48North Cannabis Corp. (TSXV:NRTH) has announced that Alison Gordon will be resigning her role as CEO effective immediately.
This ends Gordon’s leadership at the company for the past 3 years.
With Gordon’s resignation announcement, both the founders of 48North, herself, and Jeannette VanderMarel, are now out of the company.
The company has named Charles Vennat, the current Chief Corporate Officer, as the new CEO.
Sudden Resignations Are Often a Warning Sign
As far as we can tell Allison Gordon’s resignation was not part of a publicly disclosed succession plan, it truly was unexpected.
[su_panel background=”#ebebec” color=”#05011c” border=”px none ” shadow=”px px px ” radius=”4″ text_align=”center” class=”dw-editor-note”]Historically, sudden resignations of a key member of a company’s management team do not bode well for future financial and operational performance. [/su_panel]In the cannabis industry, in particular, we can point to multiple examples of write-downs and disappointing earnings results following less than a quarter after a key executive jumped ship.
In the case of Canopy Growth, the industry’s largest company, inventory write-offs, disappointing earnings and a corporate restructuring all followed the former CEO Bruce Linton’s dismissal.
Aurora Cannabis is another example. When long-time corporate officer Cam Battley left the company with no advance notice, the company ended up announcing the departure of the CEO and billions in write-downs only a few months later.
Aurora is currently still dealing with declining margins and a dangerously low cash balance.
Aurora and Canopy may be the most high profile examples, but they are definitely not the only companies to disappoint investors not long after a key management departure.
48 North investors should prepare themselves for the newsflow to get far worse before it gets better.
Looking at the stock price today, the market likely already knows its history with the stock down 15% on the news.
Even though some of this selling is driven by the greater market selloff, in the near term, we think investors should prepare themselves for more skeletons to come out of 48 North’s closet.
If nothing else, the cannabis industry has shown us it’s a place where Halloween never seems to end.
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