Oregon CBD company sues lab over THC-laden extract shipment

A CBD company in Oregon is suing a Massachusetts hemp refinery over a shipment of hemp extract that was seized for containing too much THC, leading to criminal charges.

Key Compounds filed suit against Phasex Corp. in federal court for negligence and breach of contract.

The company alleges that Phasex was responsible for the contents of an interstate shipment of hemp extract oil that was seized and found to have THC levels measuring between 2.5% and 5% – more than five to 15 times the level that can be legally shipped across state lines.

The shipment was seized by local law enforcement in Albany, Oregon, in January 2019.

As a result of the seizure and criminal investigation that followed, Key Compounds said it was forced to vacate its Oregon premises, cease operations, lay off its employees and liquidate its assets and pay hundreds of thousands of dollars in legal fees to defend against a felony indictment.

In the complaint, Key Compounds said Phasex agreed on Jan. 18, 2019, to process the company’s industrial hemp oil and return the extract with “nondetectable levels” of THC.

Phasex President Hans Schonemann was said to have assured Key Compounds CEO Alexander Reyter that the CO2 purification process Phasex used would mitigate THC from industrial hemp oil and reduce it to nondetectable levels.

Key Compounds said that Schonemann allowed the purification process to run for too long. The final sample collected during the extraction process, termed F8, contained a THC concentration that exceeded the 0.3% national limit.

“Despite having the test results … Schonemann and Phasex failed to review this information prior to shipping F8 to Key Compounds,” the complaint said.