Class action lawsuits on rise against public cannabis firms, report says

Federal class action securities lawsuits against publicly traded marijuana businesses doubled from 2018 to 2019, a trend that’s typical in an emerging industry, according to a new report.

The report, by Boston-based global law firm Goodwin Procter, detailed 13 cases filed in U.S. federal courts in 2019 compared with six in 2018. The cases included marijuana and CBD companies.

More than half the suits were filed against Canadian companies that trade on U.S. stock exchanges.

Most of the claims focused on disclosure issues, specific transactions, financial guidance, financial restatements and internal controls, according to the report.

Notably, several lawsuits followed allegations made by short-seller activist companies, according to Goodwin’s report.

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