iAnthus Cleaning Up Corporate Governance

This evening iAnthus Capital Holdings (CSE: IAN) announced a move to clear the way towards a majority independent board. The company announced a new corporate governance plan centered around the following five changes:

  1. BOD with a majority of independent directors and a Lead Independent Director.
  2. Constituting compensation, audit, and nominating and governance committees comprised solely of independent directors.
  3. Setting expertise and other required thresholds to sit on assigned committees.
  4. Improving the insider trading and confidentiality policies.
  5. Adopting a Whistleblower Policy / Third-Party Independent Hotline mechanism for confidential and anonymous submission of concerns.

The five independent nominees have all previously sat on boards, with notable positions including:

Joy Chen – Chairman and CEO of H2O+ Beauty and CEO of Yes To, Inc.

Mark Dowley – Chairman of DDCD & Partners,

Diane Ellis – Formerly of President of Chico’s FAS, CEO and President of The Limited, and COO and President of Brooks Brothers.

Michael Muldowney – Mr. Muldowney, CEO of Foxford Capital LLC

Robert Whelan – President of Whelan & Co.

We are very pleased to nominate this impressive slate of new members to the iAnthus Board. This completes one of our main 2019 objectives; transforming our Board into a best-in-class Board in Cannabis, truly independent and highly experienced, with leaders from across multiple industries and proven track records in finance, marketing, and retail operations. All proposed directors being nominated are completely independent of all iAnthus officers, directors, affiliates, and major shareholders of the business. We all look forward to working together with the newly constituted Board of Directors to achieve great success for our patients, employees and shareholders.

Hadley Ford, CEO of iAnthus

iAnthus came under pressure last Spring when they chose to cancel all options, majority of which owed to management, and reset them at a lower price. After a large public out-lash the company chose to cancel all the options, stating they would reset them at a higher price at a later date.

Corporate Governance has become an increasingly noteworthy issue in cannabis. With multiple scandals driving away institutional investments, we expect more companies to move in this direction. In article written by the Globe and Mail last July, which reads like an undisclosed promo piece, CEO of Organigram Greg Engel said the following:

“This is an industry that’s still very much moving from founders and executives being chairmen or multiple insiders on boards, and I think some of the challenges we’ve seen in the industry have been because of a lack of governance… You have to have independent governance that has oversight and holds management accountable.”

It is also worth noting that both the NYSE and NASDAQ require a majority independent board of directors, which could signal forward thinking on iAnthus’ part. As a US cannabis operator, they currently cannot list on a US exchange. However, Hadley Ford has a history of being a trailblazer for US operators and if anyone can find a way to be first to a major US exchange, we would bet on Hadley.

Information for this briefing was found via the Globe and Mail and iAnthus Capital Holdings. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.