A B.C. law firm is proposing a class-action lawsuit on behalf of investors against a Langley company over claims it made last month that it was authorized to sell cocaine.
Slater Vecchio LLP said Friday it had filed a proposed securities class action naming the company and its CEO Michael Forbes on behalf of investors.
The suit claims the company artificially inflated its stock price in breach of B.C.’s Securities Act through “inaccurate public representations” it made about its ability to sell cocaine.
It claims investors suffered losses when the stock dropped last Friday after the company walked back some of its claims.
“When companies make misrepresentations like this, it’s usually the investors who trusted them that get hurt the most,” Slater Vecchio LLP partner Saro Turner said in a media release.
“Our job is to stand up for them, and to help them get the compensation they deserve.”
Adastra Labs, B.C.-based cannabis company, issued a media release on Feb. 22 saying it had been given a Health Canada exemption to “include cocaine as a substance that the Company can legally possess, produce, sell and distribute.”
Health Canada subsequently clarified that the company could not sell cocaine to the public, and that its exemption only allowed sale to other other licence holders who have cocaine listed on their licence, such as pharmacists, practitioners, hospitals, or groups with a special research exemption.
In the wake of political and media attention, the company issued its own clarification and retraction of claims made in the Feb. 22 media release on March 3.
“Such statements should not be relied upon,” it said.
“The Dealer’s Licence issued to Adastra Labs does not permit Adastra Labs to sell coca leaf, psilocybin or cocaine to the general public. For cocaine, and under the Dealer’s Licence, Adastra Labs is only permitted to sell to other licensed dealers” outlined by Health Canada, it added.
Global News has requested comment from Adastra in response to the suit and its allegations.
The class-action suit has not been certified, and none of the claims have been proven in court.
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