Someone new is heading the board of directors at Canopy Growth (CGC 2.41%). The company announced in a press release that it has appointed David Klein to be the chair of that body, effective immediately.
Klein is CFO of Constellation Brands (STZ -0.64%), which is Canopy Growth's largest single shareholder. He replaces John Bell, who had been serving as interim chair. Bell will remain on the board.
According to Canopy Growth, Klein has 30 years of experience in a number of executive positions. The company added that he "specializes in corporate strategy, all aspects of finance and accounting, investor relations, mergers and acquisitions, and information technology." He has been on Canopy Growth's board since 2018.
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The last person to serve as chair on a permanent basis was Bruce Linton, the company's co-founder and co-CEO. Linton was terminated as both co-CEO and chair in July.
The appointment of Klein brings Canopy Growth's CEO succession into focus. Since Linton's exit, his former co-CEO, Mark Zekulin, has been leading the company on an interim basis. Canopy Growth has said it aims to hire a CEO on a permanent footing before the end of this year.
Both Klein and the incoming CEO will take their posts at a difficult time for the company. It is weathering a near-perfect storm of fundamental weaknesses in its business (strong competition, supply issues, etc.), much poorer than expected financial performance in its latest reported quarter, and general investor disfavor with marijuana stocks at the moment. Each of these is a challenge in its own right; confronting all will be daunting.
Klein's ascension seems to suggest that Constellation might be tightening its grip on the company. It's very possible Constellation would like to amplify its influence, as the erosion in the value of its Canopy Growth investment helped plunge it into a net loss on a GAAP basis in its most recently reported quarter. Over the past year, Canopy Growth's share price has declined by 57%.
Constellation first began investing in Canopy Growth in late 2017, purchasing a nearly 10% stake that was valued at around $191 million at the time. Since then, it has increased that stake to almost 36%.
