This is a copy of the February 10th edition of our weekly Newsletter, which we have been publishing since October 2015.
One of the big stories in the early part of 2019 is corporate governance failures. As we entered the year, Aphria was under attack from shorts-sellers for the second time due to the way it put together acquisitions in the international arena. While Aphria’s independent directors investigate, the company has brought in a new Chairman, while the CEO and one of the founders have indicated that they will be leaving. MedMen has been hit recently with two lawsuits, one by investors and one by its former CFO, accusing the company of acting improperly. This week, Namaste Technologies terminated its CEO, who founded the company, and launched legal action against him for alleged self-dealing. The stock plunged on the surprise announcement.
The Namaste issue is one we had been monitoring but had not yet reported due to our inability to prove the CEO’s alleged actions, so we will now look forward to learning more. For those not following, the company, pointing to its desire to move its listing to the TSX Venture and the NASDAQ (still not listed), sold its U.S. assets to what Andrew Left of Citron proved was a related party, the CMO of the company. Some have suggested that perhaps the former CEO was involved in this new entity, though this is not something that can yet be proven. Many of the people at the new company, ironically named “Lifted Innovations” and on its way to going public, are associated with disgraced former CEO, Sean Dollinger. The price at which Namaste sold the assets appeared to be very low, and this has been proven out by the valuations of the capital raises done subsequently by the buyer.
We are glad to see a focus on improved transparency and better corporate governance and see this trend as a reflection of the maturation of the industry. When the markets are hot, investors often overlook this important area, and the cooling off of the sector at the end of 2018 certainly helped swing the pendulum away from just trusting management teams to ride the boom.
For the cannabis industry, it’s even more important than for traditional industries for the companies to work for stakeholders beyond just the insiders. All eyes are on us, and poor governance can slow down the progress we are making towards normalization and expanded legalization. Additionally, the cannabis industry will require significant and continued capital investment, and we can ill afford to look like the next generation of the mining sector.
While there have been some questions about corporate governance to begin the year, and undoubtedly there might be more issues arise, we believe the industry generally does a good job of treating all stakeholders fairly, and this extends well beyond just investors. Cannabis operators must take into account a broad range of interests, including those of patients, regulators and the communities that they operate in.
As one of the few comprehensive data analytics operators in the cannabis industry, CB2 Insights is solving important issues as a multi-state operator of medical cannabis evaluation and education centers that assesses the treatment of patients, a provider of proprietary practice management for clinics and consumer loyalty and engagement programs for dispensaries. CB2 Insights anonymizes and analyzes data to bring actionable insights to stakeholders which include licensed producers, healthcare networks and government agencies.
To learn more about CB2 Insights, a client of New Cannabis Ventures, which is moving closer to public trading debut, visit the company’s page that we maintain on its behalf and click the green Get More Info button
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:
- Exclusive: 41 Top Revenue Generating Cannabis Stocks Ranked as of February 1st
- Canopy Growth to Inject $30 Million in Additional Capital into Canopy Rivers Inc.
- Green Growth Brands Taps Tilray and Authentic Brands for Greg Norman Branded CBD Products
- iAnthus and MPX Bioceutical Announce Closing of Transformational $1.6 Billion Business Combination
- Massachusetts Cannabis Control Commission Forces Wellspring to Cease Operations While it Addresses Violations
- Namaste Technologies Terminates CEO after Evidence of Self-Dealing and Looks to Sell Company
- Ontario Adds 5 Cannabis Suppliers
- Supreme Cannabis Extends Distribution to New Brunswick and Saskatchewan
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Alan & Joel