As we predicted, litigation regarding hemp production continues to rise. At this point, it is the uncommon week that we do not see at least a single new lawsuit on the state or federal docket– and that is just in Oregon. Provided the extraordinary development in hemp licensure and cultivation nationwide, it appears the courts will have their hands complete for the foreseeable future with hemp market litigation.
This post issues a contract to acquire among 9,000 to 14,000 pounds of industrial hemp at $50 per pound. The Oregon state-court lawsuit, Boring Hemp Corporation v. Organic Overall health Sources, LLC, is basic adequate: Organic Overall health, the purchaser-defendant, picked up a load of industrial hemp from the producer’s (Boring Hemp) warehouse. Per the agreement, the purchaser transported the hemp to a certified scale in Oregon exactly where the hemp was weighed – the load net weight was 10,240 pounds. The terms of payment have been “net 30 days” with a ten-day grace period and a 10% charge added to the balance if payment was not created inside that period. The complaint alleges the purchaser has not created any payments to the producer and the producer seeks to recover around $560,000 below breach of contract and unjust enrichment theories. Run-of-the-mine stuff.
What is worth mentioning is the a single-web page “Hemp Acquire Agreement” among the parties. The agreement does not call for the industrial hemp include a specific percentage of cannabidiol (CBD). The agreement does not spot any limitation on the moisture content material of the hemp (an essential term when you spend by the pound). The agreement does not make any reference to THC content material, or “total THC” content material, nor any other of the terms that hemp producers and purchasers ought to be pondering about such as testing, pesticide content material, and so forth.
To be confident, a much better contract could not have prevented non-payment for the hemp (although a much better contract could have offered some type of safety or other terms to lessen the opportunity that the purchaser just make a decision not spend the producer). But we continue to be somewhat alarmed at the poor high quality of the hemp production contracts we see. For additional reading on hemp production contracts, see beneath – and note that it could be no coincidence that the hemp contracts ending up in court are the poorly drafted ones.
Not only do a lot of of the contracts we see lack what ought to be fundamental provisions, a lot of hemp production contracts fail to account for the evolving federal and state regulatory atmosphere – like these governing the increasing, handling, processing, testing, and the manufacturing of hemp and CBD goods. Really feel cost-free to email me if you’d like a copy of the complaint.