The next wave of attacks on cannabis companies is likely to shift from short raids to traditional activist campaigns focused on better governance. That’s according to Patricia Olasker, Partner at Toronto-based Davies Ward Phillips & Vineberg LLP, which ranked number one in cannabis M&A advisory in 2018.
In an interview, Ms. Olasker pointed out that short sellers have dominated cannabis headlines after eye-watering valuations drew the attention of hedge funds that bet against stocks. Indeed, the likes of Tilray and Aphria became targets of short sellers last year, with some investors criticizing them very publicly. The question now is how activism will evolve and what types of companies will find themselves in the crosshairs.
CorpGov: To what degree has activism been a factor for listed cannabis companies and is it changing?
Ms. Olasker: We have already seen a lot of short-seller activism in the cannabis space. When valuations start to come down to more realistic levels, as stocks begin to trade on real valuations – like multiples of EBITDA – we may start to see more traditional activists focus on the sector. Is Nelson Peltz’s involvement with Aurora Cannabis a sign of things to come?