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Facing Controversy and a Takeover, Canadian Cannabis Company Names Organic Products Mogul as Chairman
Daniel Brothers / Moment / Getty Images
Embattled Canadian cannabis company Aphria Inc. named a new, independent chairman in a press release on Dec. 27, 2018: Hain Celestial Group Inc. Founder Irwin D. Simon.
The announcement comes as the company faces a takeover bid from Ohio-based cannabis company Green Growth Brands Inc, Newsday reported Wednesday. The appointment also occurred in the same month as an exposé from Hindenburg Research alleging that Aphria investors were attempting to siphon money from shareholders.
In its press release announcing their decision, Aphria emphasized the fact that appointing Simon as an independent chair would "advance the Company's governance best practices." Their board of directors now has 10 members and a majority, six, are independent.
"Aphria remains committed to strong corporate governance and promoting a culture of integrity and ethical behaviour throughout the organization," the company wrote.
Simon had served as CEO of the Hain Celestial Group for 25 years since founding the organic and natural products company in 1993. He had stepped down as CEO in November, though he continues to act as nonexecutive chairman, Newsday reported.
"Irwin Simon is a dynamic leader and entrepreneur who understands the complexities and responsibilities of building a successful and competitive company," Aphria CEO Vic Neufeld said in the press release. "As we continue to focus on building an extremely dynamic, global cannabis company with tremendous opportunity for substantial shareholder value creation, Irwin's decades of operational and strategic experience in health and wellness and consumer packaged goods will be very valuable."
In an interview with CNBC Wednesday, Simon said that the cannabis industry today reminded him of the natural organic food industry in the 1990s. He touted it as a major growth opportunity, saying it would be a $15 billion business if all 50 states legalize it. In Canada, it is currently a $5.5 billion industry, he said. Beyond smoking for pleasure, he saw major growth potential in food, beverages, supplements, vitamins and medicine.
"You want to talk about trends in 2019. The whole cannabis world is one of the hottest trends I've seen," he told CNBC.
Newsday reported that the legal cannabis market is expected to grow by 14.7 percent per year, to reach $25 billion by 2025, according to the cannabis research firm New Frontier Data.
When asked about the takeover attempt by Green Growth Brands, Simon said the company's current offer was too low to make it a potential strategic partner at the current moment, but that in the future a partnership might be possible, since the company owns many retail outlets.
"While we appreciate GGB's interest in the value we have created at Aphria and our significant growth prospects, their proposal falls short of rewarding our shareholders for participating in such a transaction," Simon wrote in Aphria's official response.
Aphria found that Green Growth Brands' proposal would be 23 percent below its average share price.
The takeover isn't the only controversy Aphria faced this month. In the Dec. 3, report, Hindenburg Research accused the company of being a "shell game" because, it claimed, its recent Latin American acquisitions were "largely worthless." These included an abandoned building in Jamaica that had been sold off by a bank earlier in 2018 and an Argentinian company that one worker said had a 2017 revenue less than half of what Aphria had claimed.
Aphria responded to the report restating the value of its acquisitions, but Hindenburg Research pointed out that it did not dispute key claims, such as the claim that the purchases were made through a series of shell companies or that the supposed office of their Jamaican subsidiary was an abandoned building.
Hindenburg Research also raised questions about the takeover, noting that, among other irregularities, Aphria CEO Neufeld was on the board of of advisers of Green Acre Capital, a group that sponsors the fund that is Green Growth Brands' second biggest shareholder.
"We view this offer as non-credible and likely an attempt to generate the appearance of demand in the hopes of spurring credible offers," Hindenburg Research wrote.
Simon was no stranger to controversy at Hain Celestial. During his tenure, the company settled a nearly $10 million dollar lawsuit in California over claims that two brands it sold as organic did not actually meet the requirements of California's Organic Products Act, Newsday reported at the time.
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By Will Sarni
It is far too easy to view scarcity and poor quality of water as issues solely affecting emerging economies. While the images of women and children fetching water in Africa and a lack of access to water in India are deeply disturbing, this is not the complete picture.
The Past is No Longer a Guide to the Future
We get ever closer to "day zeros" — the point at when municipal water supplies are switched off — and tragedies such as Flint. These are not isolated stories. Instead they are becoming routine, and the public sector and civil society are scrambling to address them. We are seeing "day zeros" in South Africa, India, Australia and elsewhere, and we are now detecting lead contamination in drinking water in cities across the U.S.
"Day zero" is the result of water planning by looking in the rear-view mirror. The past is no longer a guide to the future; water demand has outstripped supplies because we are tied to business-as-usual planning practices and water prices, and this goes hand-in-hand with the inability of the public sector to factor the impacts of climate change into long-term water planning. Lead in drinking water is the result of lead pipe service lines that have not been replaced and in many cases only recently identified by utilities, governments and customers. An estimated 22 million people in the US are potentially using lead water service lines. This aging infrastructure won't repair or replace itself.
One of the most troubling aspects of the global water crisis is that those least able to afford access to water are also the ones who pay a disproportionately high percentage of their income for it. A report by WaterAid revealed that a standard water bill in developed countries is as little as 0.1 percent of the income of someone earning the minimum wage, while in a country like Madagascar a person reliant on a tanker truck for their water supply would spend as much as 45 percent of their daily income on water to get just the recommended daily minimum supply. In Mozambique, families relying on black-market vendors will spend up to 100 times as much on water as those reached by government-subsidized water supplies.
Finally, we need to understand that the discussion of a projected gap between supply and demand is misleading. There is no gap, only poor choices around allocation. The wealthy will have access to water, and the poor will pay more for water of questionable quality. From Flint residents using bottled water and paying high water utility rates, to the poor in South Africa waiting in line for their allocation of water — inequity is everywhere.
Water Inequity Requires Global Action — Now.
These troubling scenarios beg the obvious question: What to do? We do know that ongoing reports on the 'water crisis' are not going to catalyze action to address water scarcity, poor quality, access and affordability. Ensuring the human right to water feels distant at times.
We need to mobilize an ecosystem of stakeholders to be fully engaged in developing and scaling solutions. The public sector, private sector, NGOs, entrepreneurs, investors, academics and civil society must all be engaged in solving water scarcity and quality problems. Each stakeholder brings unique skills, scale and speed of impact (for example, entrepreneurs are fast but lack scale, while conversely the public sector is slow but has scale).
We also urgently need to change how we talk about water. We consistently talk about droughts happening across the globe — but what we are really dealing with is an overallocation of water due to business-as-usual practices and the impacts of climate change.
We need to democratize access to water data and actionable information. Imagine providing anyone with a smartphone the ability to know, on a real-time basis, the quality of their drinking water and actions to secure safe water. Putting this information in the hands of civil society instead or solely relying on centralized regulatory agencies and utilities will change public policies.
Will Sarni is the founder and CEO of Water Foundry.
Note: This post also appears on the World Economic Forum.
Reposted with permission from our media associate Circle of Blue.
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