Smiths Falls, Ontario-based Canopy Growth (NYSE:CGC) is, in many ways, the epicenter of the legal marijuana industry. Despite the steady decline in its share price since the legalization of adult-use recreational marijuana in Canada last October, the company is still the only borderline large-cap company in the industry, as well as the market share leader in terms of annual sales. Canopy also sports the richest tie-up with a noncannabis company through its roughly $5 billion CAD equity investment from alcoholic beverage giant Constellation Brands (NYSE:STZ).
Even so, Canopy has been going through a rough patch lately. Mounting quarterly losses, less-than-stellar recreational and medical marijuana sales, and a number of costly acquisitions ultimately culminated in the departureof longtime co-CEO Bruce Linton last week. While Linton initially stated that the decision was mutually agreed upon between him and the board of directors, he later admitted during a rather candid interview on CNBC’s Squawk Box that he was forced out the door — presumably at Constellation’s behest. The company will reportedly begin searching for a new CEO immediately. And as part of this management churn, co-CEO Mark Zekulin stated that he also plans to step aside, once a replacement is found.
As Canopy begins the transition to a new management team, it’s an opportune time to consider where this top pot company might end up in the next five years. So, without further ado, here’s a look at where Canopy seems to be headed.
The next step
Now that Canopy is a large cap company, it’s arguably time for the company to start acting like one and that means improving its bottom-line in a big way. In the most recent quarter, the pot titan posted a staggering operating net loss of 174.4 million CAD, which was well above Wall Street’s consensus estimate for the three-month period. Therefore, the first order of business for Canopy’s next CEO will almost certainly be to rein in expenses and put the company on a path toward sustained profitability.