Keeping you up to date on trends, emerging exposures and other critical issues.

Aurora Cannabis Inc, Faces US Class Action Lawsuit

How-Workplace-Drug-Testing-Has-Changed-with-Legal-CannabisAurora Cannabis Inc, a cannabis company based out of Edmonton, Alberta Canada is now facing a class action lawsuit filed on the behalf of investors in the state of New Jersey.

In 2018, Canada legalized the distribution of commercial cannabis allowing companies to sell it commercially, which Aurora used to acquire multiple smaller companies in anticipation of sales. Two years on, they realized they could not keep with other vendors and the black market. Shortly before the period in question on February 6th, they announced a business realignment plan to better align the business financially with the current realities of the cannabis market in Canada while maintaining a sustainable platform for long-term growth.” Specifically, the press release touted that the plan was “expected to include significant and immediate decreases in selling, general & administrative (“SG&A”) expenses and capital investment plans.” [1]

The class suit, filed from multiple different law firms, alleges that their realignment plan did not address the issues that had been plaguing the company, including supply issues and false goodwill. As it concerns a product that A, crosses international lines B, concerns something that at the federal level at the moment in the US is a controlled substance, it will likely face federal sanctions on top of whatever the courts decide.

The lawsuit shows that if marijuana is ever legalized, there will be tricky slope of court battles in different jurisdictions. When dealing with this business, consult state laws on what is legal or not.