Corporations that primarily generate revenue from business activities related to cannabis have not historically had access to traditional sources of financing. However, with the passage of the Agriculture Improvement Act of 2018 (Public Law 115-334) (the Farm Bill), which legalized the cultivation of hemp, as well as the legalization of medical and, in some cases, recreational cannabis products by many states (though marijuana remains an illegal controlled substance under the Controlled Substances Act, 21 U.S.C. §§801, et seq.), many cannabis-related corporations have sold shares on the New York Stock Exchange (NYSE) and the NASDAQ, while other corporations, already listed on these exchanges, have entered the industry. With the advent of publicly-traded cannabis corporations has come a response by the plaintiffs’ bar: private lawsuits alleging violations of the securities laws.
In November 2018, a cannabis-related securities lawsuit, Tchathchou v. India Globalization Capital, No. 18-cv-3396 (D. Md. 2018), was filed against India Globalization Capital, its CEO, and its CFO. That December, another cannabis-related securities class action was filed. The defendant had only begun trading on the NYSE the previous month.
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