Radio New Zealand Report: Medicinal cannabis company fined, must offer refunds to investors after making false claims

CANNANNEW REPORT

RNZ report The Financial Markets Authority (FMA) has penalised the medicinal cannabis company Medical Kiwi $250,000 and ordered it to offer a refund to investors, after it admitted to making false claims during its equity raise in 2020. The FMA said the company misled investors when it launched its crowdfunding campaign on the PledgeMe website, when it claimed it had a “cannabis licence”. Medical Kiwi had one licence to cultivate cannabis for scientific research but the licence was due to expire during the crowdfunding period, and in fact did. “The statements were also misleading in that they omitted any explanation of other licences required, but not yet obtained, in order to lawfully produce medicinal cannabis,” the FMA said. The company also made misleading claims about its contractual arrangements with the Australian cannabis firm Hektares, claiming it had signed partnership with the company, when in fact it only had a “letter of supply intent” which was non-binding. “Crowdfunding issuers cannot leave out essential information or make misleading statements in their offer documents,” FMA acting general counsel Karen Chang said. “Investors need high quality disclosure to be able to make informed decisions and Medical Kiwi has fallen markedly short of the required standards.” Medical Kiwi is now required to correct the misleading statements on its website and PledgeMe page, offer shareholders who participated in the crowdfunding campaign a full refund, create and submit proper governance policies to an independent consultant for review, and make a payment of $250,000. The FMA said that if the company ever applies for a compliance listing on the stock exchange, it must wait until its shares had been quoted for nine months. The requirement does not apply to Medical Kiwi should it seek to list by way of an initial public offering. Karen Chang said although equity…

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Source : Radio New Zealand Report: Medicinal cannabis company fined, must offer refunds to investors after making false claims

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