Chapman says: Constellation wants all of Canopy

Canopy, the world’s most valuable cannabis company, has appointed David Klein as their new Chief Executive Officer. David Klein is currently the Chair of Canopy’s Board of Directors and the Chief Financial of Constellation Brands, which owns 35% of the company.  Coincidence – I think not.  My belief is that Constellation wants all of Canopy as they see this company becoming their shining star in their galaxy by 2025. 

It will take more than financial engineering.  If Canopy is going to continue to dominate the industry, it will need to solidify its current base and move quickly into emerging markets.  In my interview with Chris Naprawa, President of Khiron Life Sciences, we looked at Latin America, with a potential market of 650 million, and Khiron’s ambitious and well thought out plans to enjoy First Mover Advantage, everyone is after their slice.

Here is what David Klein will need to focus on:

Develop and execute the sound strategies required to deliver business growth in both recreational and medical cannabis.  What are they doing to attract, retain, and build a profitable customer base? Are they winning share from both the legalized and black market?

Solidify and build their competitive position in existing markets, and determine where will they put their focus on in new markets. 
What is their innovation pipeline on both medical and recreational cannabis?  Can they solidify their position through branding, patents, a better path to the customer?

How well can they counter disruptors?  What happens if Amazon moves into this sector or the Farm Bill passes in the United States and cannabis becomes the next gold rush.

David Klein knows you can’t be all things to all people.  Canopy has acquired an extensive portfolio of businesses and brands, established joint ventures with celebrities, and countless other chess moves.  They have to decide who do you double down on, and what do you sell or abandon?

Strategy will not be enough.  To justify this acquisition they have to win over institutional and retail investors who have seen both share prices fall dramatically.  Klein will have to show that Canopy is focusing on the metrics, including gross profits, gross margin, and heading towards operating profits and generating a return on their assets.

Canopy is an elaborate chess game and Klein must have a team capable of attacking and defending.  With their success will go the spoils of sustainable and profitable market share with cannabis – a sector of almost infinite prospects, possibilities, and profitability.

The future of Constellation shines on cannabis.

To hear my podcast with Bruce Linton, former CEO of Canopy, click here.

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