A little snarky to put a month in the title here – but I’m pretty confident we’re going to see many more changes in C-Suites over the coming months. This morning’s news brings stories about leadership changes in both Terrascend and Flowr Corporation (of which our initial structure on them was posted yesterday). These outfits join many others in seeing the old Captain(s) off the bridge while bringing in fresh blood (and hopefully fresh sales numbers).
Joining Supreme, Terrascend’s announcement sees the existing CEO move out of the way for a more consumer-packaged-good oriented sort of person (CPG) to come in and formalize an approach. Coming straight on the heels of a deal blowing up, it probably doesn’t take much to see a strategic straight line between the deal fail and the CEO’s departure.
That Terrascend’s interim replacement (Ackerman) is touted as being the person to bring US growth to the company, it’s not exactly a ringing endorsement of the previous CEO and founder of the outfit to be heralded for his ‘perseverance’. Companies are like people, they change over time, as does the environment in which they exist. We looked at some of the types of leaders there are out there a couple of years ago – and right now – anybody with the letters C-P-G anywhere in their name or on their resume seems to be a hot ticket.
Where Nashat built Terrascend, they now believe they need a person to operationalize the verticality they claim, and apparently thought twice about the Nevada entry/acquisition (Gravitas). They retain some licensing parts of the Gravitas arrangement intact, and obviously saw a $3MM bill for cancellation as the lesser cost of the transaction. Given their cash position, it might have been beyond their control anyhow….. 1000:1 proportionate shares flying around or not.
SAME DAY EDIT: Looks like the new guy isn’t wasting any time. Solace Health Network (Terrascend’s direct to patient medical subsidiary) is now gonzo, closing shop on February 7th.
Flowr Corporation did a larger sweep, with 5 executives being transitioned out of their roles. The one that sticks out to me is Mr. Laurence Levi…..who was brought into the role just last September. It was a role that didn’t exist previously (it was handled by the Chair under a slightly different title), and the initial press release about his formal hire was all happy and effusive. The role now reverts to whence it came from. When something like this happens that quickly, there’s typically two reasons for it:
- Goods not as billed
- Board changed it’s mind
There can be other reasons – it’s a bit of a guessing game – but these are the most common culprits I’ve seen. In the case of the latter, it happens – even with the high minds and high pay that come with Boards – sometimes they can be fickle, and recognize a possible misstep early on. With #1 – it happens all the time. Way more than one would expect. And the litmus test is always within 6 months of an arrival. Always, that I’ve ever seen.
I have no view into this particular individual or circumstances, and am suggesting nothing more here than relating experience I’ve had in the corporate arena.
Coming along with a new CFO (CPG!!!), it looks like they’re folding 3 positions (CRO, CMO, CSO), with the CMO being moved into an advisory position. For older Albertans, they’ll recall Oberg as a politico that moved into making money from dope – rather than collecting government cheques while incarcerating folks. But not too much money, according to him. Ugh. Quite the memorable quote.
Flowr’s move feels like a pure reset on internal thought and execution. Wherever their heads were at 4 months ago, it appears there has been a change of opinion about the front office – and this is in part to bring efficiency and cost containment and all that good stuff with it. Their CEO remains. They’ve got an interesting platform overall, and the Hawthorne R&D campus has got Cyto excited (which is really saying something). All they need to do now is sell weed.
There’ll be many more changes over this year in leadership at legal cannabis outfits – this is only the beginning.
The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds no position in Terrascend or Flowr.