The cannabis wars took another big step toward resolution last night when the CEO of Aurora Cannabis Corp. (NYSE:ACB) retired a few days before the company’s earnings report.
The sudden resignation amounts to a surrender. He can’t turn the business around and is unwilling to spend more time trying.
And while fans of the company can argue that the strategy will not change because the now-former CEO remains on the board of directors as a lieutenant takes his place, “business as usual” here is not an ideal scenario.
ACB also preannounced a $1 billion accounting charge, cut 25 percent of its executive payroll and warned us that revenue is coming in at best flat compared to last year.
That last detail is the really hard one. I thought cannabis was one of the consumer growth markets of our age. If the second-biggest company in the space can’t expand its sales, something is seriously wrong with the business plan.
I see this as an opportunity to buy the dip on every other cannabis stock. Canopy Growth Corp. (NYSE:CGC) will exploit any weakness its rival’s management transition reveals.
Smaller cultivators become interesting as well. But I am not buying ACB here.