Auxly Cannabis Group Inc. (TSXV: XLY, FRA: 3KF, OTC: CBWTF)
Ontario Superior Court of Justice, Court File No: CV-19-00617136-ooooCP
On June 16, 2021, the Ontario Superior Court of Justice granted the Plaintiff leave to proceed with his statutory class action misrepresentation claims against Auxly Cannabis Group Inc. (“Auxly”) – Gowanlock v. Auxly Cannabis Group Inc., 2021 ONSC 4205.
This securities class action relates to Canadian cannabis company Auxly releasing its 2018 Q3 MD&A and other public documents which failed to disclose issues with the status of, delays to, risk of termination of, and accuracy of the completion date for the construction of an indoor cannabis facility to be located in Cobourg, Ontario (the “Facility”). Auxly had told the market the Facility was to become “the largest indoor cannabis facility in the world” and that it was “the most unique and important asset” in its portfolio of assets.
On February 7, 2019, Auxly announced that the construction project was terminated due to contractual breaches by its joint venture partner, infrastructure problems at the Facility, plus other issues, which the plaintiff alleges Auxly knew about, but said nothing about, when it released its Q3 MD&A on November 12, 2018. These public corrections of Auxly’s past misrepresentations caused immediate and significant damage to Auxly’s shareholders, resulting in Auxly’s stock price on the TSXV dropping by approximately 21% in just a few days.
With the statutory claim now granted leave to proceed by the court, the Plaintiff will next seek certification of both the statutory and common law claims in this case and then proceed into discovery.