A U.S. judge on Monday dismissed a lawsuit accusing Tilray Inc, the world’s largest cannabis producer by sales, of fraudulently overstating the value of a marketing and revenue-sharing agreement with Authentic Brands Group Inc.
U.S. District Judge Paul Crotty in Manhattan said shareholders failed to show that the Canadian company exhibited “conscious misbehavior or recklessness” in trumpeting the agreement, when it knew that regulatory uncertainty over cannabis-based products would dampen customer demand.
“Tilray certainly appears to have overestimated, by orders of magnitude, both the value of the ABG Agreement and the likelihood of fortuitous regulatory change,” Crotty wrote. “But being wrong – even embarrassingly so – is not the same as being dishonest.”
Crotty also said shareholders failed to show that former Chief Executive Brendan Kennedy intended to defraud them by arranging a “downstream merger” in Dec 2019 between Tilray and his Privateer Holdings Inc to ensure Privateer maintained voting control over Tilray and could reap tax benefits.
The judge said the shareholders could file a new complaint to try to address shortcomings in their case.
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