Harvest Health & Recreation Inc. and its board of directors received two complaints in the District of Colorado on Wednesday alleging that the cannabis company violated the Securities and Exchange Act of 1934 through its communications related to its proposed acquisition of Trulieve Cannabis Corp.
The plaintiffs, Matt Oppen and Shannon Jenkins, are each reportedly owners of Harvest stock. They reported that the agreement for the proposed acquisition of Truelieve, which was announced on May 10, would provide each Harvest shareholder with “0.1170 of a subordinate voting share of Trulieve for each Harvest subordinate voting share (or equivalent) held.”
In the filings, the plaintiffs alleged that the proxy statement which was filed with the Securities and Exchange Commission on July 13 contained “materially false and misleading statements and omissions” about financial projections and analyses which impacted information about the background and reasons for the merger, recommendations to the Board members which are also defendants, and financial advisor opinions.
A shareholder vote on the proposed acquisition will occur on August 11; the plaintiffs argued that the misstatements and omissions must be corrected before that date so that they will have the information required, and argued that if this does not occur they should be awarded damages.
In addition to other false information, Oppen and Jenkins alleged that the proxy statement omitted potential conflicts of interest, which is required under federal law, including a financial advisor’s compensation. The plaintiff claimed that this information could alter how much emphasis the shareholders put on considering his report and could significantly alter the information they have. Additionally the plaintiffs want more information about the sales process which led to the proposed transaction.