The number of class action lawsuits in the U.S. against publicly traded cannabis companies more than doubled from 2018 to 2019 from six to 13, according to a report from global law firm Goodwin. Most of the legal actions focused on company disclosures related to operations, transactions, or financial restatements and internal controls, the report says.
More than half of the class action lawsuits against cannabis companies filed in the U.S. have been against Canadian firms traded on U.S. stock exchanges. Class action lawsuits in the cannabis industry from 2018 to 2019 include:
– The 2018 lawsuit against Paragon Coin Inc. who were sued over their initial crypto coin offering – PRG Tokens – after plaintiffs alleged that the tokens were unregistered securities. That case is ongoing.
– The 2018 lawsuit against CV Sciences, a CBD company accused of making false and misleading statements about its infused chewing gum product’s patent application. That case is ongoing.
– The 2018 lawsuit against licensed Canadian producer Cronos Group over alleged misleading and false statements over the size of its distribution agreements and positive statements about the state of its businesses. That case was ultimately consolidated with another case and dismissed.
– The 2018 lawsuit against Namaste Technologies Inc. over their claim that they were close to selling U.S. subsidiary Dollinger Enterprises US Inc. and, instead, just sold the company to other Namaste executives. That case was voluntarily dismissed by the plaintiff.
– The 2018 lawsuit against India Global Capital, Inc. over false and misleading claims about the quality of one of the company’s manufacturers of a CBD-infused beverage. That case is ongoing.
– The 2018 investor-led lawsuit against Canadian-based licensed producer Aphria over false and misleading statements over its Latin American assets. The case is ongoing.
– The 2019 lawsuit against Liberty Health Sciences Inc., a Canadian company that serves as the U.S. operational entity for Aphria that was sued over false and misleading statements in connection with the company’s investments and transactions. That case is ongoing.
– The 2019 lawsuit against 22nd Century Inc. over alleged false and misleading statements about the company’s attempt to raise capital. The case is ongoing.
– The 2019 lawsuit against KushCo Holdings Inc. accusing current and former business officers and the company auditor about misleading and false statements about the firm’s financial position. That case is ongoing.
– The 2019 lawsuit against Pyxus International Inc. which accuses the company’s CEO and CFO of false and misleading statements about the firm’s financial position. That case was voluntarily dismissed by plaintiffs.
– The 2019 investor-led lawsuit against CannTrust Holdings. Inc., over failure to disclose that the company’s Pelham, Ontario facility was out of compliance with Health Canada rules. That case is ongoing.
– The 2019 lawsuit against Curaleaf Holdings Inc. over false and misleading statements about the company’s CBD products. The case is ongoing.
– The 2019 lawsuit against Greenlane Holdings, Inc. claiming the company made false and misleading statements about its e-cigarette business. The company also distributes CBD and vaporizers. That case is ongoing.
– The 2019 lawsuit against Sundial Growers Inc. over alleged U.S. Securities Act violations. The case is ongoing.
– The 2019 case against Zynerba Pharmaceuticals Inc. over false and misleading statements and failing to disclose events adverse to its business. The case is ongoing.
– The 2019 case against Canopy Growth Corp. which alleges that the company filed to disclose to investors that the company was experiencing weak demand for its soft gel and oil products. The case is ongoing.
– The 2019 lawsuit against Canada’s Aurora Cannabis Inc. over its alleged failure to disclose it was planning to pause construction at one of its facilities. That case is ongoing.
– The 2019 lawsuit against Hexo Corp. alleged that the Canadian firm made false and misleading statements about its inventory and internal revenue figures. The case is ongoing.
– The 2019 lawsuit against Trulieve Cannabis Corp. over false and misleading statements about the value of its biological assets. The case is ongoing.
Michael Jones, partner in Goodwin’s securities and shareholder litigation, white collar defense, and cannabis practices, said that cannabis companies might be a “bigger target for securities class action lawsuits” due to “regulatory uncertainties and overall market volatility in the industry.”
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