b'Curaleaf consistently touted the potential growth anddistribution of all tobacco products on San Francisco quality of their CBD products in the U.S. despite theproperty, which included property subleased by fact that the regulatory scheme was complex and thatJUUL Labs. In June 2019, the San Francisco Board of the companys products were not FDA-approved, andSupervisors announced that the sale and distribution therefore, the companys statements about its expansionof e-cigarette products would be banned within the city.were false and materially misleading. The next day, Greenlanes stock price fell 17% to close The case was consolidated in November 2019 andat $11 per share and continued to decline over the plaintiffs filed an amended complaint on January 6, 2020.following days until it closed at $9.32 on June 24, Defendants moved to dismiss the amended complaint in2019. In response, the company released a statement March 2020. acknowledging the citys ban but noting that it did not The court granted defendants motion to dismissanticipate a material impact from the new regulation with prejudice. Specifically, the court rejected plaintiffsbecause the city, and Northern California region, arguments that the companys statements about itsrepresented an immaterial percentage of its total products were false and misleading, explaining thatJUUL sales.the Company publicly and repeatedly disclosed thatInvestors filed a putative class action against the its cannabis-based products [were] not approved bycompany, its CEO, CFO, chief strategy officer, the FDA and thus the FDA may regard their promotionfour company directors, and the companys as violating established law and the negative impact anunderwriters alleging violations of Sections 11, 12(a) enforcement action could have on the company.and 15 of the Securities Act in connection with its The court also noted that while plaintiffs amendedApril 2019 IPO. Plaintiffs alleged that the companys complaint appeared to imply that Curaleafs statementsRegistration Statement included false and misleading related to the safety and effectiveness of its CBD productsstatements because it failed to disclose that the city were false and misleading because they had not beenof San Francisco had introduced a major initiative that FDA approved, their opposition brief argued that thewould impact the sale, manufacture, and distribution of products did not in fact have the health benefits touted.e-cigarettes and, accordingly, the companys financial Plaintiffs based this allegation on the July 2019 letter fromresults and prospects. On March 6, 2020 plaintiffs filed the FDA. While acknowledging this additional theory,an amended complaint. Defendants moved to dismiss the court ultimately concluded that the entire claim wasthe amended complaint in its entirety.rooted in the lack of FDA approval, which is noton itsOn January 6, 2021, the court dismissed the amended ownsufficient to establish a securities fraud claim. complaint with prejudice. The court rejected plaintiffs argument that the company omitted material information, holding that the company warned investors about Greenlane Holdings, Inc.:the deleterious effects of profit-stripping regulations, Hammond v. Greenlane Holdings, Inc. etpredicted that future regulations were likely and al., Case No. 9:19-cv-81259-RKA (S.D. Fla.cautioned that more such unfavorable changes in the regulatory landscape could adversely affect Sept. 11, 2019) profitability, adding that plaintiffs also did not allege that [the ordinances] passage was anything Greenlane Holdings, Inc. (Greenlane) is a cannabisnear certain at the time of the IPO and that, further, company that distributes premium products containingthe announcement of the proposed ordinances hemp-derived CBD, in addition to e-cigarettes,had absolutely no effect on market price. Although the vaporizers, and accessories. market price did plummet when the ordinances were In April 2019, Greenlane raised approximatelyenacted, this was after the Registration Statement took $110 million in an IPO selling approximately 6.5 millioneffect. The court went on to add that, nevertheless, shares of common stock at $17 per share. In itsthe company had sufficiently warned investors of Registration Statement the company stated that theypotential regulations that could negatively impact its were one of the largest distributors of products madebusiness by stating that future regulations were likely by JUUL labs, an e-cigarette manufacturer based inand that if such regulations were unfavorable to the San Francisco, and touted the companys competitivecompany, it could adversely affect profitability. The court market advantages due to its relationship with JUUL. rejected plaintiffs claims based on the duty to disclose In March 2019, the city of San Francisco announcedto either clarify a misleading statement or satisfy a that it planned to introduce an initiative to ban the salelegal obligation, noting that the amended complaints of e-cigarette products that had not undergone reviewdeficiency on this point justified its dismissal with by the FDA and prohibit the sale, manufacture andprejudice. Plaintiffs also claimed that the Registration 12'