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Investors haven’t been able to prove that a Canadian marijuana company obfuscated the level of oversaturation in Canada’s legal weed market, nor how the black market cuts into the business’ profits, a judge has ruled.
U.S. District Judge John Michael Vazquez published an opinion in a New Jersey federal court Tuesday, ruling that a class action filed by investors against Aurora Cannabis Inc. did not adequately allege violations of United States securities laws, Law360 reported.
The five plaintiffs, all United States investors in Aurora, claim that the company told them the market for cannabis in Canada was massive and still growing.
However, market conditions — including overproduction, few retail stores selling weed in certain provinces, and competition from the black market — saw Aurora announce lower-than-expected revenue.
The plaintiffs claim that pushed down the trading price of their stock on the New York Stock Exchange, Law360 reported. The company’s stock now trades on the Nasdaq after moving exchanges in May 2021.
However, Judge Vazquez said the investors failed to explain what Aurora did wrong.
“The court finds that plaintiffs have failed to adequately allege any false or misleading statements,” he said. He gave them a month to revise their claims, or else he would dismiss the case with prejudice.
The class action lawsuit was first filed in 2019 by Plaintiff William Wilson. In November 2020, Aurora tried to have the class action dismissed, saying the market conditions for marijuana in Canada were “well-disclosed and well-known.”
The plaintiffs are looking to represent anyone who purchased shares of Aurora between Oct. 23, 2018, and Feb. 6, 2020.
In other news for those pairing investment with marijuana, investors have filed a class action lawsuit against the executives of cannabis cryptocurrency startup ParagonCoin Inc., alleging they violated securities laws when launching its $70 million initial coin offering.
What do you think of the allegations in this case? Let us know in the comments!
The plaintiffs are represented by James E. Cecchi, Lindsey H. Taylor and Donald A. Ecklund of Carella Byrne Cecchi Olstein Brody & Agnello PC, Samuel H. Rudman, Alan I. Ellman and Margaret S. Sanborn-Lowing of Robbins Geller Rudman & Dowd LLP, Steve W. Berman and Shayne C. Stevenson of Hagens Berman Sobol Shapiro LLP and Brian Schall of the Schall Law Firm.
The Aurora Securities Class Action Lawsuit Ruling is In re: Aurora Cannabis Inc. Securities Litigation, Case No. 2:19-cv-20588, in the U.S. District Court for the District of New Jersey.
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