Excerpted from The Globe and Mail: Executive turnover in Canada’s cannabis sector is accelerating, with another chief executive pushed out amid an industry-wide effort to turn money-losing pot producers into profitable ones.
Supreme Cannabis Co. Inc. has replaced CEO Navdeep Dhaliwal with board member Colin Moore, who will serve as interim CEO. The move extends months of senior management shuffles at the cannabis producer, which has seen its share price plummet 81 per cent from its peak.
Supreme attributes the turnover to its efforts to morph into a consumer products company, broadening its scope from the production of bulk cannabis. In October, the company also announced the departure of co-founder John Fowler, who had once served as Supreme’s CEO, and much of the executive team has changed in the past 12 months.
This kind of managerial evolution is one of the industry’s hottest trends, with cannabis companies pushing out founders and top executives to bring in leaders with experience in more mature consumer products industries. Mr. Moore, Supreme’s interim CEO, used to run Starbucks Canada. (Mr. Dhaliwal will remain on Supreme’s board of directors.)
The struggle, however, is in luring quality leaders. “With the challenging times in the cannabis sector, it has become more difficult for companies to attract top talent from the consumer products sector – or any sector for that matter,” said Les Gombik, an executive recruiter who works with cannabis companies.
While many executive candidates like a challenge, “they are also smart enough to ask the tough questions to determine if turnaround prospects are realistic,” he said, adding that these leaders also “command a premium both on cash compensation and upside potential [stock or stock options].”
Matching pay expectations is harder to do in this market because many investors have been burned and now demand that companies get their balances sheets in order. The Horizons Marijuana Life Sciences Index ETF, which broadly tracks the industry, has fallen 68 per cent from its peak in October, 2018.