Canopy Growth shares get lift after Constellation executive named new CEO

Canopy Growth Corp.’s appointment of a veteran Constellation Brands executive as its new chief executive gave the cannabis producer’s shares a lift on Monday.

Canopy shares gained 14 per cent or $3.45 to $28.17 in trading on the Toronto Stock Exchange.

The surge came after the Smiths Falls, Ont., company announced that David Klein, the chief financial officer at Canopy’s largest shareholder, will replace Mark Zekulin, effective Jan. 14.

Klein has been serving as chairman of the board at Canopy, which intends to appoint a new chairman once Klein takes over as CEO.

“Canopy Growth sits at the forefront of one of the most exciting new market opportunities in our lifetime,” Klein said in a statement.

He said no company is better positioned to succeed in the emerging cannabis market.

“I look forward to working with the team to build on the foundation that has been laid, to develop brands that strongly resonate with consumers, and to capture the market opportunity before us.”

Canopy said Klein was selected following a recruitment process using a global recruitment company and that many candidates were interviewed.

John Chu of Desjardins Capital Markets said, however, that Klein’s appointment isn’t surprising given his extensive consumer packaged goods (CPG) and alcohol beverage experience, background of operating in highly regulated markets and knowledge of Canopy.

And he said it would not be surprising to see another Constellation officials to be named chairman.

“The addition of Mr. Klein as CEO provides some much-needed senior management stability and should enable the company to formulate a formal vision and strategy under its new leadership team,” Chu wrote in a report. “We wonder if a more narrowly focused growth strategy that emphasizes cost control could become more of a priority than we have seen previously.”

Zekulin is a founding employee at Canopy and has served in a variety of roles including president, co-CEO and finally as CEO after co-founder Bruce Linton was ousted earlier this year.

Linton’s departure came after Constellation said in June that it was “not pleased” with the company’s financial results.

Linton, who had been the public face of the company as it grew into an industry leader after its founding in 2013, said he didn’t want to leave. He received $9.33 million in the fiscal year ended March 31, up from $2.52 million a year earlier, according to a regulatory filing. It included $8.56 million in option-based awards, a $450,000 bonus, $318,000 salary and $3,568 in other compensation.

He also received a $1.5-million payout after being terminated without cause as of July 2.

Zekulin is expected to step down as CEO and resign his seat on the board of directors of Canopy effective Dec. 20.

He described an incredible six years at Canopy as the company grew from “five people in an abandoned chocolate factory, to thousands of people across five continents.”

“Canopy today is positioned to win with the resources, infrastructure, team, and award-winning culture needed to succeed,” he said in a statement. “It has truly been an honour to be part of building a unique, Canadian success story like Canopy, and I look forward to seeing the company continue to evolve and grow under David’s leadership.”

Canopy has the highest market share in the Canadian recreational cannabis market at around 28 per cent, according to AltaCorp Capital Inc.

While that positioning may be important to assess its performance, the sustainable market share following the introduction of cannabis derivative products like vapes, beverages and edibles may be one of the most critical factors in determining long-term success in Canada, it added in a report.

“We believe that companies that can develop superior products through innovation and strategic partnerships with Consumer Packaged Goods (CPG) companies may be at a relatively advantageous position to capture a higher market share once cannabis derivative products are launched in Canada later this month.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Two day rainfall event wasn’t a record breaker for Red Deer

The two day rainfall event in Red Deer late last week wasn’t… Continue reading

Donald School of Business is returning to college’s main campus

Red Deer College’s Donald School of Business is moving back to the… Continue reading

Trudeau to seek 10 days of paid sick leave for all Canadian workers

Paid sick leave is key to keeping COVID-19 spread under control, prime minister says

Sylvan Lake waiting for better days

COVID-19 has put the tourism season on hold for Sylvan Lake, but… Continue reading

VIDEO: Procession to honour Snowbirds Capt. Jennifer Casey comes to Halifax

Snowbirds service member died in a crash in Kamloops one week ago

Alberta government website has latest COVID-19 statistics

Red Deer Advocate readers can stay up to date on the COVID-19… Continue reading

44% fewer passengers flew on Canadian airlines in March 2020 than in 2019

COVID-19 pandemic has hit airlines hard as travel remains low

David Marsden: Jason Kenney is all hat, no cattle

There are few character failings more unappealing than those of people who… Continue reading

Global warming critics find themselves under attack

Re: “Tropical storms offer glimpse of our evolving environment,” Gwynne Dyer, Opinion,… Continue reading

Scheer has quickly made a hash of Harper’s legacy

By the time Andrew Scheer hands over the Conservative party to a… Continue reading

Bayern, Dortmund warm up for quietest ever Bundesliga duel

BERLIN — Canada’s Alphonso Davies rose to the occasion on Saturday as… Continue reading

Ace Canadian esports driver Brooks tearing up the track online during COVID-19

TORONTO — Andrew Brooks could write a travelogue that would make a… Continue reading

Canadian Screen Awards to reveal winners tonight through Thursday

TORONTO — The Canadian Screen Awards will reveal this year’s winners in… Continue reading

Most Read