Canopy Growth co-CEO Bruce Linton says he was fired

He's a well-known executive in cannabis industry

By Paul R. La Monica, CNN Business
Noam Galai/Getty Images for Bloomberg Businessweek

Bruce Linton attends

(CNN) - Bruce Linton, one of the most well-known executives in the rapidly growing cannabis industry, is stepping down as the co-CEO of Canada's Canopy Growth. Linton is leaving the board as well.

Linton, speaking on CNNi on Wednesday morning, said that he was terminated by the company. Canopy was not immediately available for further comment.

"Creating Canopy Growth began with an abandoned chocolate factory and a vision," Linton said in a prepared statement. "The Board decided today, and I agreed, my turn is over."

But the news clearly took investors by surprise. Shares of Canopy Growth initially fell more than 8% in early trading Wednesday. before recovering later in the day.

Canopy said Linton's fellow co-CEO Mark Zekulin will become sole CEO but that the company is looking for a new person to take over that role permanently.

Linton has been a frequent guest on business media networks and shows, including CNNi, since cannabis was legalized nationwide in Canada last October and in several more American states in November.

The company also received a huge stamp of approval from alcoholic beverage giant Constellation Brands, which now owns a more than 35% stake in the company -- an investment worth about $5 billion.

Constellation's intention is to run things a bit differently, Linton said Wednesday.

Canopy has stumbled lately even as cannabis becomes more mainstream.

There are concerns that the retail price of legal marijuana and other products derived from the plant, such as oils, creams and edibles, has been falling due to intense competition.

The company also reported a bigger loss from a year ago in its most recent quarter last month. And the stock, while still up nearly 50% this year, is now about 35% below its 52-week high.

Constellation executives acknowledged these challenges in its most recent earnings report last month.

"While we remain happy with our investment in the cannabis space and its long-term potential, we were not pleased with Canopy's recent reported year-end results," Constellation CEO Bill Newlands said on a conference call with analysts.

And Constellation CFO David Klein added that Canopy is "really working their way through any execution issues that they may have had in the past."

That appears to be a reference to growing pains Canopy is experiencing from the acquisition of US-based cannabis firm Acreage Holdings. The firm is backed by former US House Speaker John Boehner.

Canopy, through the Acreage deal, is hoping to take advantage of the fact the the United States legalized industrial hemp production as part of last year's Farm Bill.

Canopy Growth announced earlier this year that it received a license from New York state — where Constellation Brands is based — to process and produce hemp. That would allow it to develop products that contain CBD, the non-psychoactive compound that some say helps reduce anxiety and stress.

The company intends to spend between $100 million and $150 million to help set up a so-called Hemp Industrial Park in upstate New York, an investment that Senator Chuck Schumer of New York said in a release could create hundreds of jobs.

Canopy also announced in February that Martha Stewart was joining the company's board as an adviser to help develop products derived from cannabis for people and their pets.

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