it has been for the past six years, Zekulin said. The company will continue investing in people, infrastructure and brands to “lead through credibility and vision.”
“I know the company will continue to thrive as the Canopy story continues on for years to come,” said Zekulin.
Canopy Growth’s stock traded lower by 4.4% to $38.30 in Wednesday’s pre-market session. Constellation’s stock was down 1.8% at $195 per share.