Dive Brief:
Cannabis operator Ascend Wellness Holdings has announced significant shifts to its leadership team, stating its CEO, John Hartmann, “will no longer serve” as its top executive, and that its CFO Mark Cassebaum was terminated from his position, effective immediately, according to a Tuesday release.
Ascend director Samuel Brill is stepping in as the New York-based company’s CEO, while Roman Nemchenko, previously chief accounting officer, has been appointed as CFO, according to the release. Ascend has also tapped its director and co-founder Francis Perullo to serve as its president.
The leadership shifts are “part of a broader effort to realign our strategy and address recent performance challenges,” Abner Kurtin, Ascend’s executive chair of the board said in a statement included in the release. “We are confident that the changes will bring our focus back to the basics with an emphasis on the fundamentals and will position AWH for future success.”
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Dive Insight:
Both Hartmann and Cassebaum are departing after relatively short tenures in their respective roles, with Hartmann serving as CEO for just over a year after taking the seat in May 2023. Cassebaum, meanwhile, is departing after 10 months as CFO after joining last November, according to the company’s most recent proxy filing.
The two executives’ past experience includes overlapping terms at the now defunct home retailer Bed Bath & Beyond, according to the proxy. Bed Bath & Beyond filed for Chapter 11 bankruptcy protection last year, ultimately conducting liquidation sales and closing down its once ubiquitous stores, CFO Dive previously reported.
Upon “termination other than for cause or Mr. Hartmann’s resignation for good reason,” the departing CEO is entitled to receive compensation equal to the amount of his $950,000 base salary, as well as the vesting of certain stock options, according to the proxy. Ascend did not immediately respond to questions asking to confirm whether Hartmann was terminated.
For Cassebaum’s part, the executive is entitled to receive “any base salary, vacation time and annual bonus from the prior year earned but not paid,” with Cassebaum set to receive an annual base salary of $450,000. Cassebaum was also granted a one-time inducement cash bonus of $135,000, as well as a one-time grant of stock, and is required to pay back that cash bonus if he either “resigns his employment without good reason or if his employment is terminated involuntarily by the company for cause,” according to the proxy.
Ascend, which operates cultivation facilities with assets in multiple states, is the third large U.S. cannabis company to push its CEO out of the door this month.
At the top of August, Curaleaf Holdings — a provider of consumer cannabis products — announced CEO Matt Darin would be retiring from his role and staying on as special adviser, while its executive chairman Boris Jordan would step in as its top executive. A few weeks later, cannabis company Canopy Growth announced its CEO David Klein would step down at the end of its fiscal year, with the firm to conduct a comprehensive search for his successor.
The CEO departures are occurring as the country’s cannabis industry continues to suffer growing pains, facing both political and regulatory uncertainty. Debate continues to swirl around the potential federal reclassification of marijuana, with the federal Drug Enforcement Administration pushing back a decision on whether to do so until after the November presidential election — leaving a continued gap between federal and state cannabis laws, Forbes reported Tuesday.
The reclassification could potentially expand the banking options for cannabis operators, as many banks avoid lending to such operators or don’t accept payments related to the industry for fear of criminal liability, The Wall Street Journal reported.
Ascend is hoping its leadership shifts will bolster its profitability as the industry continues to face headwinds. The company reported gross revenue of $172.7 million for its most recent quarter ended June 30, a 14.3% increase year-over-year and a 0.9% decrease quarter-over-quarter, according to its earnings report. However, it also reported a net loss of $21.8 million for the quarter, compared to income of $841,000 for the prior year period.
The multi-state operator will lean on its co-founders and other established company executives to improve its operations; Brill, Ascend’s newly-minted CEO, “helped guide the company” through a recent refinancing during his tenure on its board of directors, according to its Tuesday announcement.
In July, Ascend closed a previously announced $235 million private placement of senior secured notes with a 12.75% coupon due in 2029, according to a press release. The net proceeds of the transaction, “together with cash on hand,” were used to prepay $215 million of its outstanding term loan, while the remaining $60 million in principal is set to continue at the loan’s current 9.5% interest rate, according to the company.
H/T: www.cfodive.com
