Chanda v. Cronos Group, Inc. et al 1:18-cv-08047-NRB — On September 4, 2018, investors sued Cronos Group, Inc. (“Cronos” or the “Company”) in United States District Court, Southern District of New York. Plaintiffs in the federal securities class action allege that they acquired Cronos stock at artificially inflated prices between August 21, 2018 and August 30, 2018 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. For more information about the CRON Lawsuit, please contact us today.

Summary of the Allegations

Company Background

According to its website, Cronos (NASDAQ:CRON) is “geographically diversified and vertically integrated cannabis group that operates within Health Canada’s Access to Cannabis for Medical Purposes Regulations and distributes globally.”

Cronos currently has 100 percent ownership of two Canadian companies that are licensed to produce, cultivate and sell medical marijuana. It also has partial ownership of a third Canadian company that is licensed to do so.

The Company is legally incorporated in Ontario, Canada, and based in Toronto.

Summary of Facts

Cronos and one of its officers/directors (the “Individual Defendant”) are now accused of deceiving investors by lying and withholding critical information about the Company’s business practices during the Class Period.

Specifically, they are accused of omitting truthful information about the size of the Company’s distribution agreements with the provinces from a press release. By knowingly or recklessly doing so, they allegedly caused the Company’s stock to trade at artificially inflated prices during the time in question.

The truth came out on August 30, 2018, when Citron Research published an article in which it alleged that, Cronos had been misleading investors by “purposely not disclosing the size of its distribution agreements with the provinces – unlike every other major cannabis player.” It also alleged that the reason for these omissions was that, “the agreements are so small that they could never justify the premium investors are paying for stock.”

A closer look…

According to the September 4 complaint, the Company and Individual Defendant made false and misleading public statements during the Class Period.

For example, in a press release issued on August 21, 2018, the Company said in relevant part: “Cronos Group has secured listings and signed binding master supply agreements with both the Ontario Cannabis Retail Corporation and the BC Liquor Distribution Branch.”

In the same press release, the Company also stated in relevant part: “The Company has also secured listings and has accepted supplier terms with the Nova Scotia Liquor Corporation and Prince Edward Island Liquor Corporation.”

Finally, in the same press release, the Individual Defendant said in pertinent part: “Day one we are ready to build and establish our brand through premium products and we are committed to building strong relationships with the provinces and our customers.”

Impact of the Alleged Fraud on Cronos’s Stock Price and Market Capitalization

The following chart illustrates the stock price during the class period:

Actions You May Take

If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.

NOTE: The deadline to file for lead plaintiff in this class action is November 5, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.

In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Cronos common stock using court approved loss calculation methods.

Recently Filed Cases

Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action.  Please contact us if you would like an LK report for any of these cases:

About Us

Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse.  With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.

Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients.  Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.

For additional information about this case or our institutional services, please contact us.