Just one week after a Canadian company publicized that it could produce, possess and distribute cocaine, it is now facing a potential class-action lawsuit for its claims.
The company in question, BC-based Adastra Holdings Ltd., shared a news release on February 22 stating that it had received Health Canada approval to include cocaine under its controlled substances dealer’s licence.
However, how it portrayed the approval ruffled many feathers, including those of Prime Minister Justin Trudeau, BC Premier David Eby, and Health Canada.
Those entities and others condemned Adastra publicly, prompting Adastra to release a clarified statement about what it could and could not do.
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Adastra released its revised statement on March 3, clarifying that it could not sell coca leaf, psilocybin, or cocaine to the general public.
BC-based Slater Vecchio LLP has now proposed a securities class-action lawsuit against Adastra Holdings and its CEO, Michael Forbes, “for alleged misrepresentations regarding the Company’s capabilities to sell cocaine” late last week.
The law firm suggests that “inaccurate public representations” that Adastra made on February 22 “artificially inflated the company’s stock value.”
Slater Vecchio adds that investors who purchased Adastra stock after the “alleged public misrepresentations” experienced losses after stock value dropped significantly following Adastra’s correction on March 3.
In response to the news, Trudeau said he was surprised.
“There are limited and very restrictive positions for certain pharmaceutical companies to use that substance for research purposes and for very specific narrowly prescribed medical purposes, but it is not a permission to sell it commercially or provide it on an open market,” he said.
“We are working very quickly with this company to correct the misunderstanding that their press release has caused. This is not something that this government is looking at furthering.”
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