Canadian cannabis firm Sundial Growers was hit with a class-action lawsuit in the United States more than misleading investors ahead of its initial public providing in August.
The lawsuit, filed on behalf of investors who bought Sundial shares in the course of the IPO, is primarily based on “allegations that Sundial issued materially misleading data to the investing public,” which refers to claims that a consumer returned more than half a ton of poor-excellent marijuana to the firm.
Zenabis Worldwide, one more Canadian pot firm, disclosed on August 20 in its second-quarter earnings that it had returned 554 kilograms of cannabis (valued at $1.9 million), which according to a MarketWatch report, was bought from Sundial and “contained visible mold, components of rubber gloves and other non-cannabis material.”
Even so, Sundial produced no mention of the alleged incident as it ready to go public. “The registration statement represented that Sundial was a producer of ‘high-excellent cannabis in compact batches’ and that ‘we make higher-excellent, constant cannabis’,” the complaint says.
By failing to disclose data about the Zenabis buy, “defendants’ statements about Sundial’s company, operations, and prospects have been materially false and misleading and/or lacked a affordable basis at all relevant occasions.”
Defendants in the lawsuit involve Sundial chief executive Torsten Kuenzlen, chief economic officer James Keough as properly as the company’s board members and underwriters.
Sundial denied the allegations, claiming they are “without merit.”
“We are conscious of the complaints that have been filed. It is our policy not to comment on active litigation having said that, we think that the claims are without the need of merit and the firm intends to vigorously defend itself.”
“Sundial remains focused on what has produced us effective: the development of our company by means of a commitment to making secure, revolutionary and higher-excellent goods,” Sundial told CBC News in a statement.
The news hammered Sundial’s stock, sending it substantially beneath its IPO cost of $13 per share, which in turn broken investors, the law firm representing Sundial shareholders stated.
Sundial debuted on the Nasdaq on August 1, raising $143 million the firm stated it intends to use to expand its cultivation and processing facilities in Alberta, British Columbia, and the United Kingdom.
Shares of Sundial tanked three.21% to$four.52 per share at the finish of Monday’s session.