Last Thursday, Judge Robert L. Hinkle of the Northern District of Florida dismissed a second amended complaint against Trulieve Cannabis Corp. and its officers. Plaintiff Monica Acerra, on behalf of the class, failed to prove scienter in Trulieve’s officer’s actions that led to its stock price dropping.
The plaintiffs filed a complaint under the Private Securities Litigation Reform Act for monetary damages, after they believed they were deceived by executives and as a result the stock price fell. The first amended complaint was dismissed with leave to amend, as the plaintiffs did not successfully show that there were sales within the U.S. and they failed to “adequately allege a material misstatement or omission and scienter.” The second amended complaint managed to prove that there were domestic sales, but was dismissed for not proving scienter.
The crux of the plaintiffs’ argument was a “misleading” statement from Trulieve’s website: “Trulieve products are hand-grown and specially cultivated in a state-approved, climate-controlled environment to ensure purity and safety. We leave nothing to chance while letting nature do her work.” According to the complaint, this was contrary to the belief that Trulieve grew marijuana in “hoop houses,” which are structures that are not heated or air conditioned, and claimed that the statement on their website was misleading to investors as a result.
In regards to the statement on their website, the complaint did not allege “with particularity—or even generally—facts suggesting the individual defendants had any role in drafting or approving the website’s ‘climate controlled’ language or even knew about it.” Furthermore, there is no strong inference pinning the named defendants to this statement, as it was most likely written “at a lower level.” The complaint also alleged that the stock price decreased as a result of these “misleading” statements, where in reality it actually increased “substantially.”
The second amended complaint was dismissed without leave to amend as “any further amendment would be futile.” The plaintiffs are represented by the Rosen Law Firm. The defendants were represented by King & Spalding.