Montana hemp growers awarded $65 million for 'deceptive' deal

Hemp, a crop that largely flew under the radar in Montana when it was planted under a pilot program three years ago, is now central to one of the largest civil awards in the state’s history. A jury in Wolf Point last month awarded 25 eastern Montana farmers $65 million in compensatory and punitive damages, finding that a handful of Canadian and American businessmen had committed negligence, fraud and deceit in failing to fulfill contracts, leaving the crops unpaid for and languishing in fields. The award brings into focus the volatility associated with the emerging market for CBD, a compound in the cannabis plant that’s created a global market worth between $1 and $2 billion annually.

In 2018, hemp production in Montana was booming. As federal regulations around growing hemp loosened, dozens of Montana farmers saw an opportunity to diversify their operations with a crop that farmers in Canadian provinces to the north had grown successfully for decades. Montana farmers planted 22,000 acres of hemp in 2018, more than any other state at that time. But most of it was never used.

The vast majority of those acres were grown for a company called USA Biofuels, which entered into contracts with more than two dozen farms in northeastern Montana for 20,000 acres of hemp. Per those contracts, the farmers would be provided seed and paid $100 per acre at the time of planting. Come harvest, they would be paid another $400 per acre of hemp grown on dryland, and $600 per irrigated acre. The farmers liked the certainty presented by this arrangement. It would make them less beholden to the wild swings of the commodities market for crops like wheat, which was doing so poorly at the time it was hardly worth selling.

Early on, there were indications USA Biofuels wouldn’t keep up its end of the deal. The company was late delivering the seed and issuing the initial payment. The farmers were repeatedly told the promised $100 per planted acre was coming soon. Then, six week later than expected, they received their initial payment — but not from USA Biofuels. Vitality Natural Health, LLC, a Canadian company, issued the payment instead. Montana farmers wouldn’t see another check from either company.

Read more: https://montanafreepress.org/2021/07/26/montana-hemp-farmers-awarded-65-million-judgment/