In what was supposed to be a prove-it year for marijuana stocks, 2019 turned out to be a complete dud. Although the scenario looked right for cannabis stocks to thrive, including the launch of derivative products in Canada (e.g., edibles, infused beverages, and topicals), shares ultimately face-planted due to a host of regulatory and internal issues.

For example, Canadian growers have been dealing with supply issues since day one of legalization. Health Canada has struggled to approve cultivation and sales licenses in a timely manner, while Ontario's retail lottery system has been a mess. Put simply, product hasn't reached the market, as expected, and the black market has proved ever-resilient. Meanwhile, high tax rates in the U.S. on pot products have made it very difficult for legal growers to compete with illicit producers. As a result, marijuana stocks went up in smoke in 2019.

But shareholders may not be the only casualty. It could be rightly argued that the drubbing pot stocks took in 2019 has put a number of high-profile marijuana CEOs in a shaky position. While I can't say with any certainty whether or not the following three CEOs will keep their jobs in 2020, my personal leaning is that they're on thin ice.

Potted cannabis plants growing indoors under specialty lighting.

Image source: Getty Images.

Terry Booth, Aurora Cannabis CEO

I'll freely admit that it's difficult to "fire" a founder or co-founder, which is the case with all three CEOs on this list. But few leaders have done as poor a job of late creating value for investors as Terry Booth at Aurora Cannabis (ACB 0.62%).

Pardon the cheesy storybook intro, but Aurora looked to have it all. With 15 production facilities, it was expected to be the world's leading producer of cannabis. Also, with access to 25 countries, including Canada, no pot stock had greater international reach. But over the past nine months, it's all fallen apart.

Wall Street has really begun to focus on Aurora's balance sheet, which is in dire straits, according to some analysts. Aurora has so many projects on the table when it comes to production, derivatives, or within its supply chain, that its nearly $148 million in cash on hand probably won't be close to sufficient to cover its expenses. While the company does have access to $400 million in at-the-market offerings, and 360 million Canadian dollars ($277 million) in a line of credit, its cash position is clearly dicey. With Aurora using its common stock as Monopoly money, its shareholders have paid the price.

More damning is the fact that Aurora's more than one dozen acquisitions since August 2016 have ballooned the company's goodwill to CA$3.17 billion. In other words, it's pretty evident that Booth and his team did a poor job of valuing their acquisitions, and may now be forced to take mammoth writedowns as a result.

As the icing on the cake, Booth helped bring in billionaire activist investor Nelson Peltz as a strategic adviser in March 2019, and no major deals have been forged as of yet. With shares down 80% since Peltz was brought on board, Booth looks to have one foot out the door.

A large cannabis dispensary sign in front of a retail store.

Image source: Getty Images.

Adam Bierman, MedMen Enterprises CEO

Booth is far from alone. MedMen Enterprises (MMNFF) co-founder and CEO Adam Bierman isn't exactly inspiring confidence in his shareholders, either.

If we wind back the clock to October 2018, MedMen was valued at close to $1 billion, and it had just announced an all-stock acquisition of privately held multistate operator (MSO) PharmaCann for $682 million. This deal was expected to double MedMen's state-level presence from six to 12, as well as give it extra retail licenses that it could use to open more dispensaries. This deal, along with its burgeoning presence in California, was supposed to make MedMen a major MSO. But it's become nothing of the sort.

Last October, just three days before the one-year anniversary of the PharmaCann buyout announcement, MedMen shelved the entire deal. The company offered up a number of reasons for no longer wanting to proceed, including that it would place MedMen into noncore markets. But the fact remains that MedMen didn't have the cash to take on PharmaCann's existing locations, or fund its expansion plans.

Despite reducing general and administrative expenses by 30%, MedMen is still losing a lot of money. Unlike most MSOs, which have seen their losses shrink or might even be profitable, MedMen delivered almost $232 million in full-year operating losses in fiscal 2019. That's a problem for a company whose current liabilities nearly outpaced its current assets by the end of fiscal 2019.

Even with up to $280 million in financing pledged by private equity firm Gotham Green Partners, there are no assurances this will be enough money to keep MedMen afloat for the long run. In short, Bierman's vision is quickly fading, and MedMen's 81% loss in 2019 is unlikely to keep him around much longer, in my view.

A cannabis leaf laid within the Canadian flag's red maple leaf, with rolled joints and a cannabis bud to the left of the flag.

Image source: Getty Images.

Sebastien St-Louis, HEXO CEO

Lastly, the CEO of Quebec-based HEXO (HEXO), Sebastien St-Louis, looks to be in hot water following a disastrous year where the stock retraced more than 80% from its late April highs, and ended the year lower by over 50%.

Like the other pot stocks here, a compelling argument in favor of buying HEXO could have been made during the first half of 2019. HEXO's acquisition of Newstrike Brands put it on track to be a top-tier marijuana producer, and its penchant for dealmaking appeared to have the company on track for CA$400 million in fiscal 2020 sales (a figure management stood by for much of 2019). Yet, by year's end, HEXO was among the worst performers.

Contending with persistent supply issues, HEXO announced in October that it would be idling its Niagara grow campus, acquired when it purchased Newstrike, as well as 200,000 square feet of its 1.3-million-square-foot Gatineau, Quebec, facility. I expect this to reduce the company's peak annual output by roughly a third, from 150,000 kilos to 100,000 kilos. HEXO also eliminated 200 jobs from various departments in order to reduce costs.

Just as troubling, St-Louis stated that the company would struggle to reach profitability without gobbling up 20% of Canada's market share, which is something that no marijuana grower looks to be on track to achieve -- at least for the time being. HEXO certainly has little chance at gobbling up market share in the current environment where supply is constrained by regulatory issues.

Although HEXO has made moves to substantially reduce its expenses, and presumably its operating losses, the damage to the company's reputation has been done. If things don't turn around quickly, HEXO could find itself delisted from the New York Stock Exchange (it's only about $0.50 above the minimum share price for continued listing), at which point I believe St-Louis would be shown the door.