Investors are waiting for the smoke to clear around cannabis-seller Namaste Technologies and it has nothing to do with the latest dank weed strain. Co-founder and one-time CEO Sean Dollinger was fired in February 2019 following an internal investigation conducted by a special committee alongside the company’s board of directors.
The committee believed that the CEO breached his fiduciary duty to shareholders – accusing him of taking advantage of his position in certain transactions and acting in his own interests rather than the interests of the shareholders. They urged the board to terminate the co-founder’s contract and remove him from the board of directors.
Dollinger’s response to the committee’s recommendations was not as in touch with the Divine spark as it could have been. “I strongly object to the special committee purporting to have the authorization to remove me. I am of the view that the special committee has exceeded its mandate and is purporting to take control of the board,” Dollinger said in an affidavit.
Later in February, the Canadian chief executive officer threatened legal action against the cannabis ecommerce company but announced later that same week that an agreement had been reached. “I am pleased to announce that Namaste Technologies and I were able to put aside our differences in order to achieve an agreement that both parties believe is in the best interest of the company’s stakeholders,” Dollinger shared in a statement.
In March, PricewaterhouseCoopers sent Namaste Technologies kindest regrets along with their resignation shortly before the cannabis ecommerce company was supposed to finalize their 2018 earnings report. The cannabis tech company hired Baker Tilly as their new auditor but won’t be able to produce their year-end report before the deadline.
Stocks plummeted 21 percent in February after the company firing Dollinger and they haven’t recovered. Restoring market confidence may be a long haul for the company as delays on their 2018 year-end earnings report keeps investors in a holding pattern until there is more news. Stocks may rally if the leadership team can solidify their base and build upon their earlier successes with more partnerships and expansion opportunities.
But before all the billion-dollar drama, Namaste Technologies had a sweetheart start-up story of two friends who had a passion for bud and launched a company from the confines of their garage. Co-founders Sean Dollinger and Kori Zelickson were big believers in marketing and branded themselves as the soon-to-be “Amazon of Cannabis.”
Touting themselves as the world’s leading online seller of cannabis products and accessories in the world - they boasted 32 ecommerce websites across twenty countries who catered to the discerning client interested in marijuana and its associated accoutrement.
Namaste also announced the launch of NamasteMD, Canada’s first ACMPR compliant telemedicine application, and plans to use the platform to acquire patients and connect them with their subsidiary company, CannMart, for purchase of domestic and international cannabis products. Namaste also acquired Findify – an artificial intelligence app designed to personalize the buying experience for ecommerce site users.
But beyond the soundbites that surround Namaste, others wonder if it’s much ado about nothing. SeekingAlpha published a scathing article that questioned whether the company can survive post-Dollinger. According to the author, it was his compelling narrative of cannabis-startup-turned-tech-unicorn that made Namaste anything “more than an amalgamation of legacy e-commerce websites selling vaporizers in a number of countries.”
They pointed to the fact that Namaste’s last reported earnings come from fourth-quarter August 2018. Their $3 million in revenue showed flat year-on-year earnings compounded by a recorded net loss of $6.65 million Their prediction? Namaste’s Potemkin cannabis business will collapse before they get anywhere near the Amazon future they planned for themselves.