There was probably no bigger personality in the marijuana business than Bruce Linton. The former Canopy Growth Corp CEO and founder is famous for taking a defunct chocolate factory in a small town in Canada and transforming it into the largest marijuana empire in the world, at least according to valuation.
But that reading has suddenly taken a turn with his firing by his own board. What does his departure mean for Canopy Growth stock? And for the marijuana industry more broadly?
In order to properly dissect this, we need to understand how one of the biggest names in pot was so quickly dethroned.
There are a number of reasons that Linton is no longer serving as executive of Canopy Growth, but it really all started when he made his biggest deal as head of Canopy Growth: the investment from Constellation Brands Inc (NYSE:STZ).
The alcohol producer poured in over $1.0 billion into Canopy Growth Corp—twice—sending not only CGC stock soaring, but the entire industry on massive bullish runs both times. It was hailed at the time as one of the best deals ever struck in the marijuana business, and the surging stock prices reflected that.
The thinking went that if “Big Alcohol” was getting in on marijuana, that meant this was a legitimate business with a very bright future. Not to mention they’d be able to share resources and work together to create a very exciting product: cannabis-infused beverages.
And it makes sense for Big Alcohol to make this move. After all, alcohol sales have been stagnant or declining for years; marijuana drinks could reinvigorate the alcohol business.
Furthermore, marijuana, once legal in more jurisdictions, will likely serve as a direct competitor to alcohol (there’s only so many recreational drugs people can indulge in, after all), and that fear could lead to a “can’t beat ’em, join ’em” mentality.
So on the surface, this would be a match made in heaven. But Linton’s departure has exposed a deep-seated problem between these seemingly perfect marriages: the present versus the future.
What I mean by this is that Big Alcohol companies like Constellation Brands are well established and are interested in mainly one thing: sales.
Marijuana companies and the people who helm them, though, often view marijuana companies through a different lens: as young players in a nascent industry that is ripe to be exploited, but will require a lot of money up front to see that end. A growth phase company, in other words.
And many marijuana markers will use the tech analogy to point out that losing money even for years on end can pay off with big profitability.
It’s a philosophy that is well at home in Silicon Valley, but among the execs at Constellation Brands Inc, it was wrong. In their view, now is the time for profits, not reinvestment. That was fundamentally different than Linton’s vision, so the company used its 38% stake in Canopy Growth Corp to oust the founder.
“Many companies that trade on exchanges are measured on earnings per share every 90 days,” Linton explained. “That’s a good model, but there are other companies that are in a growth and creation phase — Amazon might have done a bit of that, Netflix … where what they’re doing is looking at … how do they build this thing out and emerge as a massive dominant player.” (Source: “Former Canopy Growth CEO Bruce Linton reveals why he was fired, his next move,” Yahoo! Finance, July 10, 2019.)
And there you have it: the comparison to tech companies, whereas Constellation Brands saw Canopy Growth as a profit-now venture.
Canopy Growth had made a large number of acquisitions over its lifetime, with one of the more recent major buys being that of Acreage Holdings Inc (OTCMKTS:ACRGF, CNSX:ACRG.U) which, in this writer’s opinion, was a major victory for Canopy Growth Corp.
Sure, it cost the company $300.0 million up front without yielding much in return, but it allowed Canopy Growth to gain a first-mover advantage on its competitors by having a deal set in place that would allow the company to purchase Acreage Holdings when marijuana is federally legalized in the U.S.
This could pay off huge in the near future, but, again, this was against Constellation Brand’s philosophy. It didn’t help sales in the now, so it was a bad move.
“I was of the view this is a rocket ride that will measure earnings per share sometime, but not in an immediately required time and I have $4.0 billion in the bank so the point of that is to spend it,” said Linton.
Constellation Brands, meanwhile, lost $39.0 million due to its stake in Canopy Growth, according to report released just days before Bruce Linton was axed. The two companies wanted very different things, and so Linton had to go.
“I have this idea that massive creative energy focused on a field that’s just coming out of prohibition should be measured on intellectual property achievement [and] novel creations of products as those will be the branded differentiated goods versus a rolled joint,” said Linton.
“And all of these things come with a big cost, and how much is it worth? Call me in five years I’ll tell you.” (Source: Ibid.)
And that’s the thing: we’ll have to wait five years to see how this all turns out. Was Linton’s growth-focused play on the marijuana market reckless dreaming or the plan of a visionary? Time will tell, but frankly, I’m on Linton’s side. Not to mention that share prices for CGC stock have fallen since his departure.
Chart courtesy of StockCharts.com
“Creating Canopy Growth began with an abandoned chocolate factory and a vision,” said Linton. “The Board decided today, and I agreed, my turn is over.” (Source: “Canopy Growth Announces Leadership Transition,” Canopy Growth Corp, July 3, 2019.)
That’s how all this began, but since that time we’ve seen a pretty steep decline in Canopy Growth’s share prices.
That does make a good deal of sense, after all. Linton was a well-respected executive and many thought he had a very solid job leading Canopy Growth stock to the spot it currently occupies as the largest marijuana company in the world.
And, frankly, I think the myopic vision of Constellation Brands may actually harm the stock long-term. I don’t think the comparison is entirely fair, but this does remind somewhat of Steve Job’s early termination with Apple Inc (NASDAQ:AAPL) before he was brought back into the fold, helped produce the “iPhone,” and the rest is history.
Not sure exactly how this will play out, but this does, in my mind, have the markings of a similar situation.
Now, as far as my Canopy Growth stock prediction goes, I don’t think it’ll be run into the ground in Linton’s absence. In fact, there’s a decent chance that this may actually turn out alright for CGC stock.
However, as far long-term potential goes, focusing on sales in the now and forgoing establishing a stronger foothold in the global marijuana market gives me pause. I don’t think that’s the right move now, and in the long run it may very well end up hurting CGC stock’s ceiling.
I wouldn’t tell any investors to bail right now, but I am less bullish today with Linton gone than I was last week with him at the helm.
This is just the fist clash between established institutions and marijuana stocks. After all, this isn’t Silicon Valley and these aren’t tech companies, no matter how much pot execs wish they could be treated as such.
There is a dearth of people willing to shell out big bucks without seeing returns for years on end, and most of those people are VCs in southern California. Most investors want a reasonable timeline on return and they want hard numbers, not speculation and potential.
Problem is, this is not the time for hard numbers. Sure, Canada has legalized marijuana, but that is a relatively small country. Markets like Germany and the U.S. are still very closed off to pot and will remain so likely for years to come.
But when they do eventually open, we’re going to see huge explosions in marijuana stock value. Problem is, that will require patience, and patience is not a virtue that boards tend to possess. They want results and they want profit. Such an attitude would have sunk a company like Amazon.com, Inc (NASDAQ:AMZN) years ago.
While marijuana is not tech, there are certain similarities, like building up a consumer base before focusing hard on monetization. Right now is the build phase, but more traditional companies like Constellation Brands don’t see it that way.
Again, it may work out in the end, but hopefully this does not set a precedent in the marijuana business.
If other large corporate investors demand profit immediately, that could ultimately stunt the growth of the current marijuana stocks, and instead pave the way for young upstart companies across the world to dominate their local markets, rather than form global marijuana empires.
For pot investors now, we want to get in on the ground floor of these possible global giants, and so moves like the one Constellation Brands Inc made are not what pot bulls want to see.
The marijuana industry is brimming with potential, but it’s going to need time and money to fulfill said potential. While I believe that CGC stock is still strong, losing Bruce Linton as CEO is a blow that I believe will ultimately cost the company down the line.
As for other marijuana stocks, hopefully they also don’t fall prey to corporate pressure to make money immediately off the very small slice of the marijuana space open now, and instead plan for the green future that will see shares soar.
在大麻行业，可能没有比布鲁斯·林惇更大的个性了。这位前 Canopy Growth 公司的首席执行官和创始人以在加拿大一个小镇拥有一家废弃的巧克力工厂并将其改造成世界上最大的大麻帝国而闻名，至少根据估值。
但那一读突然发生了转折，他的射击由他自己的董事会。他的离职对 Canopy Growth 股票意味着什么？而对于大麻产业来说，更广泛的范围？
林惇不再担任 Canopy Growth 的执行总裁有许多原因，但这一切都是他作为 Canopy Growth 的总裁所做的最大的交易：来自 Constellation Brands Inc （ NYSE ： STZ ）的投资。
这家酒精生产商向 Canopy Growth Corp 投入了逾10亿美元（两次），不仅导致 CGC 股价飙升，而且整个行业都出现了大幅上涨。当时，这是大麻行业有史以来最好的交易之一，股价飙升反映了这一点。
在硅谷，这是一种很好的哲学，但在星座品牌公司（ ConstellationBrandsInc ）的高管中，这是错误的。他们认为，现在是盈利的时候，而不是再投资。这与 Linton 的愿景根本不同，因此该公司利用其持有 Canopy Growth Corp 38%的股份，赶走了创始人。
林惇解释说：“许多在交易所交易的公司每90天按每股收益来衡量。”“这是一个很好的模式，但还有其他一些公司正处于增长和创造阶段——亚马逊可能已经做了一些这方面的工作， Netflix ……他们正在关注的是……他们如何把这件事建立起来，并成为一个巨大的主导者。”（来源：“ Canopy Growth 前首席执行官 Bruce Linton 透露了他被解雇的原因，他的下一步行动，”雅虎财经，2019年7月10日。）
在那里你可以看到：与科技公司相比，星座品牌把 Canopy Growth 看作是一个盈利的项目。
Canopy Growth 在其有生之年进行了大量收购，最近的一次重大收购是 Acreage Holdings Inc （ OTCMKTS ： ACRGF ， CNSX ： ACRG.U ）的收购，在本文作者看来，这是 Canopy Growth Corp 的一次重大胜利。
当然，在不产生太大回报的情况下， Canopy Growth 预先花掉了3亿美元，但它让 Canopy Growth 获得了相对于竞争对手的先发优势，达成了一项协议，允许该公司在美国大麻合法化时收购 Acreage Holdings 。
与此同时，根据布鲁斯•林惇( Bruce Linton )被解雇前几天发布的报告，星座品牌由于在 Canopy Growth 中的股份而损失了3900万美元。这两家公司需要非常不同的东西，所以林惇不得不去。
“所有这些都带来了巨大的成本，价值有多大？五年后打电话给我，我会告诉你的。”(资料来源： Ibid )
这就是事实：我们必须等五年才能看到结果。林惇专注于大麻市场的增长型游戏是不是鲁莽的梦想，还是一个有远见的人的计划？时间会告诉我，但坦率地说，我站在林惇一边。更不用说， CGC 股票的股价自他离开以来一直在下跌。
“创造 Canopy 增长始于废弃的巧克力工厂和愿景，”林惇说。“董事会今天决定，我同意，我的决定已经结束。”（来源：“ Canopy Growth 宣布领导层换届，” Canopy Growth Corp ，2019年7月3日）
这一切都是这样开始的，但从那以后，我们看到了 Canopy Growth 的股价大幅下跌。
坦率地说，我认为星座品牌的短视可能会长期损害其库存。我认为这种比较并不完全公平，但这确实让人想起了乔布斯在被带回苹果公司（ Apple Inc ， NASDAQ ： AAPL ）之前就与苹果公司（ Apple Inc ）提前终止合作，帮助苹果生产了“ iPhone ”，其余都是历史。
现在，就我对 Canopy Growth 股票的预测而言，我认为在林惇不在的情况下，它不会出现在地面上。事实上，对于 CGC 股票来说，这是一个不错的机会。
然而，就长期潜力而言，现在专注于销售，放弃在全球大麻市场建立更强大的立足点，让我犹豫了。我认为目前这不是正确的举措，从长远来看，这很可能最终会损害 CGC 股票的上限。
但当它们最终开放时，我们将看到大麻库存的巨大爆炸。问题是，这需要耐心，而耐心不是董事会往往拥有的美德。他们想要结果，他们想要利润。这种态度会让亚马逊这样的公司陷入困境。年前，纳斯达克（ NASDAQ ： AMZN ）上市。
大麻产业充满了潜力，但要实现上述潜力需要时间和资金。虽然我相信 CGC 的股票仍然很强劲，但失去了 BruceLinton 作为首席执行官是一个打击，我相信这将最终导致公司的损失。