According to the Complaint, HEXO is a consumer-packaged goods cannabis company that, together with its subsidiaries, produces, markets, and sells cannabis for both recreational and medical use in Canada and abroad.
The Complaint alleges that Defendants misled investors throughout the Class Period by making materially false and/or misleading statements, as well as failing to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, the Complaint alleges Defendants failed to disclose to investors that: (1) HEXO’s reported inventory was misstated as the Company was failing to write down or write off obsolete product that no longer had value; (2) HEXO was engaging in channel-stuffing in order to inflate its revenue figures and meet or exceed revenue guidance provided to investors; (3) HEXO was cultivating cannabis at its facility in Niagara, Ontario that was not appropriately licensed by Health Canada; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On February 25, 2020, the Court issued an Order consolidating cases and appointing Lead Plaintiffs and Counsel. Lead Plaintiffs filed an amended Complaint on June 12 and corrected the amended Complaint on June 15.