His tenure at the helm of Canada’s biggest pot co may be over but Bruce Linton is still cheerleading for the emerging sector which for many years now had Linton as its primary spokesperson and key visionary.
This week, news broke that Canopy Growth’s board of directors had asked Linton to step down as co-CEO and board member for the company which he co-founded six years ago. The move comes after disappointing quarterly results last month which saw the licensed cannabis producer’s net losses climb to $335.6 million, more than three times the amount that analysts had predicted.
Linton’s ouster can be traced back to last summer when US beer and liquor company Constellation Brands upped its bet on Canopy to the tune of $5 billion, taking on a 37 per cent stake in the company and setting itself up in four of the company’s seven board positions.
Linton said his termination was likely more to do with his own management style than a knee-jerk reaction to the company’s latest financial results.
“I’m not sure it’s actually related to the results because internally we had a model and those results weren’t materially off that in terms of the actual gross margin, I think,” said Linton in conversation with BNN Bloomberg on Wednesday. “We were building a platform and rolling it out. I don’t think it’s actually one quarter. I imagine that people who buy and sell the stock in one quarter or fire or don’t fire the CEO in one quarter are not consistent with the sector.”
“You don’t get to a $20-billion market cap, 4,000 people and operating in 16 countries because you’re super malleable and [say that] everybody’s idea is a good idea. You actually have an idea of how it should be done and you go and do it. And so, with $5-billion coming in, we changed the board on November 1 and that changes the dynamic,” says Linton.
“So I don’t love this outcome but it’s not necessarily wrong for the company and it’s not totally unexpected when you change that structure of governance,” he said.
And while Linton applauded Constellation’s boldness in investing heavily in both Canopy Growth and an industry still taking its first steps, he also alluded to differing visions for Canopy, where Linton’s own attempts to build a “legend,” as he called it, were likely in conflict with Constellation’s more pressing concerns.
Last week during Constellation’s quarterly conference call, CEO Bill Newlands said that while he is still happy with Canopy’s potential, the liquor giant’s management was “not pleased” with Canopy’s latest financial results.
When asked about Newlands’ statements, Linton offered, “I wouldn’t have said them.”
Linton is still a major shareholder in Canopy Growth but the terms of his dismissal reportedly call for him to stay clear of the cannabis businesses in Canada for a defined period of time. And while he says that his plans include spending more time with his software services company Martello Technologies, Linton had some parting words about Canada’s pot sector, urging the government and the business community in general to be more awake to the opportunities that cannabis presents.
“This is no longer a Canadian thing and the government has to make sure to keep their eye on the ball. This could be the best new business outcome for Canada in the last 20 years but they do really need to push globally to make people understand how well it’s governed in Canada,” he said.
“If you look at the number of jobs created by Canopy in the last 12 or 14 months, it’s more than Google, Amazon and McCain combined. If you look at the capital investment, it’s almost $1 billion in capital investment in Canada, which is more than almost any other company that exists, and so, they should recognize that this is almost the strongest piece of growth in the entire Canadian economy and they should reflect that globally,” Linton said.