B.C. news: Lawsuit proposed against Adastra over cocaine claim
A Vancouver-based law firm says it has filed a securities class-action lawsuit on behalf of anyone who bought shares in a BC company that recently announced plans to commercialize cocaine.
Adastra Labs CEO Michael Forbes issued a statement on Feb. 22 saying the company will “assess how commercialization (of cocaine) fits” with the company’s business model.
The company revised the announcement on March 3 after both Prime Minister David Abe and Prime Minister Justin Trudeau expressed surprise at the plans, which stemmed from a change in Adastra’s license to manufacture, sell and distribute cocaine in mid-February.
Health Canada has confirmed that it allows the change Adastra Produce no more than 250 grams of cocaine in 2023, and none may be sold to the general public.
A lawsuit that contains allegations that have not been proven in court is an allegation Adastra and Forbes violated the BC Securities Act by making “inaccurate public representations” that artificially inflated the company’s stock price.
Adastra Shares, valued at 75 cents on February 22, hit a high of $1.33 on March 3 before falling to a low of 42 cents on March 8, and the proposed class action is on behalf of those who acquired. Adastra common shares between February 22 and March 3.
Saro Turner, a partner at Slater Vecchio LLP, which represents the firm behind the class action, said the investors deserve compensation.
“When companies make these kinds of misrepresentations, it’s usually the investors who trust them who suffer the most,” Turner said in a statement.
On the same day Adastra retracted its commercialization announcement, Eby said he had spoken with the federal government and was “further concerned” to hear from Health Canada that Adastra may “materially misrepresent the nature of the license” in an irresponsible manner.
Health Canada said it contacted the company to “reiterate the very narrow parameters of their license” and warned it could take action, including revoking the license, if strict federal requirements are not followed.
This report by The Canadian Press was first published on March 10, 2023.
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