Excerpted from The Globe and Mail: Former British Columbia premier Christy Clark is joining Constellation Brands’ board of directors as the American alcohol giant tries to rescue its bet on Canadian cannabis.
Ms. Clark is the first Canadian to join Constellation’s board, and her appointment follows the company’s $5-billion investment in Canopy Growth Corp. in 2018. Constellation now effectively controls Canopy, with four of seven seats on Canopy’s board of directors.
A year ago, Constellation’s deal with Canopy was seen as a prescient bet on the cannabis industry’s potential. Lately, however, the outlook has soured and Constellation is taking action to shake things up.
In July, the beverage giant pushed Canopy founder Bruce Linton out, removing the man who was often held up as the face of Canada’s burgeoning cannabis industry. Canopy’s losses had been piling up, and Constellation chief executive Bill Newlands had voiced his displeasure with the results.
The exit, coupled with poor results from rival cannabis companies and ongoing trouble at CannTrust Holdings Inc., has spooked investors across the sector. Constellation made its investment in Canopy by purchasing 104.5 million new shares from the Canadian pot producer for $48.60, but Canopy is now trading far below that level, closing at $32.85 Thursday.
While Ms. Clark’s appointment is at the board level, meaning she will not be involved in day-to-day operations, it is another sign that companies with cannabis operations are re-tooling their governance for a new era. The high-flying days of growth at any cost are in the past, and cannabis producers are adding heavyweights to their governance structures.
“As investor impatience mounts and high profile stumbles give the sector a black eye, companies increasingly feel the pressure to ensure that the right people are in the right chairs at the right time,” executive search firm Caldwell Partners wrote in a report this week.