This is a shareholder class action on behalf of a class of investors consisting of all persons and entities who purchased or otherwise acquired the securities of Canopy Growth Corporation (hereinafter “Company” or “WEED”) between August 6, 2021 and May 10, 2023 (the “Class Period”).
Prior to the Class Period, the Defendant controlled the total mix of information for investors to make an investing decision to purchase, sell, or to hold its securities. During the Class Period, the Defendant’s division identified as BioSteel was its largest and most important subsidiary. The Defendant touted its BioSteel as the leading producer of sports nutrition products.
During the Class Period, the Company represented that its quarterly and annual financial statements did not contain misrepresentations or, in other words, material errors. The Defendant released Certifications on SEDAR affirming the accuracy of its quarterly and annual financial statements. However, on May 10, 2023, Canopy released a Material Change Report reporting that revenues and accompanying balance sheet line items related to BioSteel contained material misstatements and would need to be restated.
The Material Change Report (the Corrective Disclosure) was released at the end of the trading day on May 10, 2023, which is an admission that the disclosure was material. The release of the Material Change Report caused the market to sell off Canopy shares, causing the stock price on the TSX exchange to decline from a closing price of $1.67 on May 9, 2023 to $1.62 on May 10, 2023, and to further decline to $1.39 on May 11, 2023. The two-day drop from $1.67 to $1.39 represented a 17% decrease on heavy trading volume.