Marijuana Business Magazine May-June 2019

Marijuana Business Magazine | May-June 2019 102 Progress on Gender Diversity? Men account for the vast share of positions in the boardrooms of leading Canadian cannabis companies, but industry experts said that trend may be changing, albeit slowly. Among two dozen of the leading publicly traded cannabis companies in Canada, 93% of board members are men, according to a Marijuana Business Daily analysis. Collectively, the companies employ only 11 women on their boards, and most—including the market leaders—have not disclosed written policies relating to the identification and nomination of female directors. An analysis of regulatory filings for cannabis companies traded on Canadian stock exchanges reveals that women make up 7% of marijuana company boards. While that’s a slight improvement from the previous year’s 5%, it is well below the Canadian average of 15%-20% in other industries. That said, are cannabis companies making more of an effort to promote greater diversity within their top ranks? Cheryl Reicin, a partner at Torys, a Canadian corporate law firm with additional offices in the United States, believes so. “It used to be a small group of guys getting together and doing this—and I make no judgment on that— but I do think the industry is trying harder now,” she said. Trina Fraser, a partner at Brazeau Seller Law in Ottawa, said more cannabis clients are approaching law firms wanting to achieve greater female representation. “Clients come to me and say we want to do better; we want more female representation,” Fraser said. “They are asking for recommendations, and even just the intention to move in that direction is very good.” – Nick Thomas and Matt Lamers Outside Experience Is Key Having people with extensive corporate experience outside the cannabis industry is also seen as increasingly important for companies seeking to avoid potential governance problems. They can share valuable business networks and bring more of an objective perspective. Companies already are reaching outside the industry to find such experience, with three Canadian companies announcing such moves earlier this year: • Tilray hired former Goldman Sachs Managing Director Andrew Pucher to head up corporate strategy, adding to the Nanaimo, British Columbia-based cultivator’s extensive list of management personnel with backgrounds in other industries. • Aurora Cannabis hired billionaire Nelson Peltz as a strategic adviser to help the Edmonton, Alberta-based cultivator lock in partnerships and expand internationally. Peltz is co-founder of New York-based, multibillion-dollar asset-management firm Trian Fund Management. And he is a member of the Procter & Gamble board and chair of the fast-food holding company Wendy’s. Peltz did not join Aurora’s board. • Moncton, New Brunswick-based cannabis producer Organigram appointed Helen Martin as its corporate secretary, noting her “extensive experience in both securities law and corporate governance.” Martin previously served as chief operating officer of Crosswinds Holdings, a publicly traded private equity firm based in Toronto. She also has experience as a lawyer. At the board level, cannabis companies are taking steps to include voices from outside the industry. Three of the five board members at Tilray are women from outside the cannabis industry, for example. Aurora Cannabis’ eight-member board includes two women with audit committee experience and an executive chair who is not a member of the company’s management team. 48North, meanwhile, has five independent directors to comple- ment the two female co-CEOs, VanderMarel and Alison Gordon. The NewNormal Board makeup aside, top executives at publicly traded cannabis companies will need to be aware that their operations and governance practices will be put under a microscope—not just by regulators but also investors and consumers. It’s a reality that public cannabis companies both big and small will face—with the former likely to encounter the most scrutiny. “The larger the business, the more exponential the potential problems,” noted Wellington of VS Strategies. Reporter Matt Lamers contributed to this story. Reach him at [email protected] Trina Fraser is a partner at Brazeau Seller Law. Photo by Soliman Productions Cannabis Corporate Governance

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