Hemp Contracts Crucial as Litigation Jumps

10:32AM Dec 05, 2019
Hemp litigation
As disagreements related to CBD and seed spill into court rooms, the timing is in sync with hemp’s rollicking rise, says Jesse Mondry, attorney with Harris Bricken.
( Manstrom Photography and Istock )

Take the hemp money and run. Expect litigation to rise as the 2019 hemp crop comes in during the first harvest since legal hurdles were lowered in the 2018 farm bill. In many cases, as growers, seed dealers and processors point fingers or hurl accusations of fraud, failure, theft and breach of contract, one lesson is increasingly clear: Hemp is a crop unto itself and a solid contract is crucial from the get-go.

As disagreements related to CBD and seed spill into court rooms, the timing is in sync with hemp’s rollicking rise, says Jesse Mondry, attorney with Harris Bricken.

“There is lots of uncertainty because people don’t know exactly what they’re doing yet, even as far as how to store the crop or how to process it, and that’s part of why litigation is happening,” he explains.

Absolutely Forbidden

In September, Elemental Processing (Lexington, Ky.) hit HP Farms (Troutdale, Ore.) with a $44 million lawsuit, alleging receipt of fraudulent seed for CBD production. Elemental claims HP delivered a batch of predominantly male seed, absolutely forbidden in CBD hemp farming which requires feminized seed.

After Elemental distributed the HP-provided seed, its farmer customers got whacked with a jarring surprise in late-season when the plants developed pollen sacs indicative of males. Bottom line: Elemental claims the male seed allowed $44 million to bounce.

Assume Nothing

Counterintuitively, some hemp industry players are not educated about hemp, contends Harris Bricken attorney Nathalie Bougenies.

“There is a lack of guidelines, and that makes it difficult for everyone to know what to look out for until presented with problems. Too many people have never worked with hemp before. This has contributed greatly to a rise in litigation.”

Whether buying seed or selling a hemp crop to a processor, growers need separate, explicit contracts on both ends, Bougenies explains.

“Ensure contracts specify the buyer’s license and include warranties, where basically the processor agrees to remain in compliance with all applicable laws, permits and registrations,” she says.

Considering the legal complexities and shifting landscape of an evolving hemp industry, growers must consider contract examination by an attorney well-versed in hemp law, Bougenies says.


Interested in learning more about hemp? Farm Journal is hosting several upcoming events. Register at AgWeb.com/events/hemp-college