b'GOODWINsecurities class actions. The majority of theDating back to the beginning of 2018, therecases have been filed in the federal districthave been at least 19 securities class actionscourts in the in Second Circuit (specifically,filed against companies in U.S. federal courtsNew York district courts) and there have beenagainst publicly traded companies operatingfour lawsuits filed in the district courts in thein the cannabis or cannabidiol (CBD) sectorNinth Circuit (specifically, California and Nevada(collectively herein, cannabis companies).district courts). The few remaining lawsuitsThis includes a 116%increase from 6 cases inwere filed in district courts in other states and 2018 to 13 in 2019. federal court circuits. The majority of the cases have been SECURITIES CLASS ACTION FILINGSfiled in the federal district courts in the INVOLVING COMPANIES IN CANNABIS ORin Second Circuit (specifically, New York CBD BUSINESSES (20182019) district courts) and there have been four 15 lawsuits filed in the district courts in the Total: 13 Ninth Circuit (specifically, California and NUMBER OF FILINGS12 3 Nevada district courts).96 Total: 63 6 10 CANNABIS FILINGS BY FILING LOCATION02018 2019 2nd 9ParallelFederal Courts Only 3rd 3Federal-State Filing4th 2COURTOf the cannabis companies named in securities9th 4class actions during that time frame, more than half have been Canadian companies traded on11th 1U.S. stock exchanges. This is likely due to theStatefact that concurrently with Canadas legalizationCourt 3of cannabis-based products, several Canadian0 2 4 6 8 10companies in the industry registered their sharesNUMBER OF FILINGSfor trading on U.S. securities exchanges. While the U.S. securities exchanges generally will notThis update focuses primarily on some of the register U.S.-based cannabis companies becausemore interesting decisions in the cases brought in of federal criminalization, the exchanges generally2018 and 2019. Most of the securities class action will register and list Canadian cannabis firms onmatters brought against these companies focus the theory that those companies are operating inon disclosures related to operations, transactions, compliance with their domestic laws.financial guidance, or financial restatements and Although the sample size of cases is still relativelyinternal controls. Notably, several of the lawsuits small, there are some early trends with regard tofollowed purported expos reports published by where plaintiffs lawyers are choosing to file theseactivist short-seller stockholders.5'