For any company, going public is fraught with securities litigation risks. As highlighted in the recent New York State Appellate Court decision In The Matter of Sundial Growers, Inc. Securities Litigation, companies operating in the relatively new, but rapidly growing, frontier of legal cannabis must be thorough and careful when issuing public disclosures. Companies must also be aware of venue issues: in particular, the potential for simultaneous federal and state proceedings related to IPO filings following the United States Supreme Court’s 2018 Cyan decision, and should consider the adoption of Federal Forum Provisions (“FFPs”) to avoid this problem.
Sundial Growers Securities Litigation
Sundial Growers is a Canadian company which commenced cannabis production in December 2018, following legalization of adult-use cannabis in Canada. The company went public via an Initial Public Offering in August 2019.
As is common following an IPO, plaintiff, on behalf of a putative class of investors, brought a claim under the Securities Act of 1933 (the “Securities Act”) alleging material misstatements and omissions in the IPO’s registration statement that had been filed with the Securities and Exchange Commission. (“SEC”).