It is not-so-high times for Aurora Cannabis (ACB) , nor other marijuana producers, for that matter.
Shares of Aurora Cannabis plunged more than 15% on Friday after the Canadian company revealed that its CEO, Terry Booth, will retire effective immediately, and that it will eliminate some 500 staff positions, of which roughly 25% are corporate positions.
Aurora said Executive Chairman Michael Singer has been appointed interim CEO and a search for a permanent successor is underway. Booth will remain a director and become a senior strategic adviser to the board, which will gain two new members: Lance Friedmann and Michael Detlefsen.
At issue: massive-scale debt among many cannabis producers and distributors, along with lackluster demand and too much supply – all of which has collectively turned the sector from darling to disaster.
The announcement comes as pot and pot-product producers and distributors struggle with oversupply, lack of demand, and a more general distaste for all things pot-related – specifically among investors but more generally among the pot-consuming public – despite widespread legalization of the green weed in Canada in 2018 and more recent U.S. state approval of the plant last year.
While most Wall Street analysts and investors expect a better year for pot stocks in 2020, only the lean and mean will likely survive and flourish.
"Industry-wide management changes are a telling sign that the industry has matured some (though not fast enough), and gotten competitive enough, that founder-led strategies aren't going to cut it in a capital constrained backdrop," Cowen and Co. analyst Vivien Azer said in a research note.
Catch up on the Latest Videos on TheStreet!