Canadian cannabis pioneer Canopy Growth hires Constellation Brands CFO as new CEO

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Canadian cannabis pioneer Canopy Growth hires Constellation Brands CFO as new CEO

(Pictured) Canopy's new CEO David Klein

(Pictured) Canopy's new CEO David Klein

(Pictured) Canopy's new CEO David Klein

(Pictured) Canopy's new CEO David Klein

Bethan Rose Jenkins, Cannabis News Writer/Editorial

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On Monday, December 9, Canopy Growth Corporation announced that David Klein – chief financial officer of Constellation Brands Inc. – will be taking on the role of the Canadian cannabis producer’s new chief executive. Klein will replace Mark Zekulin from January 14 onwards.

Constellation Brands owns a number of alcoholic beverage brands, including Corona beer — the iconic imported brand for which Klein has assumed the role of CFO and Executive Vice President for the past 14 years. Klein has also spent a year sitting on Canopy’s board of directors and is currently the board chairman; a role that someone else will fill once Klein is officially appointed as CEO. 

Klein’s time spent at Corona has involved dealing with various facets of business finance, including mergers and acquisitions (M&A). With his level of experience – combined with the fact that Canopy is now involved in the cannabis drinks sector – Klein stands to greatly benefit the Ontario-based company. 

Bruce Linton was fired from his role as Canopy’s CEO in July

In July 2019, Canopy’s former CEO Bruce Linton was fired from his role by the company’s board of directors, which is predominantly made up of directors from Constellation Brands. The current outcome was somewhat predictable, considering the fact that Constellation invested USD $4 billion into the Canadian cannabis company last year and, consequently, now dominates the board. 

Before Linton was banished by the board, Zekulin acted as the company’s co-CEO. Zekulin vowed to maintain his position dealing with day-to-day operations until the board decided on a new CEO. With Klein being a part of the Constellation team for so long, his expertise and authority at the company gave him a leading edge to bag the position at Canopy.

Alliance Global Partners analyst says Canopy’s CEO new choice could enhance company profitability

An analyst for Alliance Global Partners named Aaron Grey believes that the decision to appoint Klein as Canopy’s new CEO is a smart one.

“Given David’s background as CFO of STZ, we expect the company to have an increased focus on profitability, while still focused on overall growth as the company aims to become a leading global cannabis CPG company,” Grey wrote in a note to clients, adding that he sees the move as a tactic for Constellation to take full leadership over Canopy in the foreseeable future. 

However, Owen Bennett, a Wall Street analyst at Jefferies, says that Canopy is an under-performing cannabis stock; noting that the cannabis drinks market is in its nascent stages and is therefore widely unproven.

“Positive views (are) likely to be taken around implications for greater financial focus and commitment from Constellation Brands, though also negatives around potential lack of external appetite for the role, and the likelihood of a heavy focus on an unproven beverage category,” Bennett explained. “Expect financials to continue to underwhelm as domestic Canada struggles continue.”

Following the announcement of Canopy’s new CEO, shares of cannabis stocks listed in the United States soared approximately 13 percent.