CEO dismissal highlights low growth in Canada’s cannabis industry
Published: July 11, 2019
CATEGORY: Industry Trends
Weeks after Canadian marijuana company, Canopy Growth Corp., fired founder Bruce Linton as its chief executive officer, the reasons why are slowly emerging. While the cause of Linton’s removal from the world’s biggest cannabis firm has remained private, it seems stilted growth following marijuana legalization in Canada is to blame.
Market analysts say Canopy’s profitability has not grown since legalization, leading to share prices largely staying static. Bloomberg reports the board has tied Linton to a non-compete agreement to prevent him operating in Canada’s cannabis industry for years.
Speaking to Bloomberg, Linton suggested he would stay away from cannabis in Canada regardless, saying the industry is set up to reward the few and harm the many.
“Anybody who’s dumb enough to launch a new cannabis company in Canada, I don’t know what they’re doing, they should have been at it six years ago. Canada is done. You’re going to end up with a few winners and a whole bunch of people who wonder why they started.”
While that may be the case for cannabis distributors, the insurance industry is operating in contrast. Cannabis insurance in Canada is mostly dominated by smaller companies that are offering specialized coverage. Major insurance companies that have found national fame in the home and auto personal markets have not made a significant impact on the cannabis insurance market.
“The regular insurance carriers – the big household names – still aren’t really moving forward with cannabis insurance,” said Lars Rittmann, producer at ERB and ERB Insurance Brokers. “I’m sure they have people behind the scenes looking into it, but they’re not fully on-board yet. As brokers, we’re still using the MGAs and the Lloyd’s markets to place cannabis related business. The market is pretty much status quo with where it was on October 17.
“As for the brokerage community, there are still some brokerages out there who are saying: ‘We don’t know or understand the cannabis business, so we’re not willing to write it.’ However, there are more brokers coming on board. Some brokerages, like Cowan, have even started their own cannabis business insurance programs. But, generally speaking, placing cannabis-related business is a one-off for most brokerages and they’re seeking help with their submissions from the more established players.”