[PRESS RELEASE] – NEW YORK, April 8, 2025 – Pomerantz LLP announced that a class-action lawsuit had been filed against Canopy Growth Corp. The class action, filed in the United States District Court for the Eastern District of New York, and docketed under 25-cv-01877, is on behalf of a class consisting of all persons and entities other than defendants who purchased or otherwise acquired Canopy securities between May 30, 2024, and Feb. 6, 2025, both dates inclusive (the “class period”), seeking to recover damages caused by defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, against the company and certain of its top officials.
If you are an investor who purchased or otherwise acquired Canopy securities during the class period, you have until June 3, 2025, to ask the court to appoint you as lead plaintiff for the class. The complaint is available at www.pomerantzlaw.com. To discuss this action, contact Danielle Peyton at [email protected] Call us at 646-581-9800 (or 888.4 POMLAW) toll free, Ext. 7980. If you send an email, please include your address and telephone number as well as the number of stocks purchased.
[Click here for information about joining the class action]
Canopy’s subsidiaries manufacture, distribute, and sell hemp and cannabis products, both for recreational use and medicinal purposes. Products include: Inter alia,Pre-rolled jointsi.e., cannabis cigarettes) and its Storz & Bickel brand vaporizer devices.
In November 2024, Canopy announced that it had launched the “award-winning California grown Claybourne brand” pre-rolled joints in Canada through an exclusive licensing agreement with Claybourne Co.
Canopy’s filings with the U.S. Securities and Exchange Commission have consistently stated that “[t]”The cannabis industry relies on margins, where gross profits are determined by the difference between sales prices and costs.” Canopy is also credited with achieving and maintaining healthy costs and margins in their narratives of the company’s profitability. Investors and analysts are particularly interested in this. In fact, all defendants at relevant times emphasized Canopy’s adoption of various cost reductions measures that drove improved gross margins. Inter aliaMeasures to reduce the costs of joint pre-rolled production and distribution.
In addition, throughout the entire class period defendants stated that the purported positive effects of these measures on gross margins and profitability would continue into the fiscal year 2020.
The complaint alleges that, throughout the class period, defendants made materially false and misleading statements regarding Canopy’s business, operations, and prospects. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) Canopy had incurred significant costs producing Claybourne pre-rolled joints in connection with the Claybourne product launch in Canada; (ii) the foregoing costs, in addition to certain indirect costs that Canopy incurred in connection with its Storz & Bickel vaporizer devices, were likely to have a significant negative impact on the company’s gross margins and overall financial results; (iii) accordingly, defendants had overstated the efficacy of Canopy’s cost reduction measures and the health of its gross margins while downplaying issues with the same; and (iv) as a result, defendants’ public statements were materially false and misleading at all relevant times.
On Feb. 7, 2025, during pre-market hours, Canopy issued a Press Release Announced its financial results from the third quarter of FY 2025. Canopy also reported its financial results for the third quarter (Q3) of FY 2025.[g]The ross-margin decreased from 32% to 400 basis points in [Q3 2025] Compare [the same quarter the year prior] primarily due to the incremental costs related to the Claybourne infused pre-roll launch in Canada, and an increase in indirect costs of Storz & Bickel vaporizer devices[.]” These factors contributed to Canopy reporting a wider-than-anticipated Q3 2025 loss of C$1.11 per share compared to the C$0.48 per share loss estimated by analysts.
Canopy also held a call the same day with analysts and investors to discuss Q3 financial results for 2025. During the call, Canopy’s chief financial officer, defendant Judy Hong, revealed that the company’s Claybourne product launch costs were “primarily attributable to [the] Claybourne products have a higher cost of production. Hong also disclosed that the “indirect costs” related to Storz & Bickel vaporizer devices were attributable to, Inter aliaShipping costs
On this news, Canopy’s common share price fell $0.76 per share, or 27.34%, to close at $2.02 per share on Feb. 7, 2025.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. This firm has won billions in compensation awards for class members. The Firm has recovered billions of dollars in damages awards on behalf of class members. www.pomlaw.com.
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