Canopy Growth Corporation (TSX:WEED), one of the Canadian marijuana stocks, plans to tap Constellation Brands’ CFO as its new Chief Executive Officer
SmallCapPower | December 11, 2019: Canopy Growth Corporation (TSX:WEED) (NYSE:CGC), one of the Canadian cannabis stocks, climbed 14% to $28.17 on Monday after announcing that David Klein will become the Company’s new CEO effective January 14, 2020. Mr. Klein has spent the past 14 years at Constellation Brands, Inc. (NYSE:STZ), which includes his current role as Executive Vice President and Chief Financial Officer. David Klein is presently Chairman of Canopy Growth Corp’s Board of Directors.
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In November 2018, Constellation closed a $5-billion investment in Canopy, at a price of C$48.60 per share, increasing its interest in Canopy Growth to 37% and becoming WEED’s biggest shareholder. That investment is now worth about 42% less as of Monday’s market price. Constellation Brands also owns warrants that would allow the beverage giant to eventually take majority control of Canopy Growth Corp.
Constellation Brands is clearly concerned with the lack of profitability at Canopy Growth and it is bringing in its CFO to turn the ship around. David Klein successfully integrated the Corona beer brand into the Constellation stable following its acquisition from Anheuser-Busch InBev in 2013.
Constellation Brands has a history of buying and building great alcohol beverage brands, and that includes Corona beer as well as Robert Mondavi wines, which sparked North America’s interest in California’s Napa Valley.
Beverages are anticipated to become a big part of Cannabis 2.0 when products begin to roll out in 2020. David Klein is expected to turn Canopy Growth into consumer products company.
Canopy Growth already has a solid presence in Canada, with the highest market share in the Canadian recreational cannabis market at about 28%, according to AltaCorp Capital Inc.
Canopy Growth has also taken steps to establish its presence in the United States. First, by acquiring the rights to buy U.S. vertically-integrated, multistate cannabis operator Acreage Holdings Inc. for $3.4 billion, which is contingent on the U.S. legalizing cannabis at the federal level. And, more recently, Canopy launched its hemp-derived CBD brand, “First & Free,” into the U.S. consumer market, available for sale in the 31 U.S. states where CBD products are legal. Jefferies LLC analyst Owen Bennett forecasts U.S. CBD retail sales to reach US$3.5 billion by 2022.
Also, on October 2, 2019, Canopy Growth Corp. announced that it had acquired a 72% stake in BioSteel Sports Nutrition Inc., a maker of sports nutrition products, providing entry into the sports nutrition and hydration business. Outgoing Canopy Growth CEO Mark Zekulin said the Company has plans to introduce CBD into future BioSteel offerings.
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