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ARTICLE · 13 JANUARY 2021

A Dive Into The Surge Of Cannabis-Related Securities Class Actions

After nearly two years since the recreational cannabis industry has been in operation, we are seeing a rise in securities class actions and regulatory activity relating to cannabis companies

CanadaCannabis & Hemp

After nearly two years since the recreational cannabis industry has been in operation, we are seeing a rise in securities class actions and regulatory activity relating to cannabis companies. Since legalization, the growth of the sector has been fast and furious. The initial excitement and high investor interest has been recently overshadowed by compliance breaches at Canadian cannabis issuers coupled with market volatility fueling event-based securities litigation.

A surge of securities class actions were filed on behalf of disgruntled investors in 2019 against a number of Canadian cannabis issuers for prospectus and secondary market misrepresentation. NERA Economic Consulting released a report noting that the cannabis industry accounted for five of the fourteen new Canadian securities class action filings (36%). Securities class actions commenced against cannabis companies generally involve circumstances of:

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