The Globe and Mail reports in its Tuesday, Nov. 12, edition that in the months before Canada legalized recreational cannabis, companies in the new sector rushed to get established. The Globe's guest columnist Ian Robertson writes that since Oct. 17, 2018, it has become clear that many did not put sufficient effort into building their boards or instituting governance best practices.
With more than 200 publicly listed cannabis companies in Canada, there are significant deficiencies when it comes to board diversity, executive compensation, chief executive officer succession planning, director independence, and corporate checks and balances. Until recently, lofty expectations meant investors were willing to look the other way. A year of promise has turned into a year of struggle.
From the get-go, producers faced national supply shortages while the illicit market continued to flourish. Earnings consistently fell below expectations, with even some of the larger companies, like Hexo, being forced into cost-cutting measures. There have also been high-profile compliance and regulatory issues at Canntrust Holdings and Namaste Technologies that cast a shadow on the industry and put a spotlight on governance.
© 2020 Canjex Publishing Ltd. All rights reserved.