(Reuters) - Canada’s Canopy Growth Corp (WEED.TO) (CGC.N) fired founder and co-Chief Executive Officer Bruce Linton, a surprise move that comes just a week after the weed producer’s largest shareholder expressed disappointment over its loss-making streak.
The world’s largest pot company announced earlier in the day that Linton was stepping down, leaving Mark Zekulin in charge of the company.
"I think stepping down might not be the right phrase," Linton said in an interview with CNBC here "I was terminated."
Linton also said he did not know why he was fired, adding, “At the end of the day I really think sometimes entrepreneurs are entrepreneurs because they’re not super employable.”
Last month, Canopy reported a net loss of about C$323 million for the fourth quarter, attributing it to increased investments in expanding the business.
A week later, Constellation Brands (STZ.N), which owns a stake of nearly 56% in Canopy and has four of its six board seats, said it was not happy with the Canadian company’s year-end results.
“We are working with Canopy almost on a daily basis to ensure that we are all focused on the right things,” Constellation CEO Bill Newlands had said on a post-earnings call with analysts.
On Wednesday, the brewer said it fully supported the decision made by Canopy’s board to appoint Zekulin as the company’s sole CEO.
“It is pretty clear that it was at the urging of Constellation Brands. At this point they have enough power on (its) board to make these kinds of decisions,” William O’Neil analyst Andrew Kessner said.
Linton’s strategy of chasing growth at the expense of near-term profits seemed to have fallen out of favor with top Constellation executives, who are under pressure to provide a clearer timeline on a return on investment in Canopy, Kessner said.
Linton founded Canopy in 2013 in an abandoned Hershey’s chocolate factory in Smiths Falls, Canada and has since been the face of the company. He took the company public in 2014 and has bolstered its operations with acquisitions worth more than C$5 billion.
Under Linton, Canopy also raised over C$6 billion since its founding in 2013, with the Corona beer maker agreeing to invest more than $4 billion in the company - the biggest such investment in the cannabis industry.
(Graphic: Canopy shares outperform peers - tmsnrt.rs/2YsEya5)
Linton did not immediately respond to a Reuters request for comment. Reuters’ calls and emails to Canopy seeking details on Linton’s departure were not answered.
While it was not clear what Linton’s severance package would be, company filings showed that his total compensation for 2018 was $2.46 million, a near six-fold rise from a year earlier due to $2 million of option-based awards.
Analysts at brokerage Stifel said they would not be surprised to see Linton take on another role within the cannabis industry, likely as an entrepreneur as his strength was in recognizing early stage value.
Rade Kovacevic, who currently leads the company’s Canadian operations and recreational strategy, will take over the role of president from Zekulin.
The company also named John Bell, Canopy’s lead director of five years, as chairman, a decision that it said would be reviewed at the board’s annual meeting in September.
Earlier this year, Canopy also replaced long-term Chief Financial Officer Tim Saunders with a former Constellation executive.
Shares of the company, which fells as much as 5.3% earlier in the session, reversed course to trade marginally up.
Reporting by Debroop Roy, Nivedita Balu and Shanti S Nair in Bengaluru; Editing by Anil D'Silva and Sweta Singh