Press Release
April 23, 2020

Goodwin Report Highlights 116% Increase in Securities Class Actions Against Cannabis Companies

Global law firm Goodwin today announced the release of its Update on Securities Litigation Against Cannabis Companies. Produced by the firm’s Securities + Shareholder Litigation and Cannabis practices, the report analyzes securities class actions filed in U.S. federal courts against publicly traded companies operating in the cannabis or cannabidiol (CBD) sector (collectively “cannabis companies”).

The report highlights significant decisions and litigation matters arising as the number of companies entering the industry has increased to serve the ever-expanding legal cannabis market. It also looks into cases stemming from the uptick in activity by corporations in more traditional industries (e.g., healthcare) to develop and market products derived from cannabis. Key findings of the report include:

  • Alongside significant growth in 2019, the legal cannabis industry saw a 116% upsurge in securities class action litigation matters from 6 cases in 2018 to 13 in 2019.
  • Most matters focused on companies disclosures related to operations, transactions, financial guidance, or financial restatements and internal controls.
  • Several of the lawsuits followed purported expose reports published by activist short-seller stockholders.
  • The majority of the cases have been filed in the federal district courts in the in the Second Circuit (specifically, New York district courts) and the Ninth Circuit (specifically, California and Nevada district courts).
  • More than half of the companies named in securities class actions have been Canadian companies traded on U.S. stock exchanges. 

View the full analysis here.

As the leading law firm focused on the intersection of capital and innovation, Goodwin’s litigation practices have developed a reputation as the go-to counsel for matters involving M&A litigation and post-closing disputes; advising established and emerging technology, life sciences, private equity, financial services and real estate companies; securities class action litigation and SEC investigations; advising clients in trade secret disputes; while collar defense; and government investigations. The firm’s Securities + Shareholder Litigation practice is highly ranked in leading industry publications including The Legal 500 and Chambers.

Since launching in 2016, Goodwin’s Cannabis practice has become a national leader in this sector. Comprised of a cross-disciplinary group of nearly 100 lawyers, Goodwin’s Cannabis practice covers the full spectrum of legal services needed by industry participants, including finding and developing investment opportunities, obtaining funding, structuring of transactions, M&A, protection of intellectual property, handling of government and regulatory investigations, advising clients on risks arising under federal law, and all forms of litigation, all subject to the firm’s obligations under federal law.