Another Corporate Governance Fiasco and 8 Stories from New Cannabis Ventures

This is a copy of the February 10th edition of our weekly Newsletter, which we have been publishing since October 2015.


One of the big stories in the early part of 2019 is corporate governance failures. As we entered the year, Aphria was under attack from shorts-sellers for the second time due to the way it put together acquisitions in the international arena. While Aphria’s independent directors investigate, the company has brought in a new Chairman, while the CEO and one of the founders have indicated that they will be leaving. MedMen has been hit recently with two lawsuits, one by investors and one by its former CFO, accusing the company of acting improperly. This week, Namaste Technologies terminated its CEO, who founded the company, and launched legal action against him for alleged self-dealing. The stock plunged on the surprise announcement.

The Namaste issue is one we had been monitoring but had not yet reported due to our inability to prove the CEO’s alleged actions, so we will now look forward to learning more. For those not following, the company, pointing to its desire to move its listing to the TSX Venture and the NASDAQ (still not listed), sold its U.S. assets to what Andrew Left of Citron proved was a related party, the CMO of the company. Some have suggested that perhaps the former CEO was involved in this new entity, though this is not something that can yet be proven. Many of the people at the new company, ironically named “Lifted Innovations” and on its way to going public, are associated with disgraced former CEO, Sean Dollinger. The price at which Namaste sold the assets appeared to be very low, and this has been proven out by the valuations of the capital raises done subsequently by the buyer.

We are glad to see a focus on improved transparency and better corporate governance and see this trend as a reflection of the maturation of the industry. When the markets are hot, investors often overlook this important area, and the cooling off of the sector at the end of 2018 certainly helped swing the pendulum away from just trusting management teams to ride the boom.

For the cannabis industry, it’s even more important than for traditional industries for the companies to work for stakeholders beyond just the insiders. All eyes are on us, and poor governance can slow down the progress we are making towards normalization and expanded legalization. Additionally, the cannabis industry will require significant and continued capital investment, and we can ill afford to look like the next generation of the mining sector.

While there have been some questions about corporate governance to begin the year, and undoubtedly there might be more issues arise, we believe the industry generally does a good job of treating all stakeholders fairly, and this extends well beyond just investors. Cannabis operators must take into account a broad range of interests, including those of patients, regulators and the communities that they operate in.

As one of the few comprehensive data analytics operators in the cannabis industry, CB2 Insights is solving important issues as a multi-state operator of medical cannabis evaluation and education centers that assesses the treatment of patients, a provider of proprietary practice management for clinics and consumer loyalty and engagement programs for dispensaries. CB2 Insights anonymizes and analyzes data to bring actionable insights to stakeholders which include licensed producers, healthcare networks and government agencies.

To learn more about CB2 Insights, a client of New Cannabis Ventures, which is moving closer to public trading debut, visit the company’s page that we maintain on its behalf and click the green Get More Info button

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:

To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than $2.5m per quarter.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Consider subscribing to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013 for more in-depth information and market intelligence about the publicly traded cannabis sector.

Find your place in the cannabis industry by visiting our Careers and Jobs Page and learn which companies are hiring aggressively.


Alan & Joel

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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