Class-action lawsuit proposed for shareholders affected by Adastra cocaine claim
VANCOUVER — A Vancouver-based law firm says it has filed a proposed securities class-action lawsuit on behalf of anyone who acquired shares in a B.C. company that recently announced plans to commercialize cocaine.
Adastra Labs CEO Michael Forbes released a statement on Feb. 22 saying the company would "evaluate how the commercialization of (cocaine) fits" with the firm's business model.
The company revised the statement on March 3 after both Premier David Eby and Prime Minister Justin Trudeau expressed astonishment about those plans, which stemmed from Adastra's mid-February licence amendment to produce, sell and distribute cocaine.
Health Canada confirmed the amendment allows Adastra to produce no more than 250 grams of cocaine in 2023, and none can be sold to the general public.
The lawsuit, which contains allegations that have not been proven in court, contends Adastra and Forbes violated the B.C. Securities Act by making "inaccurate public representations" that artificially boosted the company's stock price.
Adastra shares, valued at 75 cents on Feb. 22, peaked at $1.33 on March 3 before tumbling 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 Feb. 22 and March 3.
Saro Turner, a partner at Slater Vecchio LLP, the firm behind the proposed class action, says investors deserve compensation.
"When companies make misrepresentations like this, it's usually the investors who trusted them that get hurt the most," Turner says in the statement.
On the same day Adastra retracted its commercialization statement, Eby said he had spoken to the federal government and was "further disturbed" to hear from Health Canada that Adastra may have "significantly misrepresented the nature of the licence" in an irresponsible manner.
Health Canada said it had contacted the company to "reiterate the very narrow parameters of their licence," and warned it could take action, including revoking the licence, if strict federal requirements were not followed.
This report by The Canadian Press was first published March 10, 2023.
The Canadian Press