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CGC.US
id: 1554

Canopy Growth ($CGC) Misleading Cost Efficiency and Product Rollout Case

E.D. New York
Court
1:25-cv-01877
Case number
05/31/2024
Class period Start
02/06/2025
Class period End
06/03/2025
Lead Plaintiff motion deadline
  • $CGC investors filed a claim against Canopy Growth for misrepresenting production costs and overstating the strength of its profit margins.
  • After reporting a major earnings miss tied to hidden costs from its Claybourne pre-roll launch and shipping issues, $CGC dropped 27.3% on February 7, 2025.
  • $CGC investors can join this case to be notified about potential recovery.
Case Details:

Between May 30, 2024 and February 6, 2025, Canopy Growth promoted its cost-efficiency strategies and claimed it was on a clear path to profitability. Executives frequently pointed to margin improvements from its Storz & Bickel vaporizer brand and automation of pre-roll production as key drivers of success.

At the same time, the company announced a major product expansion through a licensing deal with Claybourne, launching high-end pre-rolled joints in Canada. Canopy described the rollout as artisanal and premium but failed to disclose the significant costs associated with manufacturing and shipping these products. Internal shipping costs related to Storz & Bickel were also rising, despite claims to the contrary.

Throughout multiple quarterly filings and earnings calls, Canopy continued to assert that its gross margins were improving and that its FY2025 profitability targets were on track.

On February 7, 2025, Canopy reported a 400 basis point drop in gross margin, citing high production costs from the Claybourne launch and shipping-related indirect costs. The company also posted a loss of C$1.11 per share, missing analyst expectations by more than double. $CGC fell 27.3% in one day on the news.

Based on these events, $CGC investors filed a claim against Canopy Growth, accusing the company of the following:
  • It misled investors by overstating margin strength and hiding key product-related costs.
  • It promoted the Claybourne launch and vaporizer segment as profitable while knowing internal expenses were rising.
Considering all the representations, investors believe Canopy concealed material financial risks to maintain its stock price and delay revealing underperformance.
Case Status
Lead Plaintiff Appointment
Alleged Offence
Misleading Statements
Failure to Disclose
Omissions
Suspected Party
Directors
Management
Security Type
Stocks
Trade Direction
Long
Shock Event Date
02/07/2025
Filing date
04/04/2025
Lead Plaintiff Deadline
06/03/2025

Canopy Growth Corp

Canopy Growth Corporation, together with its subsidiaries, engages in the production, distribution, and sale of cannabis, hemp, and cannabis-related products in Canada, Germany, and Australia. It o...

    Ticker
    CGC.US
    ISIN
    CA1380351009
    CIK
    0001737927
    Sector
    Healthcare
    Industry
    Drug Manufacturers - Specialty & Generic
    Country
    USA
    Address
    1 Hershey Drive, Smiths Falls, ON, Canada, K7A 0A8