The cannabis governance shit show

I’ve spent the last few weeks speaking with institutional investors about funding LPs and MSOs.  One major reason for their investing reluctance is the sector’s poor governance practices.  

Turning off institutional money and degrading your market cap are clear consequences of bad governance.  I’ll also add internal management distraction, reputational embarrassment and bad strategic decision making. 

I have seen many examples of poor governance in LPs and MSOs: keeping a complicated cap table; having weak Board oversight in critical business areas; using dodgy biological asset valuations; a lack of independent Directors and; maintaining a convoluted share structure which give preferential rights to minority shareholders. 

To truly professionalize their firms and earn stakeholder trust, companies need to quickly improve their governance practices. Best practices include:

1.     Develop a properly documented governance framework including defined and transparent Board roles & accountabilities and ‘fit for purpose’ reports for them to use;
 
2.     Adding a suitable number of qualified, independent directors;

3.     Move to a single class share structure with equal rights for all;

4.     Institute Director evaluation mechanisms to ensure the Board is up to speed on the regulations and performing up to expectations;

5.     Get your filings, audits and external reporting completed on time.

DM if you need need an objective view on how to improve your governance.

#governance #Boards #sharestructure #diversity #reporting #publiccompanies #MSOs #LPs