Growing Up: Corporate Governance Is The Next Step For Canadian Cannabis Companies

Article by Davis Milstead, Globe and Mail

Growing up: Corporate governance is the next step for Canadian cannabis companies DAVID MILSTEAD Illustration, for Board Games 2018-ROB

After months of focusing on how to grow marijuana, publicly-traded pot producers are facing a new problem: how to grow up.
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One of the key next steps in the industry’s evolution from outlaw business to legal industry is to bolster corporate governance – the set of best practices in how a board manages a corporation, and the disclosures that let investors know it’s being done right.
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It’s a step that the Canadian cannabis companies – and other young stars of the Toronto Stock Exchange that posted returns outpacing most of the S&P/TSX composite index in the past year – have yet to take, according to the Report on Business’s annual evaluation of Canada’s corporate boards.
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Canopy Growth Corp., in its second year in the rankings, has finished second from the bottom once again. It’s trailed only by Aurora Cannabis Inc., coming in dead last in its first rating in Board Games. Aphria Inc. ranked 227th out of 237 companies. (For a full detailing of the three cannabis companies’ scores, see sidebar.)
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It is not just a matter particular to pot, however: Other young, high flying companies such as Canada Goose Inc. and Shopify Inc. dwell in the nether regions of the Board Games rankings. Canada Goose leads the index with a return of just less than 157 per cent through Friday, according to Standard & Poor’s Global Market Intelligence, with Canopy second at 134 per cent. Aurora, Aphria and Shopify all rank in the top 25.

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