NEW YORK, April 25, 2025 (GLOBE NEWSWIRE) — Pomerantz LLP announces that a class action lawsuit has been filed against Canopy Growth Corporation (“Canopy” or the “Company”) (NASDAQ: CGC) and certain officers. The class action, filed in the United States District Court for the Eastern District of New York, and docketed under 25-cv-01877, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Canopy securities between May 30, 2024 and February 6, 2025, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
If you are an investor who purchased or otherwise acquired Canopy securities during the Class Period, you have until June 3, 2025 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Danielle Peyton at newaction@pomlaw.com or 646-581-9980 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
Canopy, together with its subsidiaries, produces, distributes, and sells cannabis and hemp-based products for recreational and medical purposes. The Company’s products include, inter alia, pre-rolled joints (i.e., cannabis cigarettes) and its Storz & Bickel brand vaporizer devices.
In November 2024, Canopy announced that it had launched “award-winning California grown Claybourne brand” pre-rolled joints in Canada through an exclusive licensing agreement with Claybourne Co. (“Claybourne”).
As Canopy has consistently acknowledged in its U.S. Securities and Exchange Commission filings, “[t]he cannabis industry is a margin-based business in which gross profits depend on the excess of sales prices over costs.” Accordingly, Canopy’s efforts to achieve and maintain healthy margins and costs feature prominently in Defendants’ narratives about the Company’s path to profitability, which is of particular importance to investors and analysts. Indeed, at all relevant times, Defendants stressed Canopy’s implementation of various cost reduction measures to drive improved gross margins and profitability, including, inter alia, measures to reduce pre-rolled joint production costs and overall product distribution costs. Throughout the Class Period, Defendants also repeatedly touted the positive impact that these measures were purportedly having, and would purportedly continue to have, on the Company’s profitability and gross margins in its fiscal year (“FY”) 2025.
The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding Canopy’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Canopy had incurred significant costs producing Claybourne pre-rolled joints in connection with the Claybourne product launch in Canada; (ii) the foregoing costs, in addition to certain indirect costs that Canopy incurred in connection with its Storz & Bickel vaporizer devices, were likely to have a significant negative impact on the Company’s gross margins and overall financial results; (iii) accordingly, Defendants had overstated the efficacy of Canopy’s cost reduction measures and the health of its gross margins while downplaying issues with the same; and (iv) as a result, Defendants’ public statements were materially false and misleading at all relevant times.
On February 7, 2025, during pre-market hours, Canopy issued a press release announcing its financial results for the third quarter (“Q3”) of its FY 2025. Among other items, Canopy reported that its “[g]ross margin decreased by 400 basis points to 32% in [Q3 2025] compared to [the same quarter the year prior] primarily due to the incremental costs related to the Claybourne infused pre-roll launch in Canada, and an increase in indirect costs of Storz & Bickel vaporizer devices[.]” These factors contributed to Canopy reporting a wider-than-anticipated Q3 2025 loss of C$1.11 per share compared to the C$0.48 per share loss estimated by analysts.
The same day, Canopy held a conference call with investors and analysts to discuss its Q3 2025 financial results. During the call, Canopy’s Chief Financial Officer, Defendant Judy Hong (“Hong”), revealed that the Company’s Claybourne product launch costs were “primarily attributable to [the] higher initial cost to produce Claybourne” products. Defendant Hong also disclosed that the “indirect costs” related to Storz & Bickel vaporizer devices were attributable to, inter alia, shipping costs.
On this news, Canopy’s common share price fell $0.76 per share, or 27.34%, to close at $2.02 per share on February 7, 2025.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.
Attorney advertising. Prior results do not guarantee similar outcomes.
CONTACT:
Danielle Peyton
Pomerantz LLP
dpeyton@pomlaw.com
646-581-9980 ext. 7980
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