Anytime a company within the chronically struggling marijuana industry sees a leap in stock price, it’s notable. That happened on Thursday with top Canadian cannabis company Tilray Brands (TLRY 8.50%), following news of a development in the legal sphere. Tilray’s shares enjoyed a 9% pop on this news, comparing most favorably to the 0.3% slump of the S&P 500 index that day.
Cannabis clash
Just after market hours on Wednesday, Tilray announced — no doubt with relief — that a lawsuit against the company had been dismissed in a Massachusetts court.
In the suit, a plaintiff named Clement Italume accused Tilray and Hexo (a peer Canadian marijuana company it acquired in mid-2023) of failing to properly disclose and notify shareholders of certain Hexo actions. Italume also alleged that those investors were not properly informed of the acquisition. Finally, he accused Hexo of engineering a 2020 reverse stock split in order to essentially harm shareholders.
The ruling, by a Superior Court in the state’s Suffolk County, granted in full a summary judgement motion made by Hexo and Tilray. It is unclear whether the plaintiff intends to appeal the ruling.
Italume also included brokerage Robinhood Financial in his lawsuit; the court ruled that this is subject to arbitration proceedings.
A minor victory is better than none at all
Given the state of the marijuana industry, investors unfortunately have to take even minor wins gratefully. While this probably removes a legal headache for Tilray, the company still has to contend with the many challenges of its business, including black/gray market competition, over-supply, and limited growth opportunities at present.
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