This year was not especially auspicious to CEOs. As of October 2019, a record number of 172 CEOs from companies that included Nike, WeWork and Under Armor, left their posts. The legal cannabis industry was not immune from this CEO-apocalypse. Last summer, Canada’s Canopy Growth, the largest cannabis company in the world, ousted co-CEO Bruce Linton. Is the space following a precedent set by other companies that have undergone similar shake-ups? Or was the Canopy Growth leadership shuffle a singular exception to what has become an unsettling trend in modern business?

Rick Batenburg III, chief investment officer of Cliintel Capital Management Group, a Denver-based cannabis investment firm, thinks it’s very much the former, with Canopy Growth falling victim to the lack of revenue that has befallen other companies. Batenburg, who founded Cliintel in 2015 with his father Richard M Batenburg Jr, is not a doomsayer; yet he does believe that as sales continue to be sluggish and stocks slide, investors who were previously bullish may jump ship, causing more heads to roll at the top.

This interview was edited for conciseness and clarity.

Iris Dorbian: Why do you think this CEO-apocalypse is going on?

Rick Batenburg III: There is a rush of CEOs leaving the business because leadership is about having ideas and standing by the success or failure of those ideas: When an idea doesn't deliver, someone must be held accountable. Many of the CEOs in the cannabis industry are not the same hardened business executives who understand how to scale businesses, which is precisely what this sector requires. To be successful in a growth market, you have to out-work and out-think competitors, while having a ruthless conviction for your ideas.

Dorbian: Do you think that the recent CEO turnover at Canopy Growth bodes ill for the legal cannabis industry?

Batenburg: I don’t think the changes at Canopy Growth and elsewhere bode well or poorly; change is just that, change. This is about holding leaders accountable for their choices. We must all hold our leaders accountable, whether that's as citizens or shareholders. I always look for three things when looking at cannabis CEOs: First, can they do everyone’s job in the company better than their employees? Second, are they emotionally committed to the success or failure of the company? Third, does the CEO understand their own revenue and EBITDA? I know this sounds simple but if you do not understand your numbers and how you make money, then what are we really talking about?

Dorbian: Why do you think there's been a slowdown in the legal cannabis industry?

Batenburg: The growth of the legal cannabis market in North America is a result of regulatory change. The inflated valuations in the Canadian public market were largely due to oversimplification of supply-chain needs in order to get product in consumers’ hands. That supply chain of cultivation, processing, shipping and retail takes time and problem-solving to develop. This issue is amplified in the U.S.: When you cannot move over state lines, you have extraordinarily restricted investment capital that comes at a high price with strings attached. This creates a regulatory environment that is particularly hard to scale. Companies are successful in one or maybe two states, but nobody has developed a real national brand because of the level of capital and infrastructure that is required.

Dorbian: Isn’t it also about consumer trust? What about the recent vaping crisis also being a factor?

Batenburg: You are absolutely correct; it's about consumer trust, which is achieved by delivering consistent, clean products in multiple markets. That requires scale, and it requires a company and person to stand up and assume the risk. My father and I are doing just that. We are taking responsibility by showing the public they can trust our vapes (Last February Cliintel acquired The Clear, a cannabis concentrate company, which includes a vaping line).

Dorbian: Is there a way that the legal cannabis industry can turn itself around to prevent further erosion? Or is legalization the only way that can happen?

Batenburg: I cannot speak for the entire cannabis industry, but I can speak for myself as one of the larger brands (i.e. The Clear). We have spent $11.2 million of our own money and our private investor capital to build an infrastructure to inspire consumer trust and a real brand presence in cannabis. Consumers deserve a brand that they can rely on. To be successful, the cannabis industry must provide what the people want.

Authored by: Iris Dorbian, Forbes