Investors in some Canadian licensed producers were finally starting to see some daylight after a dreadful year on North American stock exchanges.
Last week, Ottawa-based HEXO Corp. shares climbed above US$1, which is necessary for it to continue being listed on the New York Stock Exchange.
And shares in Moncton-based Organigram Holdings Inc. jumped significantly last week after the company reached a deal to get its medicinal weed distributed in Israel.
But both are among 15 defendants named in a Calgary lawsuit alleging misstated levels of THC and CBD. And investors in most of these companies, including HEXO Corp. and Organigram Holdings, suffered a setback in trading on Friday (June 19) when the lawsuit became known across Canada.
The plaintiff, Lisa Marie Langevin, is seeking to have it certified as a class action. She’s hoping to win $500 million for Canadians who purchased misidentified legal weed, either medicinal or recreational, from the defendants dating back to June 16, 2010.
None of the allegations have been proven in court.
The share price of HEXO Corp. fell 2.96 percent on Friday (June 19) to close at US$0.75 in New York. Organigram Holdings shares fell 2.26 percent on Friday to close at $2.59 in Toronto.
Among the other licensed producers named in the court action are Tilray Canada Ltd., Cronos Group Inc., MediPharm Labs Corp., Aurora Cannabis Inc., and Aleafia Health Inc.
Tilray shares fell 3.04 percent on Friday to close at US$8.30 on NASDAQ, bringing its market value down to US$1.04 billion.
Tilray is also fending off a shareholder’s lawsuit filed earlier this month over the company’s 2019 marketing and revenue-sharing agreement with Authentic Brands Group LLC.
Cronos Group Inc. shares declined by 2.8 percent on Friday to close at $8.68 in Toronto. MediPharm Labs Corp. shared dropped 4.11 percent to end the day at $1.40 in Toronto.
Despite the lawsuit, two defendants saw their share prices go up.
The best performer, Aurora Cannabis Inc., rose 2.37 percent on Friday, closing at $18.17. Its market capitalization is $2.05 billion.
Meanwhile, Aleafea Health Inc. shares rose 2 percent to reach $0.51. Both companies are listed in Toronto.
Other big players, such as Canopy Growth Corporation and Aphria Inc., are not listed as defendants.
Canopy Growth Corporation shares rose 1.33 percent on Friday to close at $23.64. Aphria Inc. shares were off 0.66 percent to close at $6.04, but the stock was still up 5.6 percent on the week.
In other cannabis-industry news, Vancouver-based Zenabis Global Inc. announced on Friday that it entered into an agency agreement with several investment houses. This is for an offering that will raise up to $20.4 million, minus cash commissions of six percent of the gross proceeds.
A prospectus is available on sedar.com.
Zenabis will use the funds for working capital and corporate purposes, as well as to partially repay subordinated secured notes and unsecured convertible debentures, and partial or full repayment of its $7-million third tranche of senior secured debt.
Another publicly traded Vancouver-based cannabis company, B.C. Craft Supply Company, revealed on Friday that its former CEO, Jason Longden, received more than $1 million in compensation during the six months that he headed the company last year. For more information on this story, visit Straight.com.