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Cannabis producer Sundial faces lawsuits over US securities laws violations

Cannabis producer Sundial Growers Inc. is facing lawsuits for allegedly violating certain U.S. securities laws related to disclosures in its IPO filing.

Calgary, Alberta-based Sundial said the lawsuits stem from a news report, which erroneously said about 554 kilograms of the company's product was returned by a client, and the company did not disclose this information in its IPO filing.

Sundial said the commercial dispute has since been resolved and the returned amount was only a fraction of the total product.

In August, MarketWatch reported that Zenabis Global Inc. returned about a half a ton of cannabis because it contained parts of rubber gloves and other non-cannabis material. Sundial did not disclose any information about the returned product in its IPO filings but had mentioned about C$3.3 million in penalties for not delivering cannabis to partners, which were related to contingencies from 2018.

The company said in an Oct. 9 press release that it did not mislead investors and disclosed all material information to investors in its IPO, which raised about $143 million in gross proceeds.

Sundial noted that its products continue to follow Good Production Practices, and its facilities have not stopped producing and selling its cannabis products at any point.