Curaleaf Holdings, Inc.
- Company Name
- Curaleaf Holdings, Inc.
- Stock Symbol
- Class Period
- November 21, 2018 to July 22, 2019
- Motion Deadline
- October 4, 2019
- Eastern District of New York
The complaint charges Curaleaf and certain of its officers with violations of the Securities Exchange Act of 1934. Curaleaf describes itself as an integrated medical and wellness cannabis operator in the United States. Curaleaf’s products include CBD oils, lotions, capsules, and vape pens.
The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Curaleaf’s business and operations, including that, on its website and social media pages, Curaleaf marketed its CBD products for use as drugs and dietary supplements and sold unapproved animal drugs, in violation of the Federal Food, Drug, and Cosmetic Act (“FD&C Act”), which would result in the U.S. Food and Drug Administration ("FDA") issuing a warning letter about several of the Company’s CBD products. As a result of this information being withheld from the market, Curaleaf securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $11 per share.
On July 22, 2019, the FDA sent Curaleaf a warning letter regarding several of the CBD products sold on its website. According to the FDA’s letter, Curaleaf’s CBD Lotion, CBD Pain-Relief Patch, CBD Tincture, and CBD Disposable Vape Pen products were drugs because “they [we]re intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease and/or [were] intended to affect the structure or any function of the body.” The letter also stated that information on Curaleaf’s “website and social media accounts suggests that [Curaleaf] may intend to market [its] CBD products as dietary supplements,” but the products do not meet the definition of a dietary supplement under” the FD&C Act. In addition, the letter stated the FDA had determined that Curaleaf’s CBD products for pets “are unapproved new animal drugs” and “marketing them violates the FD&C Act.” On this news, the price of Curaleaf shares fell over 7%, to close at $7.40 per shares on July 23, 2019.