Fixing Cannabis Investor Relations

It’s no secret that the market caps of publicly-listed cannabis firms are in the toilet.  There clearly is a disconnect between share prices and the real value of many of these companies.

Many cannabis Investor Relations problems trace to corporate missteps, such as: 

·       Late and restated regulatory filings;

·       Irrational or overly exuberant leadership statements & behaviors;

·       Poor corporate governance practices.

These blunders reduce investor trust, dissuade institutional capital, and perpetuate negative stereotypes (e.g., cannabis is the Wild West). 

An effective IR capability plays a key role in managing the relationship between current & prospective investors and management.  

This role includes:   thwarting & mitigating some of the above issues, better communicating your corporate value and; preventing self-inflicted wounds.

Sadly, most IR departments and leadership teams have not risen to the challenge.

Relevant cannabis firms must fix their existing IR or develop a real capability soon. The sector’s unique capital markets issues and history requires a bespoke approach.  This approach should include best practices from the non-cannabis world, such as-

1.     Prioritize your biggest, long-term investors.  They are strategic to your business and deserve an honest assessment of financial and operating performance including being apprised of bad news;

2.     Content is more important than flash or style. Some companies make a show out of investor day rather than treating it as an educational session about how the firm makes money and what makes them special;

3.     Be consistent with messaging.  Develop a compelling narrative (incl. peer comparables) and stick with it. Ensure your story is also integrated with what you say internally.  

There are strong IR performers among MSOs & LPs. Consider #TerrAscend, a successful MSO (note: I don’t own their stock nor are they a client).

Their IR effort is led by Executive Chairman, #JasonWild. Putting his money where his mouth is, Jason has been an active buyer of his stock while other MSO execs have sat on their wallets. TerrAscend also have a bench of credible leaders, from the CEO and CFO through to the Chief Counsel, who can effectively but prudently tell the company 'story.' Finally, the Company's executive incentive plans and governance structure are aligned with shareholder interests, unlike some other cannabis pubcos.

According to Wild, "Our IR mission is anchored in respecting the investor.  That begins with alignment:  management shouldn’t be winning if investors are losing.  Secondly, we focus on transparency and honesty.  We are timely, candid and balanced in delivering the good news as well as the bad." 

#MSOS #LPS #investorrelations #shareholders #cannabis #investors #TerrAscend #JasonWild