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Former Canopy Growth CEO Bruce Linton reveals why he was fired, his next move

Zack Guzman
Senior Writer

It’s been a week since the surprise firing of the co-founder of the world’s largest marijuana company Canopy Growth ( CGC ).

In that week, former CEO Bruce Linton has been reflecting on what brought the board of the company he co-founded to oust him and the conclusion he reached is simple: He thought he had more time to continue growing his baby.

But with Canopy’s board mostly controlled by executives from alcohol conglomerate Constellation Brands ( STZ ) following that company’s $4 billion investment in Canopy last year, there was an impetus to start making money immediately.

“Many companies that trade on exchanges are measured on earnings per share every 90 days,” Linton explained on Yahoo Finance’s YFi PM. “That’s a good model, but there are other companies that are in a growth and creation phase — Amazon might have done a bit of that, Netflix … where what they’re doing is looking at … how do they build this thing out and emerge as a massive dominant player.”

With investment after investment, Linton certainly was making good use of the war chest provided by Constellation, including inking the agreement to acquire U.S. multi-state marijuana operator Acreage Holdings, and racking up unprofitable quarter after unprofitable quarter. For a tech company in growth mode answering to a venture capital firm with a stomach for quarterly losses, that might not be such a large problem. For a Canopy Growth answering to Constellation Brands CEO Bill Newlands — who sits on Canopy’s board — it cost Linton his job.

“I was of the view this is a rocket ride that will measure earnings per share sometime, but not in an immediately required time and I have $4 billion in the bank so the point of that is to spend it,” Linton said.

Considering Newlands as recently appointed CEO of Constellation Brands has his own board to answer to, it’s easy to see why the earnings drag Canopy had become on Constellation Brands might lead to one dog eating another dog in the dog-eat-dog world of public markets. Constellation just days before Linton’s firing reported a $39 million loss from its stake in Canopy. The company, for its part, told Yahoo Finance through a spokesperson last week that it “fully supported” the decision by Canopy’s board to remove Linton.

But the obvious disagreement over whether Canopy Growth should remain a company focused on growth versus one focused on profits could hang over where it goes from here as shares have slipped nearly 5% since Linton’s departure.

“I have this idea that massive creative energy focused on a field that’s just coming out of prohibition should be measured on intellectual property achievement [and] novel creations of products as those will be the branded differentiated goods versus a rolled joint,” he said, “and all of these things come with a big cost, and how much is it worth? Call me in five years I’ll tell you.”

Eyes on the U.S. cannabis market

Canopy Rivers founder, Chairman & co-CEO Bruce Linton is interviewed on the floor of the New York Stock Exchange, Thursday, March 7, 2019. (AP Photo/Richard Drew)

Constellation clearly wasn’t prepared to wait five years, but it doesn’t sound like Linton is prepared to wait that time, either, to challenge his old company in the cannabis space by taking his talents elsewhere. While Linton’s non-compete bars him from the cannabis space in Canada, he revealed on YFi PM he’s looking to enter the U.S. cannabis space, instead.

“I will be involved in the cannabis space but I need to be selective,” he said, admitting that whatever he does, his new company is unlikely to hit lightening twice by matching Canopy’s climb from a $100 million market cap to $15 billion in just a few years. “That’s one of the fastest growth [rates] by valuation of an enterprise in the history of creating businesses. I don’t think I am going to get that twice so I need to be fairly selective, and where I go I need to be sure I’ll have a direct influence.”

Linton mentioned many companies had already reached out to him, but declined to disclose names. For the time being, he said he’s perfectly content to help out the Ontario, Canada-based software technology company he’s co-chaired for the past six years. Since he mentioned he’d be helping the small-cap Martello Technologies Group last week in a Bloomberg interview, the company has seen shares skyrocket 375%. During the interview, Linton wore a Martello Technologies T-shirt in place of his usual Canopy Growth attire.

After that interview, Martello Technologies had to put out a statement noting that nothing material at the company had changed aside from Linton’s remarks, and in a follow-up interview with Bloomberg, Martello CEO John Proctor said, “What I think really happened was Bruce wore the T-shirt and that sort of shone a bit of a spotlight on Martello.”

The company hasn’t traded lower since, yet Linton instead sported an uncharacteristic plain button-down shirt when he spoke to Yahoo Finance, joking he didn’t want Martello shares to “run too hot.”

“We’re gonna put it up on the wall because I think that shirt’s worth about $50 million bucks now,” Linton joked.

Zack Guzman is the host of YFi PM as well as a senior writer and on-air reporter covering entrepreneurship, startups, and breaking news at Yahoo Finance. Follow him on Twitter @zGuz .

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