Pomerantz LLP Appointed Lead Counsel in iAnthus Capital Holdings, Inc. Securities Litigation

On July 9, 2020, Pomerantz LLP was appointed Lead Counsel in a securities litigation class action lawsuit against iAnthus Capital Holdings, Inc., concerning allegations that the company issued contradictory statements regarding its ability to make its interest payments by use of escrowed funds, ending in a default in April 2020.

The class action, filed in United States District Court for the Southern District of New York, and indexed under 20-cv-03513, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired iAnthus securities between May 14, 2018, and April 6, 2020, both dates inclusive, seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

iAnthus is a holding company and represents that, “[t]hrough its wholly-owned subsidiaries, the Company’s principal business activity is to provide Shareholders with diversified exposure to best-in-class licensed cannabis cultivators, processors and dispensaries throughout the United States” by “acquir[ing] and operat[ing] a diversified portfolio of cannabis licenses and investments for Shareholders.”  Heavily leveraged, iAnthus has at all relevant times depended upon equity and debt financing to fund its aggressive expansion plans.

The complaint alleges that the Defendants made materially false and misleading statements regarding the Company’s business, operational, and compliance policies.  Specifically, Defendants issued a series of statements representing that the Company’s business operations, financed through various debt and equity offerings, were expanding throughout the United States, without disclosing to Company shareholders that the Defendants were either unwilling or unable to utilize escrowed funds to make necessary interest payments under certain of iAnthus’s debenture agreements.

The truth about the Company’s operations and finances came to light on April 6, 2020, when iAnthus announced that it had defaulted on $4.4 million in interest payments to the private equity firm Gotham Green Partners under the parties’ Amended Debenture Agreement on March 31, 2020.

On the news of the default, iAnthus’s stock price fell $0.29 per share, or nearly 62%, to close at $0.179 per share on April 6, 2020.