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Canopy Growth Executive Shakeup highlights growing pain for the cannabis industry



Linton praised Canopy & # 39; s potential and told CNN Business last week that his company – the world's largest cannabis company – was well placed to dominate his new industry in the years to come. However, the Canadian cultivator, manufacturer and seller of cannabis products will soon become a flux company.
Wednesday, Linton told CNN he was fired. The executive shake-up at Canopy not only highlights the challenges that cannabis companies face when trying to meet sky-high expectations, but also the maturation of a long illegal drug in a legitimate industry.
It used the money to pick up competitors; establishing new operations abroad securing a blockbuster agreement to ultimately acquire American cannabis company Acreage Holdings; Invest in drug research and formulate a lot of cannabis drinks, chocolates and vaporizers.

The company played the long game: It takes time for the Cannabis markets to scale, for products to be developed, for research to be done, and for nations to change.

However, Canopy could fail to deliver in the short term and meet the expectations of its investors, especially its multi-billion dollar remuneration .

"[Linton] is a loss of industry growth," says Richard M. Batenburg III, who leads investor relations to Cliintel Capital Management, a Denver-based institutional investment company focusing on cannabis. "You need a multi-trillion dollar CEO to handle this process."

Linton told CNN Wednesday that he had fallen in vain with the company's board, which now includes four directors installed by Constellation. Marketing Director Mark Zekulin, who is temporary CEO, will go down as the company assures a new CEO, a canopy spokeswoman told CNN Business.

Canopy lost $ 670 million and reported revenue of $ 226.3 million for the financial year. The losses ̵

1; which were partly due to a lack of sales in Canopy's home country in Canada as well as large stock options – were far broader than analysts expected.

"This is a long-standing industry," says Bethany Gomez, CEO of Brightfield Group, a Chicago-based company researching and analyzing the cannabis industry. "I think there are some revelations about the true viability and scalability of the Canadian market in general."

  Bruce Linton says he has been co-director of the world's largest cannabis business, Canopy Growth.
There was much ado from investors as Canada in October 2018 became the second nation in the world to legalize cannabis for adult recreational purposes. Valuations skyrockected for Canadian licensed operators such as Canopy, which had public capital to quickly build market share in a potentially thriving industry. In the last nine months, however, sales in the country did not match the hype.

Canada registered 356 million. Kr. In cannabis sales from October 2018 to April 2019, according to data from Statistics Canada, the nation's statistical agency. These figures tend to be well below analysts and market research, some containing projections that Canada could have billions in recreational sales right out of the gate. Canada's roll-out was deliberately maintained. The government wanted to take a cautious and thought-provoking approach to the process, Gomez said and noted how the products were limited to smokable cannabis, seeds, plants and oils.

  A Wrigley gum heir and a former Patrón CEO enters cannabis

As such, Canada's recreational cannabis market does not resemble the adult -Under States on the other side of the southern border. Recreational cannabis stores in places like Colorado and California offer cannabis in various forms far beyond the usual "flower" or bud.

It will change later this year when Canada allows for more consumer goods – beverages, edibles and vaporized products – to be sold commercially where permitted. The canopy has invested heavily for the day that buys dollars and hours to create cannabis-infused drinks and chocolates and acquire companies with deep intellectual property and research portfolios.

Linton told CNN Business last week that he believed Canopy's products, including brands like Tweed, could become industry standard and sold at the world's largest retailers. Despite the possibility of Canada's export market and the emergence of medical cannabis industries abroad, Canopy has broadened widely and established operations in more than a dozen countries.

Canopy has been more aggressive than his peers in acquiring other companies. It has also been more in the public eye thanks to Linton, an eccentric personality hyped over the potential of Canopy, said Gomez.

Linton's departure may not necessarily signal that Canopy Growth will change its approach, says Kris Inton, a Morningstar analyst covering Canopy Growth and other listed listed companies.

"In my opinion, that will probably not change their strategic direction," he said. "It won't change any of their options."

Canopy Growth's management review may indicate the development of a more disciplined economic understanding of cannabis businesses, especially in the public domain, said William "Beau" Wrigley, Jr., who heads the Atlanta-based cannabis company Surterra Wellness.

Wrigley expects to see traditional players like Constellation Brands continue to acquire and invest in cannabis companies, but with a more critical eye on management's background and economic and operational history.

"This in no way affects the potential of [cannabis]," Wrigley said. "This valuation business needs some recalibration."


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