The Vancouver Sun reports
A proposed class-action lawsuit was filed Thursday on behalf of investors who bought shares in a B.C. company after its leadership claimed to have government approval to sell cocaine and was evaluating the drug’s “commercialization,” before retracting the statement.
After Langley-based Adastra Labs announced in a Feb. 22 news release it had received approval from Health Canada to produce, sell and distribute cocaine, the stock price of its parent company Adastra Holdings more than doubled to $2 per share from the 70-to-90-cent range in the weeks prior. The February release quoted Adastra CEO Michael Forbes saying: “we will evaluate how the commercialization of this substance fits in with our business model.”
A notice of claim filed in the B.C. Supreme Court alleges Forbes authorized “inaccurate and careless representations” of Adastra, which “artificially inflated share prices.”
After the company retracted its remarks on March 3, stating that its federal dealer’s licence does not permit it to sell cocaine to the public, its stock prices plummeted. As of Thursday, shares of Adastra were trading at around 70 cents.
So far, one B.C. resident who purchased 220 shares at $1.45 per stock is listed as a plaintiff in the lawsuit, which was filed by Vancouver law firm Slater Vecchio.
The notice of claim alleges the plaintiff and other prospective class action members suffered losses and damages as a result of purchasing Adastra shares between the time of the inaccurate statements’ publication and the “corrective disclosure.”
The defendants — Adastra Labs, Adastra Holdings, and Forbes — had a duty to exercise due care and diligence to ensure their public statements were accurate, the lawsuit alleges, and they breached this duty by making representations implying the new licence “permitted Adastra to sell cocaine commercially to the public.”