Canadian cannabis giant Hexo Corp. (TSX: HEXO) (NYSE: HEXO) is shedding some of its top management, including CEO Sebastien St-Louis, who founded the firm in 2013 with his brother-in-law Adam Miron.
In a statement Monday, Hexo announced the immediate departure of St-Louis and the resignation of COO Donald Courtney, “as the company completes a strategic reorganization.”
A special committee established by its board is in advanced talks with a preferred CEO candidate, Hexo says, and expects to make an announcement in the coming days. Courtney will stay on until a replacement is found.
In the statement, board chair Michael Munzar thanked St. Louis for his “tremendous” impact on the Canadian industry, and helping to build Hexo into a market leader in Canada.
“The board has established a special Committee for succession to identify a new CEO with the experience to defend Hexo’s position as a market leader in Canada and secure our place as a top-three global cannabis company,” Munzar continues.
Read more: Hexo and Molson Coors expand CBD drinks to 17 states
Read more: Hexo touts Q2 earnings, eyes M&A
The firm says its next leader will be well-positioned to integrate Hexo’s recent acquisitions, and leverage its “lean production capabilities, solid brands and robust product offering” to lead it through its next phase of strategic evolution.
Building the company from the ground up has been the highlight of his career, St-Louis said in the statement.
“Without question, Hexo’s future is bright — I am so proud of the team we established, the brands we launched, and the loyalty our customers have shown us. As a significant shareholder I look forward to the company’s next exciting stage of growth.”
St-Louis is bound by a non-compete clause for 18 months.
After rollercoastering from start-up to billion-dollar company, to its $432-million market cap today, the entity has followed a similar narrative to its Canadian peers: a ton of presence but no profit.
Read more: Hexo to buy 48North Cannabis for $50M
Read more: Hexo says it’s offset 100% of its carbon emissions
Over the past two years, Hexo has reported staggering losses and shrinking market share. Recently, the firm has gone on a spree of buying other operators, dipping deep into its pockets. This year, it’s struck deals to buy 48North Cannabis Corp., Zenabis Global Inc. and Redecan Pharm, totalling $1.2 billion combined.
Apparently, investors haven’t been pleased with the strategy.
According to reports from Yahoo Finance and BNN Bloomberg, former Redecan advisor Adam Arviv sent a letter to Hexo’s board on Sept. 26, stating that St-Louis had over-leveraged the company to finance the acquisitions, leaving open the speculation that the letter played a part in the CEO’s sudden exit.
Company stock fell almost 3 per cent Monday to $2.09 on the Toronto Stock Exchange.