Los Angeles Cannabis Securities Litigation Attorneys
Securities law is vast and complex. It is, unfortunately, an unavoidable arena for any business that expands beyond a few partners. Even close corporations owe duties to minority shareholders, which can lead to disputes and even fraud allegations. Companies that grow larger and consider going public must contend with all facets of securities law. In particular, public entities must be sure to file all proper disclosures, including all and only accurate information, and make sure to avoid misspeaking publicly. Even an innocent, if overly enthusiastic, public statement on the company’s prospects can open a business up to the dreaded Rule 10b-5 class action.
If you operate a cannabis business in California, the cannabis securities litigation attorneys at McReynolds Vardanyan are ready to provide you with the advice and representation you need. Our cannabis securities team will help you grow your business without running afoul of state or federal securities laws. We’ll help you make regulatory disclosures, respond to investigations, conduct internal audits, and field any shareholder complaints.
Securities Litigation Is on the Rise in the Cannabis Industry
It may seem early to start worrying about shareholder disputes and securities class actions, but in the world of business, things move quickly. Cannabis business owners and investors benefit from established legal advisors who can ensure that they are protected from liability and that their interests remain protected in the burgeoning marijuana industry. Several recent lawsuits illustrate just how quickly securities litigation can invade a burgeoning business arena.
For example, a 2021 lawsuit filed in the Southern District of New York concerns a proposed merger between two large players in the cannabis industry. Shareholders of Tilray, a global leading medical and recreational use cannabis supplier, filed suit to stop the company from merging with Aphria Inc., a major producer of cannabis lifestyle goods. The lawsuit alleges that Tilray shareholders were misled about the proposed transaction, which the plaintiff claims will ultimately undervalue their shares in the company. The plaintiff seeks to enjoin the merger and to force Tilray to reissue its disclosures about the proposed transaction.
Another proposed class action similarly challenges a merger between a medical analytics company and Helix, a company that provides supply chain management to legal cannabis entities. The plaintiffs in the Helix matter allege that they, like the plaintiffs in the Tilray matter, were given a misleading proxy statement that failed to accurately advise shareholders of the consequences of the transaction.
Additionally, a product development and supply chain solutions company that advises cannabis businesses, among others, was hit with a putative class action alleging violation of federal securities laws. The plaintiffs seek remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, which states that it is illegal to defraud or deceive someone in connection with the purchase or sale of securities. The plaintiffs allege the defendant company made misleading statements in press releases and other public filings that artificially inflated its share prices, deceiving the public and shareholders.
The merits or likelihood of these lawsuits notwithstanding, the message is clear: Cannabis business owners need to familiarize themselves with the securities laws. Securities liability can wreck an enterprise, and any cannabis industry company that goes public or that has a number of divergent shareholders needs to understand its responsibilities and potential liabilities. A savvy California cannabis industry business and compliance attorney can help ensure that you satisfy all disclosure requirements and identify and remedy all potential areas of liability, securities or otherwise.
Trusted Advice and Effective Representation From Qualified Cannabis Securities Lawyers
If you are dealing with federal or state securities matters in connection with your cannabis business, if you are facing other regulatory concerns, or if you are interested in setting up a marijuana business in Los Angeles or southern California, call McReynolds Vardanyan, LLP, in Glendale at 818-855-2115. Our California cannabis securities law and regulatory compliance attorneys are available 24/7 and are ready to help you step through the legal hoops necessary to get your budding business off the ground effectively, efficiently, and legally.