Organigram Holdings Inc. (TSX: OGI) (Nasdaq: OGI) says Greg Engel is stepping down from his role as CEO of the pot producer, effective immediately.
While the Moncton, N.B.-based company didn’t offer details on Engel’s departure, it said Monday he will continue to act as a special advisor to the board during a “transition period.”
Engel, who had led Organigram since 2017, resigned just two months after he helped secure a major investment from multinational firm British American Tobacco (BAT).
The move follows a number of other high-profile CEO departures in the Canadian cannabis industry over the past two years. Most notably, Canopy Growth Corp. (TSX: WEED) parted ways with founder and former co-CEO Bruce Linton in July 2019.
At the time, analysts said it was likely that Constellation Brands (NYSE: STZ), the alcohol titan that invested $5 billion in Canopy, wasn’t pleased with Linton’s maverick style of leadership leading to the mega-producer overspending on assets and reporting steep quarterly losses. Constellation took over four out of the seven board seats at the weed firm.
Earlier this month, Organigram reported a $66.4 million second-quarter net loss after posting a $34.3 million net loss in the previous quarter.
The company’s revenue has also dropped in the last two quarters as the Canadian cannabis industry continues to struggle. Oversupply issues, Covid-related lockdowns and increased competition has all impacted sales nationwide.
Organigram said its second-quarter revenue fell 37 per cent sequentially to $14.6 million.
In March, BAT invested $221 million in Organigram for a 19.9 stake in the company. The two enterprises said they’d work together to develop CBD and new innovative cannabis-related products. As part of the deal, one BAT executive was set to join Organigram’s board and another is expected to be added later this year.
Read more: Organigram shares surge on big tobacco deal
Organigram’s chairman Peter Amirault will serve as executive chair until a permanent CEO is appointed.
“Greg has brought innovative leadership as the company created new structures around operations and increased capacity to serve the growing marketplace, while ensuring our successful launch into the adult recreational cannabis space and bringing leading innovative new platforms and edible products to the marketplace,” Geoff Machum said in a statement.
Machum was appointed Monday as an independent lead director to Organigram’s board.
As CEO, Engel helped Organigram grow from a small medical cannabis business to a top-10 player in Canada’s competitive adult-use sector.
The company reported total revenue of $86.8 million in fiscal 2020. But the firm’s 2021 full-year sales are on pace to decline about 10 per cent to $77.3 million.
With its BAT investment, Organigram said it would have about $296 million in cash to fuel expansion efforts in Canada. The company is also eyeing international markets, including strategic entry into the expanding U.S. market if and when the country legalizes weed federally.
Shares of Organigram fell 4.6 per cent Monday to $3.11 on the Toronto Stock Exchange.
Company stock has dropped 38 per cent since it announced the BAT investment on March 11.
Top image of departed CEO Greg Engel via Organigram