It appears that the cannabis sector is just firing up in terms of lawsuits. Following iAnthus Capital’s announcement this morning that they had filed a lawsuit against a significant lender, BNN Bloomberg broke the story that Tilray Inc (NASDAQ: TLRY) has been sued by that of 420 Investments Ltd, the firm behind the Alberta-based Four20 retailer.
The lawsuit is in relation to the previously announced definitive agreement entered between Tilray and Four20. Under the terms of the arrangement, Tilray had agreed to purchase the Alberta retailer for $110 million in an all-stock transaction. Payment was to consist of an initial $70 million in Class 2 common stock of Tilray as well as earn-outs of up to $40 million in common stock, as per the official company news release.
However, as per BNN Bloomberg’s report this morning, Tilray walked from that deal last week due to “a change of heart.” Four20 subsequently filed a statement of claim for $110 million plus an additional $20 million in damages in Alberta against Tilray as a result. The company has also stated it will not be paying back a $7 million bridge loan provided by Tilray to fund additional store openings.
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Four20 filed the claim on the grounds that they don’t believe Tilray had the right to terminate the agreement, which Tilray denies. Tilray as a result intends to defend itself, stating that they are confident they have the right to terminate the agreement, while blaming Four20 for not meeting conditions required to close the arrangement.
Tilray last traded at $14.23 on the Nasdaq.
Information for this briefing was found via Sedar, BNN Bloomberg and Tilray. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
