Marijuana Business Magazine April 2019

Marijuana Business Magazine | April 2019 78 The cannabis industry, he noted, has seen “overpromotion” on the part of some publicly traded cannabis companies in the form of “fluffy” news releases that have little meaning or are not based on fact. Over time, this can deflate investor confidence in a publicly traded company. Hiring the right investor or public relations firm can help set the right standards for the type of news releases a company distributes, according to Greiper. He added that the CEO of a publicly traded cannabis company should issue a corporate mission statement or strategy letter. “This establishes communication between the CEO and shareholders and sets the general tone of the company’s goals,” he said. “Of course, the primary goal should be to work for the best inter- ests of shareholders.” According to Landry, “Companies with great disclosure and good shareholder communications usually will have reasonable expectations built into their stock price. Reasonable expectations often translate into less volatility.” The upshot: A company may well be less susceptible to a short attack. Landry noted that “managing expectations and avoiding the pitfalls of being too promotional is key.” To defend management’s reputation against short sellers, he said, “having a strong track record of execution will go a long way.” He added: “Investors will be more forgiving and patient if management has historically rewarded them with good returns.” 3. Keep your financial house in order. Greiper said a company’s website should have a clearly defined “investors” section, where current and potential shareholders can access public filings, announcements of shareholders’ meetings and frequently asked questions, or FAQs. In addition, the company should hire a strong accounting/audit firm that will provide integrity and accountability to its public financial statements. Obviously, always filing the financials on time is crucial to reinforcing a com- pany’s credibility with investors. “Lack of doing so usually raises red flags,” Greiper said. Employing a “strong, experienced (chief financial officer) that will estab- lish strong and transparent financial controls will add credibility to those financials,” he added. 4. Get ahead of bad news. Bad news eventually happens to every company, such as a missed revenue target or a product recall. If you don’t break the news, however, someone else will—think a news organization, a short seller, a website or a social media platform. So, be proactive. If you own your bad news, you can better control the narrative by sharing reasons why the issue surfaced. “If bad news occurs—or if operations materially missed internal targets— communicate these items with investors rapidly. We have often seen bad news come out on social media and investment websites before a company issues a press release. These things should not happen,” Landry said. “Transparency will go a long way to establish trust, and transparency starts with clear and timely communications with shareholders.” SHORT STOP Martin Landry is an analyst at GMP Securities. Courtesy Photo Short sellers are “jerks who want us to die.” — Tesla CEO Elon Musk Courtesy TED Talk