Sundial Growers Inc. SNDL, -3.19% has become the subject of a class-action lawsuit in the U.S. for allegedly failing to disclose that a customer returned 554 kilograms of cannabis because it contained mold and bits of rubber gloves. The allegations were first reported by MarketWatch on Aug. 20, and MarketWatch's reporting is cited in the suit. Sundial went public on the Nasdaq on Aug. 1. The company reported earnings on Aug. 20, the same day that another Canadian cannabis company, Zenabis Global ZENA, -8.33% , disclosed that it had returned a half-ton of pot and terminated its agreement to buy cannabis from a "third party" that it did not name. People familiar with the matter said that party was Sundial, and Zenabis returned the cannabis because it was of poor quality and contained bits of rubber, among other issues. The batch was worth about C$2.5 million ($1.9 million) at the time. Sundial declined to comment at the time. The class-action suit alleges that the company "made false and misleading statements and/or failed to disclose that: (1) Sundial failed to supply saleable cannabis in line with contractual obligations to Zenabis Global Inc.; (2) due to material quality issues, Zenabis had to return or reject a total of 554 kg of cannabis to Sundial, valued at approximately U.S. $1.9 million (C$2.5 million); and (3) as a result, defendants statements about Sundial's business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times." Sundial shares fell 4.6% Monday and are down 42% in the past month, while the ETFMG Alternative Harvest ETF MJ, +0.48% has fallen 19% and the S&P 500 SPX, +1.59% has fallen 0.8%. (This Market Pulse item has been updated to clarify that MarketWatch's reporting was cited in the class action. The publication is not a party to or a target of the suit.)