- Financial management coming into sharper focus in the cannabis sector
- Several public companies have replaced their CFOs in the past few months
- MediPharm’s hiring of former Weston Group SVP Kwon seen as a ‘big win’
In legal cannabis, the process of filling the corner office is turning a corner.
As recently as mid-2018, “there was still what I call the ‘career suicide concern’ around moving into cannabis,” said Alison McMahon, founder and CEO of recruitment and HR consulting firm Cannabis at Work. “People were worried that if they took a role in cannabis and then wanted to go back to a more traditional industry that it might hurt their career longer-term.”
The declining prohibition-era stigma, combined with falling stock prices and scant profits, have led to an increasingly higher calibre of financial management in the cannabis sector. Several publicly traded cannabis companies have announced new chief financial officers in recent months - Namaste, Sunniva and Emerald Health to name just a few - and last week, MediPharm Labs said Bobby Kwon would take over as CFO of the Barrie, Ontario-based cannabis processor.
Having most recently served as senior vice-president of the Weston Group, Mr. Kwon was a trusted adviser to multibillionaire Galen Weston Jr. and, in 2012, oversaw the company’s $12-billion acquisition of Shoppers Drug Mart.
“What excites me about this opportunity is the chance to work in a brand new sector that is starting to mature in Canada and just starting to emerge in so many other parts of the world,” Mr. Kwon told Cannabis Professional via e-mail. “What we are seeing now is the emergence of a brand new sector but also rapid changes as the industry evolves from start-ups and entrepreneurs to more mature, specialized companies like MediPharm Labs.”
Hiring Mr. Kwon was “a really big win” for MediPharm, Ms. McMahon said, adding the move is indicative of a broader shift currently underway in the legal cannabis space.
“There has been talk for a long time about this industry moving towards a more traditional [consumer packaged goods] industry or a pharmaceutical model and when you see somebody like [Mr. Kwon] joining the ranks of a company like MediPharm, it really shows they are positioning themselves to be a part of that larger, more sophisticated food and drug world.”
“Now we really are starting to see some of those sort of people joining cannabis organizations,” Ms. McMahon said.
Some of the recent cannabis CFO turnover is a result of positive corporate growth, she said, as companies start “looking for people who can bring in a level of expertise with strategic financial work across global business units, [but] in other cases we are seeing immature financial functions within businesses and weak revenues and, in some cases, complaints about the rate of cash burn,” Ms. McMahon said. “So on the one hand it is a result of expansion and positive growth and then in other cases it is a bit of a changing-of-the-guard.”
Ron Hulse, partner at Bigwin Group Talent Strategy – another executive recruitment firm – agrees the cannabis industry is witnessing a changing-of-the-guard, but warns the culling process remains far from complete.
“The CFO is often the first person to take the fall for a management team,” Mr. Hulse said. “We are now seeing the accountability axe fall at the management level [and] CFOs are being recruited from the food, beverage, pharmaceutical and manufacturing industries to try and right the ship. However, even this new phase of hiring won’t deal with the fundamental flaws underpinning the economic challenges of this new industry. I think you’re likely to see a deeper second wave over the next three years as people come to realize that.”
For Mr. Kwon, he is counting on legal cannabis continuing down the path towards becoming a more traditional CPG industry; it is a world he knows well.
“We are seeing the [cannabis] industry mature rapidly, yet it remains dynamic and fast-moving with evolving behaviours and trends; not that dissimilar to the broader CPG and retail space,” Mr. Kwon said. “I have had the privilege to be part of some large-scale change management initiatives globally and significant business events over the years and I plan to draw on those experiences and lessons to contribute to the success of MediPharm.”