Adastra threatened with class-action lawsuit over cocaine controversy
Posted March 10, 2023 10:56 am.
Last Updated March 10, 2023 12:36 pm.
The Langley-based company at the centre of controversy after it claimed it got approval to make and sell cocaine is now facing a potential class-action lawsuit due to “inaccurate public representations.”
Lawyers from Slater Vecchio LLP in Vancouver filed the proposed class action suit on Thursday against Adastra Holdings Ltd. and Chief Executive Officer Michael Forbes.
This comes after Adastra was forced to retract an earlier statement that it got Health Canada approval to “legally possess, produce, sell and distribute” cocaine, noting it was in fact “only allowed to sell cocaine “to other licensed dealers who have cocaine listed on their licence.”
The lawsuit still needs to be certified by the court before it can proceed.
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The initial announcement from Adastra, prior to its retraction, was followed by a surge in its stock.
In a statement Friday, Slater Vecchio says the company’s “inaccurate” claims “in turn artificially inflated the company’s stock price.”
“Investors who purchased Adastra stock after the alleged public misrepresentations experienced losses when the stock dropped significantly after Adastra publicly corrected its own misrepresentations on March 3, 2023.”
Saro Turner, a partner at the law firm, says that when companies misrepresent in these ways, it hurts the investors who trusted them.
“Our job is to stand up for them, and to help them get the compensation they deserve,” Turner said.
The proposed class action lawsuit is being filed on behalf of all people and other entities who acquired common shares of Adastra Holdings (CSE: XTRX) between and inclusive of Feb. 22 and March 3, 2023.
The company’s share price rocketed up between those dates, with the stock rising 70 per cent on the Canadian Securities Exchange on March 3 alone, and up more than 100 per cent over the previous five days.
