b'INTRODUCTIONThe cannabis industry has exhibited significant growth in recent years as more states legalize medical marijuana or adult recreational marijuana or, in the case of 11 states and the District of Columbia, both. In addition, in 2018, adult recreational marijuana became legal across all of Canada. Not surprisingly, the number of companies entering the cannabis industry has increased to serve this ever-expanding legal cannabis market. These companies tend to focus on farming and cultivation, distribution, retail sales, and financing of cannabis industry participants. In addition, there has been an uptick in activity by corporations in more traditional industries (e.g., healthcare) to develop and market products derived from cannabis. As is typical with any emerging industryallegedly false and misleading statements or experiencing a significant increase in publicomissions made by the company and its officers, companies operating in that space, there has beenand, if the alleged misstatements or omissions an upsurge in securities class action litigationare made in connection with a securities offering, matters. The plaintiffs bar has started to focusunder Sections 11, 12(a)(2) and 15 of the Securities on cannabis companies in the last two yearsAct of 1933 (the 1933 Act).likely due to the growing number of companiesDating back to the beginning of 2018, there have in the sector, regulatory uncertainties, and overallbeen at least 19 securities class actions filed market volatility in the legal cannabis industry. Theagainst companies in U.S. federal courts against cases are typically filed by shareholders seekingpublicly traded companies operating in the to recover investment losses after a companyscannabis or cannabidiol (CBD) sector (collectively stock price drops following corporate disclosures.herein, cannabis companies). 1This includes a Plaintiffs typically assert claims under Sections116% increase from 6 cases in 2018 to 13 in 2019.10(b), 20(a) and Rule 10b-5 of the SecuritiesTwo of those companies also faced 1933 Act claims Exchange Act of 1934 (the 1934 Act) based uponin state courts. 21Source: Cornerstone Research Securities Class Action Filings2019 Year in Review (Cornerstone Report), at 41.2 Id.4'