Ottawa-based Hexo says another U.S. court has dismissed a class-action lawsuit filed against the firm on behalf of shareholders who claimed the pot producer misled them.
Hexo said Wednesday that the Commercial Division of the Supreme Court of the State of New York, New York County ruled that the plaintiffs in the suit “fail(ed) to identify any facts which were known or should be known which rendered the offering documents materially misleading at the time they were issued.”
The plaintiffs can still appeal the ruling.
It was the second U.S. court victory for Hexo this year. In March, the U.S. District Court for the Southern Region of New York dismissed another class-action suit alleging the firm deceived investors and failed to disclose problems in the business.
A third class-action suit filed against Hexo in Quebec remains before the courts.
“While the Quebec litigation remains pending, today’s ruling should further help reduce our litigation burden as we continue closing and integrating our recent acquisitions, to pursue our goal of becoming a top-three global cannabis products company,” Hexo general counsel Roch Vaillancourt said in a statement.
Hexo was one of three major Canadian pot producers listed on U.S. stock exchanges that were hit with class-action suits last year alleging they exaggerated or overestimated sales figures and market potential.
According to media reports in February 2020, Hexo was accused of failing to inform investors it was inflating its revenue figures by sending retailers more products than they were able to sell. The court filing also said the company didn’t tell investors its cannabis inventory was misstated and that a facility it acquired from a rival producer in 2019 was growing pot without proper federal approvals.
Smiths Falls-based Canopy Growth, Canada’s largest pot producer, and Edmonton’s Aurora Cannabis have also faced lawsuits alleging they exaggerated or overestimated market demand for their products.