b'Key Disclosure TakeawaysWhile many of the cases described in this update are still in their early stages, publicly-traded cannabis companies can glean from both plaintiffs allegations and court orders some valuable disclosure lessons: Establish a Robust Disclosure Culture: IssuersInclude Meaningful Cautionary Statements: must establish a corporate culture that mandatesForward-looking statements (e.g., disclosures only truthful, forthright disclosures, and avoids theconcerning financial projections, business plans use of clever spin tactics. Issuers should avoidand objectives) should be accompanied by exaggerated disclosures. Disclosure of good newsspecific, substantive cautionary language that should not be overly touted, and disclosure ofidentifies important factors that could cause negative news should not be downplayed. actual results to differ materially from the issuers forward-looking guidance. Boilerplate warnings Make Detailed Disclosures: Detailed and preciseare disfavored by securities regulators and disclosures are more likely to satisfy investorsthe courts, and should be avoided. Cautionary and the courts. Vague or imprecise descriptions oflanguage should be tailored to the specific an issuers operations, financial performance, andforward-looking statement. Specific events, prospects invite false expectations by investorsdevelopments, or other factors that may and therefore serve little benefit. influence the realization of predicted results No Comment: A policy of truthful disclosureshould be clearly identified. does not mean that an issuer must answerInclude Robust Risk Factors: It is imperative every question asked. Information that is eitherthat issuers disclose the existence, likelihood, confidential or not ready for public release shouldand magnitude of risks. The cautionary language be closely protected. should disclose information sufficient to permit an Continually Evaluate the Need to Discloseinvestor to determine not only the existence of or Update Disclosures: An issuer does notvarious risks, but also the likelihood that the risk have a duty to disclose material informationfactor will occur and the magnitude of potential unless there is a specific legal requirementloss or consequence to the company should to do so, such as in periodic regulatory filingsit occur. or in connection with the offering of company securities. In certain situations, a duty may exist to promptly update prior disclosures which are no longer accurate based on subsequent developments. A company should continually evaluate the need for such updates and make any necessary updated disclosure.20'