This past year gave us plenty of things we'd rather forget: denim underwear (aka "janties"), that creepy Sonic the Hedgehog with the teeth, and the seemingly endless downward trend of nearly all pot stocks. While some were able to gain in value this year, with a select few even doubling, most cannabis companies struggled or outright tanked.
But with the new year comes new optimism. There are plenty of reasons to suspect that 2020 will deliver good news for investors. Consumers will diversify, product offerings will diversify, and plenty of new markets will open up.
The best way to get a better 2020, however, is for cannabis companies to learn from their mistakes. Those that properly address the skeletons in their closets will be the pot stocks to watch. Those that don't might not stick around to ring in 2021.
To make sure they enter the new year on their best feet, several companies have been appointing new CEOs. While swapping out one leadership position doesn't guarantee a company will be successful, it's nevertheless an incredibly important factor to consider, especially for investors.
If investors have confidence in a CEO, the company will likely do well on the markets. If the CEO doesn't inspire confidence, you'll probably want to dump that stock. So with that in mind, let's look at the new CEOs and see if we can't tell the difference between confident men and con men.
Pot Stocks to Watch: Canopy Growth (New CEO, David Klein)
Since ousting Bruce Linton in July, Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) lost almost exactly 50% of its value.
Linton was considered a superstar CEO, so it was never going to be easy to find his replacement. But most cannabis investors probably didn't expect it to take this long.
Finally, after nearly half a year, Canopy named Linton's permanent replacement. Beginning in January, David Klein—the current CFO of Constellation Brands (NYSE:STZ), which holds a 38% stake in Canopy—will serve as the new Chief Executive Officer of Canopy Growth.
Klein will take over from Mark Zekulin, who's held the role of interim CEO since Linton left the company. In a press release, Klein stated his belief that Canopy will once again become a pot stock to watch in 2020.
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CGC stock initially rose 12.7% on the announcement. It didn't take long, however, for pessimism to seep back into the markets.
Ultimately, Klein is expected to tighten the ship at Canopy. Linton was forced out because the company's cost far exceeded its revenue. Klein will likely do whatever it takes to correct that, but it will certainly be an uphill battle.
Pot Stocks to Watch: Medicine Man (New CEO, Justin Dye)
Colorado-based Medicine Man Technologies (OTCQX:MDCL) provides cannabis consulting services, nutrients, and supplies to clients in 20 states and seven countries.
On December 9, Medicine Man appointed Justin Dye of Dye Capital as Chairman and Chief Executive Officer. Dye, a 25-year veteran of management and corporate finance, will lead day-to-day operations across the company.
His primary goal will be to ensure that progress is made towards Medicine Man's acquisition targets. The company has agreed to spend $36,898,499 in order to purchase four dispensaries in Colorado. Termed its "roll-up plan," Medline Man expects these acquisitions to add $170 million to its annual revenue.
MDCL is actually up 63% from the start of the year, so the transition to Dye is more about ensuring goals are met, and not about swapping out a bad leader for a good one. If Dye proves he can deliver, this will definitely be a company to keep your eye on.
Pot Stocks to Watch: Zenabis (Interim CEO, Kevin Coft)
Zenabis Global Inc. (TSX:ZENA) (OTCPK:ZBISF) is one of the industry's biggest losers of 2019. From the start of the year, it's fallen a cringe-inducing 96%, from $4.97 to just $0.20.
This largely occurred under the leadership of Andrew Grieve, who took over as CEO on January 21. Now Zenabis is replacing Grieve, at least temporarily, with Kevin Coft, a founding member of the company.
Coft previously served as interim CEO once before for Zenabis and was instrumental in the company achieving ACMPR compliance as a Canadian cannabis licensed producer. He also brings more than 30 years of international procurement, facility operations, and managerial experience to the role.
Zenabis is currently working with Korn Ferry to look for a permanent CEO. It expects to have one in place during the first quarter of 2020. If Coft or his successor can get ZENA stock to gain half of its previous value, that will be a serious upside for investors.
Expect some more corporate shuffling to occur in the coming months. And as 2020 rolls around, remember not to throw good money after bad. If a pot stock is letting you down, don't be afraid to ditch it like a sub-par CEO.
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