Marijuana Business Magazine May-June 2019

May-June 2019 | 99 Cannabis Corporate Governance Gender and racial diversity plus mainstream talent and strict compliance are key to good corporate governance practices • Leamington, Ontario-based cannabis grower Aphria pledged in February to improve its management practices after an independent probe found some of its directors had conflicts of interest related to the 2018 acquisition of assets in Latin America. The investigation concluded that unidentified, nonindependent directors had conflicts that were not revealed to the rest of the board. Aphria also said CEO Vic Neufeld and co-founder Cole Cacciavillani would resign. “The cannabis industry has been the Wild West,” Vijay Sappani, CEO of Toronto-based venture capital firm Ela Capital, told Marijuana Business Magazine. “It is time for cannabis companies to focus on corporate governance.” For starters, that means having truly independent boards composed of diverse professional backgrounds and genders, according to industry experts. It also means taking rigorous steps to ensure strict compliance with regula- tions, not to mention federal law. Following are tips for how cannabis industry executives can beef up their com- panies’ corporate governance practices and, in the process, help their bottom lines. Keep Compliance Top of Mind Companies and lawyers operating in the cannabis industry face many of the same corporate governance issues that mainstream companies encounter— think transparency, conflicts of interest and board composition. But cannabis companies face a key challenge that many mainstream industries don’t: heavy state and local regulation. By Nick Thomas Vijay Sappani