The departure of co-founder and chief executive officer Jesse McConnell from Rubicon Organics Inc. (
) is a “material loss” for the Vancouver-based organic cannabis producer, according to Raymond James analyst Rahul Sarugaser.
On Aug. 25, Rubicon announced Mr. McConnell, who is currently on parental leave, resigned from his position and will depart on Dec. 31.
“We viewed Mr. McConnell as ROMJ’s navigator through the Canadian cannabis market’s choppy waters, and it was on his shoulders that we placed our confidence in ROMJ’s ability to become one of Canada’s leading cannabis companies. So, while we await further clarity on who will succeed Mr. McConnell, and how the market will respond to such succession, we take a more conservative stance,” said Mr. Sarugaser.
Though he is “dialing back” his long-term financial expectations for Rubicon, “handicapping its capacity to continue growing its market share,” the analyst said he has “confidence” in the company that Mr. McConnell and chief financial officer Margaret Brodie “have built, which should drive durable +EBITDA performance going forward.”
“While it took a year longer for ROMJ to turn +EBITDA than we had originally anticipated, the company has indeed done so particularly in the face of an oversupplied and extremely competitive Canadian cannabis market populated by a wide array of often-irrational players,” Mr. Sarugaser said. “We have credited ROMJ’s recent +EBITDA turn to (1) Mr. McConnell’s unique understanding of the cannabis market as it stands today (i.e. informed by the legacy Cdn market + U.S. market), and (2) to Ms Margaret Brodie, ROMJ’s CFO, who has steeped ROMJ in a culture of financial and operational rigour.”
Maintaining an “outperform” rating for its shares. he lowered his target to $3 from $5. The average on the Street is $3.25.