Hemp Notebook: Why your growing hemp business needs legal counsel before disputes arise

(This is an abridged version of a column that appears in the November-December issue of Marijuana Business Magazine.)

Hemp is making strides faster than activists dreamed even a couple of years ago.

Farmers are planting thousands of acres. Processors are adding warehouse space to accommodate ever-increasing orders for CBD extracts. Retailers are popping up so quickly that poor hemp reporters (like me!) have a hard time formulating even a rough guess how many places are selling hemp products.

But there’s a darker side of this go-go hemp industry.

Lawsuits and legal disputes are popping up just as quickly as product announcements and merger deals.

The disputes vary, but one common thread stands out: Hemp entrepreneurs are trying to get rich without retaining legal counsel.

It makes sense. For decades, the hemp industry was so small that hemp business owners all knew one another.

When a new business opportunity emerged, the sizzle could be easily separated from the steak by asking around about the person behind the new venture.

But hemp is too big for that now. And the industry is being held back by legal disputes that could have been avoided by having a smart lawyer look over the deals.

Consider:

• A Vermont landowner hoped to save a family farm by allowing a hemp entrepreneur to grow hemp on her land. When the landowner didn’t see the profits she wanted, she sued – while admitting she had nothing in writing to back up what she says she was promised.
• A California marijuana company contracted with a Colorado firm to produce 600 acres of CBD-rich hemp. The California business said it found out later that the Colorado company “had no idea what it was doing and had never planted industrial hemp intended for CBD production,” according to its lawsuit.
• A California plant breeder claimed to have developed a non-cannabis source of CBD, then entered a distribution agreement with a large CBD company. The relationship soured within weeks, with no rollout of the tantalizing product.

Click here to read more about why hemp businesses should consider “lawyering up.”

Kristen Nichols can be reached at [email protected].