The share price of Canopy Growth Corp. plunged by just under five per cent in early morning trading as investors absorbed the news that Bruce Linton, the company’s co-chief executive officer was abruptly ousted from the company.

Linton, an early pioneer in the Canadian cannabis industry who went on to build the biggest cannabis company in the world by market value, was removed as co-chief executive officer and board member of Canopy Growth Corp. effective immediately, according to a press release put out by the company early Wednesday morning.

In an interview with CNBC, Linton confirmed that he had been “terminated”.

“I think stepping down might not be the right phrase,” he told the network’s morning show, in reference to language used in Canopy’s press release that said he had “stepped down” as a board member and co-CEO.

“Creating Canopy Growth began with an abandoned chocolate factory and a vision. The Board decided today, and I agreed, my turn is over,” Linton said in the press release.

Multiple calls and text messages to Linton were not returned.

Current co-CEO Mark Zekulin, who co-founded Canopy Growth along with Linton and Chuck Rifici (who left the company in 2015 and is now at the helm of Auxly Cannabis), will assume the role of sole CEO until a replacement for Linton is found. The search will include both “internal and external” candidates, Canopy said.

Early reaction from cannabis industry insiders points towards the fact that Linton’s termination was a move orchestrated by alcohol giant Constellation Brands, whose CEO had expressed disappointment with Canopy’s recent quarterly earnings — the company suffered significant losses amid challenges in scaling up at its largest greenhouse facilities in British Columbia and Quebec.

Constellation holds a 38 per cent stake in Canopy through a $5 billion investment in the cannabis company last fall and had appointed two members of its executive team, as well as two independent directors to Canopy’s board last August, when the deal closed.

“It seems that the Street believes that this was a concerted decision from Constellation, who might want to put a blue chip CEO in Linton’s place,” Canaccord Genuity cannabis analyst Matt Bottomley told the Financial Post.

“Clearly this is something that came from the newly formed board, because Constellation has a lot of say in how Canopy is run. I think the main thing that the Street was afraid of was that Linton was just leaving to liquidate his position in the sector. But that’s not the case,” Bottomley added.

In the interview with CNBC, Linton said he has no plans to sell any of his 18 million shares in both Canopy Growth and investment arm Canopy Rivers Inc. — Linton also stepped down as chairman of the venture capital unit.

“We expect Canopy shares to come under pressure on the rather abrupt news that founder and co-CEO Bruce Linton is leaving the company. Mr. Linton has been at the forefront of Canopy and a figurehead for the industry, and thus we view the announcement as surprising,” wrote Royal Bank of Canada analyst Douglas Miehm in a note.

“Mr. Linton had set relatively high expectations in the market (i.e. $1.0B in F2020 revenues according to a Bloomberg article in April) with underlying operational execution underperforming an already-struggling peer group. Thus, we believe there may have been a disconnect between the near-term execution sought by Constellation at this point and Mr. Linton’s focus on investing for the longer term, often at the expense of short-term performance,” Miehm said.

An executive at a rival cannabis company who declined to be named told the Financial Post that based on meetings and conversations with Linton over the past month, the former CEO had been anticipating his own termination.

“It was clear when I talked to him that this stuff was going on,” the executive said.

“I think what we need to pay attention to as a country is: Canopy Growth and (Canadian licensed producer) Cronos Group have been taken over by American companies. They aren’t Canadian companies anymore, because they don’t have majority control of the board,” he said.

In the lead up to Linton’s termination, Canopy had replaced long-serving chief financial officer Tim Saunders with Mike Lee, who hailed from the beer giant.

“Investors should also be aware that new CEOs with a different operating philosophy normally ‘clear the decks’ when they join. As such, the next several quarters could be ‘transitional’ and volatile prior to the release of significantly improved results in fiscal Q4/2020 associated with the launch of value-add products late in 2019,” Miehm wrote.

Cam Battley, chief corporate officer of Aurora Cannabis Inc. who has worked with Linton told the Financial Post that Linton should be “proud” of what he had achieved and built. “At Canopy, he established a number of firsts in this fast growing and fast moving industry. His contributions to the creation of first a Canadian and now a global cannabis sector will not be forgotten.”