An Oregon hemp processor claims a Washington farm violated a contract by failing to deliver hemp of sufficient potency and quality to fully repay a loan.
New Earth Biosciences, a processor in Salem, Ore., has filed a lawsuit seeking repayment of about $800,000 advanced to Terra Ridge Farms of Othello, Wash., for seeds, growing supplies and drying services.
Under a contract between the companies, 90% of the hemp supplied by Terra Ridge Farms to New Earth Biosciences was to contain at least 10% cannabidiol, or CBD, the complaint said.
The CBD compound is extracted for use in a variety of products, as it’s believed to have anti-inflammatory and other healthful qualities.
However, the farm’s first load of hemp delivered to the processor last autumn only contained about 7% CBD while having been “excessively dried” and “chopped too finely” to fit the specifications of extraction equipment, the complaint said.
New Earth Biosciences rejected that load of nearly 26,000 pounds of hemp biomass, as well as another 400,000 pounds that was being held at a storage facility, the complaint said.
Aside from containing insufficient levels of CBD, some samples of the crop also exceeded 0.3% THC, a psychoactive substance, the complaint said.
Cannabis testing above 0.3% THC is no longer considered hemp but rather marijuana, which is illegal under federal law and is regulated more strictly than hemp in Oregon and Washington.
Another problem is that the “few lots” containing sufficient levels of CBD were “riddled” with various types of fungus and mold, according to the plaintiffs.
Ultimately, the processor accepted about 25,000 pounds of hemp from the farm that weren’t contaminated with fungus or mold but that only contained 7.65% CBD, with the crop valued at $172,000, the complaint said.
The farm also repaid another $165,000 of its debt to the processor, but it still hasn’t paid back about $800,000 of the $1.14 million it received to grow the crop from New Earth Biosciences, the plaintiff claims.
Capital Press was unable to reach Terra Ridge Farms or its attorneys for comment as of press time.
In a recent letter to New Earth Biosciences, however, Terra Ridge Farms said a laboratory confirmed the fungus levels in the hemp are “within normal guidelines” and that it wants to renegotiate the crop price as allowed under the contract.
The processor has “rejected conforming product that is available for purchase” and its “request for cash does not conform to the contract,” the letter said. “We demand that you stick to the contract and purchase the biomass as agreed upon.”
By Mateusz Perkowski for the Capital Press