Pomerantz Secures $2.9 Million Settlement in Securities Litigation Against iAnthus

Pomerantz recently obtained a $2.9 million settlement in an investor action against the cannabis company iAnthus Capital Holdings Inc. The amount represents a reported 16.6% of estimated recoverable damages, well above the 1.8% median recovery for securities class actions.

The case relates to allegedly false and misleading statements made by iAnthus about its business operations and relations with its financial backers. iAnthus, a company claiming to provide diversified exposure to U.S. cannabis operations, was heavily reliant on raising capital to fund its expansion. During the class period, iAnthus raised approximately $166 million from lenders, including $106 million from Gotham Green Partners (GGP). However, the company’s co-founder and CEO at the time, Hadley Ford, allegedly engaged in self-dealing, receiving significant personal payments from GGP and other brokers, which was not disclosed to investors. This alleged misconduct led to iAnthus defaulting on its debt obligations in March 2020.

According to the complaint, iAnthus made misleading statements about its financing arrangements, falsely portraying GGP as a long-term investor aligned with shareholders’ interests, when in reality, GGP positioned itself to take over iAnthus during a financial downturn. The company also allegedly concealed a $10 million “exit fee” agreement with GGP and misrepresented its financial stability, leading to a default on $4.4 million in interest payments.

The alleged misconduct severely harmed iAnthus’s shareholders, causing the company’s stock to plummet by 62% on April 6, 2020, and its market capitalization to fall from $780 million to just $17 million by July 2020.

The Lead Plaintiff in the case, Jose Antonio Silva, was represented by a Pomerantz team consisting of Managing Partner Jeremy Lieberman, Partner Michael Grunfeld, and Associate Brandon Cordovi.