Constellation Brands (NYSE:STZ) appears pressured to push Canopy Growth (NYSE:CGC) in a different direction. After Canopy fired its co-CEO, Bruce Linton, the company is poised to shift its strategy. This time, Constellation Brands, as its largest shareholder, will exert more influence on the company’s business plan.
Aurora Cannabis (TSX:ACB) management is likely content with not allowing outsider investor interference. It is free to exercise its business growth plan with no pressure to expect profits for the short-term. Conversely, Canopy Growth has to answer to Constellation Brands.
The clash between the two companies could create uncertainties in Canopy’s strategy in the short-term. Disagreements at the executive level will hamper growth. If profits are the near-term priorities, Canopy could fall behind its competitors who are free to buy out smaller firms to grow.
Previously, investors could assume that Canopy could freely spend the $4 billion cash it received through the Constellation investment. This is no longer true. Cannabis investors now need to consider Aurora stock or Cronos (TSX:CRON).
Chances are low that Canopy will reach a path of profitability in the near-term. Besides, with operating costs always exceeding revenue growth, Canopy is in danger of never becoming profitable. That should also get investors holding STZ stock nervous.
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