Finance veterans dominate the boards of the top 13 publicly traded cannabis companies, with 30% of members coming from the finance sector. No other sector has so much influence in the cannabis industry, suggesting companies’ leadership have prioritized acquisition and financial deal-making more than any other goal, such as product development, marketing, or retail management.
Mark Cozzi, founder and CEO of CentoVentiCinque, said board members in the cannabis industry “skew towards finance, but not necessarily applicable finance.”
“As I think about building our board of advisors, I don’t really want any more finance professionals. I want people from marketing, law, governmental affairs, and education,” Cozzi said, referring to a group with less fiduciary responsibility than a board of directors, which typically has legal responsibility to protect company shareholder value.
Karl Johansson is one of three financial experts on the board of Curaleaf. Previously, he was a regional partner for Eastern Europe countries for Ernst & Young CIS, which organizes the management of funds, trusts, and foundations. He also worked as a managing Partner of Ernst & Young CIS in Moscow, where he was a coordinator of the Foreign Investment Advisory Council.
Every company has at least one person in finance on the board except for MedMen and TerrAscend. Former MedMen Chief Financial Officer James Parker is suing MedMen, alleging a breach of employment contract and retaliation, according to Law360. He claims former co-founders Andrew Modlin and Adam Bierman led excessive and luxurious lifestyles.
MedMen did not offer comment.
The second largest sector represented is law, at 8%.
“Certainly in the context of cannabis, there’s a lot of unknowns, and there are many gray areas. To ask someone to help navigate those is really critical,” said Cozzi. “Whether it’s cannabis or any company — having someone with a broad legal background and years if not decades of experience are really important aspects…You need that wisdom and that perspective.”
Boards of directors have a fiduciary duty to to focus on the interests and protection of shareholders, Cozzi said.
“Having boards that are diverse from their background standpoint and independent and have real experience. That’s what really matters. Most of these companies are moving that way, but they still have a ways to go,” he said.
Nicholas Gastevich, vice president of Gastevich Investments, a family office, said having finance top the list of sectors is what he would expect.
“There’s a certain level of sophistication and legitimization that needs to be brought. I think companies have been focused on bringing in that talent that will show off that these are mature and financially sound operations,” Gastevich said. “Having just a very professionalized board is a key aspect of just bringing legitimacy to the industry overall.”
Only three public cannabis company board members have backgrounds in agriculture.
Trulieve, a vertically-integrated company with extensive cultivation facilities, has two board members in the agriculture sector. Thad Beshears is the co-owner of two plant nurseries in Tennessee and Florida, and Richard May, co-owner of May Nursery, Inc. May, who has over 18 years of experience in growing and managing, has also served on the Southern Nursery Association and the Gadsden County Chamber of Commerce.
One other company has a board member with an agriculture background, 4Front. Board member Eric Rey is the retired CEO of Arcadia Biosciences.
“I believe Eric’s experience, both as an entrepreneur and public company CEO and board member for agricultural technology companies, should provide a solid foundation for quickly understanding and contributing to 4Front’s oversight as our industry evolves, particularly as it relates to agricultural practices and managing rapid growth,” said then 4Front CEO Joshua Rosen in 2019, when Rey joined the board.
Rey previously worked at Rockridge Group, a management consulting firm specializing in agricultural biotechnology. He worked for the Calgene Oils Division of the Monsanto Company, where he spearheaded the operational, plant breeding, product development, and agricultural infrastructure of the company.
Gastevich said investors look for board or c-suite level positions that fulfill a specific niche that needs improvement.
“Some companies like Acreage, for example, have lots of private equity type names, but very little actual cannabis direct experience–whether it’s on the grow or branding side. That really limited them for a number of years just because they couldn’t get the fundamental operations sound,” Gastevich said.
Jushi, Trulieve, and Cresco all had members with backgrounds in the alcohol and beverage industry. Jane Morreau, a board member of Trulieve, has nearly 30 years of experience at Brown-Forman, a large publicly traded spirits and wine company which produces, markets, and distributes beverages like Jack Daniel.
Morreau was nominated to Trulieve’s board of directors after the company retained search firm Heidrick and Struggles, according to SEC documents.
“The search was targeted to identify one candidate with financial and audit experience to bolster the audit committee,” according to SEC documents.
Morreau has experience in supply chain management, manufacturing operations, information technology, retail operations, mergers and acquisitions, and corporate strategy, according to her Trulieve biography.