Canopy Growth Corporation (CGC) Must Restate its Financial Statements
A shareholder filed a class action on behalf of persons and entities that purchased or otherwise acquired Canopy Growth Corporation (NASDAQ: CGC) securities between May 31, 2022 and May 10, 2023. Canopy Growth produces, distributes, and sells a diverse range of cannabis, hemp, and consumer packaged goods products for recreational and medical use.
According to the complaint, throughout the class period, defendants failed to disclose to investors: (1) that there were material weaknesses in the Company’s internal controls over accounting and financial reporting; (2) that, as a result, the Company improperly booked sales of its BioSteel business unit; (3) that, as a result, the Company’s revenue was overstated; and (4) that, as a result of the foregoing, defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On May 10, 2023, after the market closed, Canopy Growth announced that its audited consolidated financial statements for the fiscal year ended March 31, 2022 and the quarters ended June 30, 2022, September 30, 2022 and December 31, 2022 should no longer be relied upon, and would need to be restated. The Company also disclosed that it “identified certain trends in the booking of sales by the [BioSteel] business unit for further review.” The Company specified that “although the BioSteel Review remains ongoing, the Company has preliminarily identified material misstatements” and that “the correction of the misstatements is expected to reduce certain revenues previously recognized.” On this news, Canopy Growth’s stock price fell $0.18, or 14.8%, to close at $1.04 per share on May 11, 2023, on unusually heavy trading volume.
What Now: Similarly situated shareholders may be eligible to participate in the class action against Canopy Growth Corporation. Shareholders who want to act as lead plaintiff for the class must file their papers by July 24, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.