BNN Bloomberg is reporting that Tilray (NASDAQ:TLRY) is being sued in its native Canada by privately held 420 Investments after the former backed out of an agreement to buy the latter.

In August, the companies announced they had signed a deal under which Tilray would pay 110 million Canadian dollars ($83 million) in cash and stock to acquire 420 Investments,  a dispensary operator that now has 11 stores in the western Canadian province of Alberta.

BNN Bloomberg said Tilray officially retreated from the deal last week. It did not offer details. Meanwhile, neither company had officially announced the termination.

Gavel with marijuana leaf.

Image source: Getty Images

According to court documents cited by BNN Bloomberg, 420 Investments, also known as FOUR20, seeks that $CA110 million as well as CA$20 million ($15 million) in damages. Additionally, it does not intend to pay back a CA$7 million ($5 million) bridge loan Tilray provided it to build new stores.

The article quoted a letter sent by 420 Investments CEO Geoff Gobert to company employees and other stakeholders, in which he wrote, "To our knowledge, Tilray has not received the required approval from [the Alberta Gaming, Liquor & Cannabis Commission, a provincial regulator] for the transaction and we believe that Tilray has not acted in good faith in its efforts to obtain this approval."

A spokeswoman for Tilray told BNN Bloomberg that her company decided to back away from the acquisition because "Certain conditions precedent to closing the acquisition of 420 Investments could not be satisfied by Four20." She did not provide additional details.

The Alberta Gaming, Liquor & Cannabis Commission has not commented on these reports.

Tilray, a high-profile marijuana stock, closed down by almost 9% on Thursday. The S&P 500 index ended trading about 4.4% lower.

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