Canopy Growth Corp. (CGC) Securities Class Action Lawsuit Update [May 5, 2025]

Introduction to Canopy Growth Corp. (GGC) Lawsuit

This is a shareholder alert about the Canopy Growth Corporation (CGC) class action lawsuit filed on April 4, 2025. The lawsuit alleges Canopy Growth and certain executives violated the Securities Exchange Act of 1934, including that defendants made false and/or misleading statements during the Class Period. The Canopy Growth class action seeks to represent purchasers of Canopy Growth Corporation securities between May 30, 2024 and February 6, 2025. If you purchased Canopy Growth securities during the Class Period, you may be entitled to compensation through a contingency fee arrangement. Shareholders have until June 3, 2025 to file submissions as lead plaintiff. 

Canopy Growth Corporation is a cannabis producer and distributer.   

In its investor documents, Canopy says it depends on high margins to produce gross profits. Throughout 2024, Canopy told investors its margins were improving, particularly due to improvements in its Storz & Bickel vape brand and due to improved efficiency in pre-rolled joints production.   

However, in February 2025, the Company told investors its margins shrunk because Canopy Growth incurred significant costs producing Claybourne pre-rolled joints and because Storz & Bickel’s shipping costs were skyrocketed. 

Investors reacted negatively: Canopy’s stock price dropped over 27% the same day.  

Canopy Growth Corp. (GGC) Lawsuit Case Details 

Baron v. Canopy Growth Corp., et al Case No. 1:25-cv-01877 

U.S. District Court, Eastern District of New York  

Filed on April 4, 2025 

Canopy Growth Corp. (GGC) Company Profile 

Canopy is a cannabis company. It produces, distributes, and sells cannabis and hemp-based products for recreational and medical purposes. It operates several recreational and medical cannabis and hemp brands, such as Tweed, Storz & Bickel vaporizer devices, and Spectrum Therapeutics, amongst others. In November 2024, it announced it launched its Claybourne product launch through an exclusive licensing agreement with California-based Claybourne Co.  

Canopy Growth Corp. (GGC) Lawsuit Class Period 

May 30, 2024 to February 6, 2025, inclusive.  

Investors who acquired Canopy Growth Corporation stock during the class period might be eligible to join the Canopy Growth Corp (CGC) lawsuit. 

Canopy Growth Corp. (GGC) Lawsuit Allegations 

In its SEC filings, Canopy consistently acknowledged “[t]he cannabis industry is a margin-based business in which gross profits depend on the excess of sales prices over costs.”   

On May 30, 2024, Canopy announced its Q4-24 and FY-24 financial results. The Company’s SEC Form 10-K touted improved margins, claiming Canopy Growth's margins improved from 19% of gross revenue in 2023 to 27% in 2024. In its earnings press release, Canopy also boasted its improved margins, highlighting Storz & Bickel’s improved margins “driven primarily by a positive shift in product mix.” During the earnings call, Company executives continued to plug improved margins, driven by Canopy's cost reduction measures and product profiles.  

On August 9, 2024, Canopy issued a press release announcing its Q1-25 financial results. In it, Hong is quoted as discussing improvements to the Company's gross margins, EBITDA, and expenses. However, the press release noted minor problems with the Storz & Bickel brand, which saw diminished revenue year-over-year.  

In both the May and August calls, Company executives discussed improvements to Canopy’s processes and machinery for producing pre-rolled joints. Executives highlighted the cost savings these processes would provide, further improving Canopy’s margins.   

Similarly, in November 2024, the Company issued its financial results, again calling out improved margins. Yet again, however, the Storz & Bickel vaporizer devices brand saw diminished revenue, though Company executives downplayed that problem as being due to “rebates provided to clear out remaining stock.”  

The filed complaint alleges Defendants' public statements were deceptive, materially false, and misleading, in violation of federal securities laws. Specifically, Plaintiffs allege Defendants concealed significant costs Canopy incurred in the Claybourne product launch. Additionally, Plaintiffs allege Canopy overstated the efficacy of its cost-cutting measures and the improvements they had on its margins. Finally, Plaintiffs allege Canopy’s statements regarding the Storz & Bickel vaporizer devices brand were deceptive or misleading.  

The Truth Emerges 

On February 7, 2025, Canopy issued a press release announcing is Q3-25 financial results. The Company reported that its gross margins decreased by 400 basis points due to increased costs related to the Claybourne roll-out and increased related to Storz & Bickel. The Company reported an anticipated Q3 loss per share of C$1.11 (~$0.80 USD) – substantially more than the C$0.48 (~$0.35 USD) analysts expected.   

During the associated earnings call, Canopy executives admitted the increased costs related to Claybourne was due to higher initial costs of producing the Claybourne pre-rolled joints. The higher Storz & Bickel costs were attributable to shipping.  

Market Reaction 

This news had a significant negative impact on Canopy's stock price, which dropped 27.34% the same day as the announcement.  

Next Steps 

• Submissions for lead plaintiff are due June 3, 2025. 

• The Court will issue its order for lead plaintiff and counsel in the weeks after submissions are due. 

• The Court will then consider motion for class certification. 

• The Court will later consider a Motion to Dismiss. 

To learn whether you may be eligible for a recovery under this class action, go to the case submission page found here.