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Calgary-based Sundial calls class action lawsuit over allegedly tainted cannabis 'completely without merit'

A worker tends to young cloned plants at the Sundial Growers cannabis production facility in Olds.
A worker tends to young cloned plants at the Sundial Growers cannabis production facility in Olds.

Calgary-based cannabis producer Sundial Growers is hitting back at claims the company misled investors over a massive recall of tainted pot.

A class action suit launched against the licensed producer claims a customer had returned 554 kilograms of cannabis worth $2.25 million contaminated with mould and pieces of rubber gloves.

In its complaint filed Sept. 25, a plaintiff claims the product return wasn’t disclosed to investors before Sundial issued its initial public offering (IPO) and that shareholders lost “significantly” due to the resulting fall in stock value.

But the company insists only a “fraction” of the cited amount was returned by Vancouver-based licensed producer Zenabis.

“The return represented a minimal percentage of our total production to date, had no impact on our second quarter financial results and is expected to have a negligible impact on our third quarter earnings,” said Sundial in a statement.

In the statement, Sundial CEO Torsten Kuenzlen said the company had provided all required information to prospective investors in their IPO.

“We are therefore confident that the class action lawsuits filed against Sundial are completely without merit and intend to vigorously defend our company in these matters,” said Kuenzlen.

Contracts with customers allow for product returns, it states, and that “at no point have our facilities stopped producing and selling our high quality cannabis products.”

The company produces cannabis at its flagship facility in Olds, north of Calgary.

In the class action suit filed by investor Yimin Huang on Sept. 25, it’s alleged the cannabis was visibly mouldy and contained pieces of rubber gloves and other foreign material.

It alleges those details also weren’t disclosed to investors during a promotional roadshow in Toronto.

A number of Sundial board members and executives, including Kuenzlen, are named in the action, along with the company’s underwriters.

None of the allegations have been proven in court.

BKaufmann@postmedia.com

on Twitter: @BillKaufmannjrn

Copyright Postmedia Network Inc., 2019


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