On October 12, 2018, Hemp, Inc.’s wholly-owned subsidiary, Industrial Hemp Manufacturing, LLC (IHM) (Plaintiff) filed a lawsuit against American Hemp Seed Genetics, LLC (AHSG) (Defendant) for Breach of Contract, Breach of Express Warranty, Breach of Implied Warranty of Fitness for a Particular Purpose, Breach of Implied Warranty of Merchantability, Intentional Misrepresentation, Negligent Misrepresentation, Incidental and Consequential Damages, Unfair and Deceptive Trade Practices, and Fraud. AHSG is managed by Jerry Norton of Salem, Oregon. 

IHM and AHSG entered into a contractual agreement on April 26, 2018. According to Hemp, Inc. executives, Norton convinced IHM executives that the seeds IHM were to purchase had excellent genetics and were the right seeds for planting in North Carolina’s soil and climate. Thus, IHM agreed to purchase said seeds in order to plant 1,000 acres of hemp for biomass.  
 

Norton recommended one pound of seeds per ten acres of land with 100% germination. He assured IHM his seeds had a 97% germination rate and to make up for the expected 3% failure rate, he added 3 more pounds of seed for a total of 103 pounds.  
 

Seeds were sent to IHM in North Carolina, per contract. However, upon receiving the seeds, IHM did a test for germination and found the seeds had a germination rate in the high teens. Confounded by the results, IHM sent the seeds out for professional germination testing by experts who were able to get a 24% germination rate… higher than IHM’s first test but still disturbingly lower than what Norton had promised.  
 

Jerry Norton was informed of the results and of the seeds’ failure to germinate properly. At that point, IHM demanded the return of their $70,000 payment with the return of the seeds back to Norton. Norton refused to refund IHM’s payment, did not accept the seeds back, and refused to discuss it further. As a result of his intransigence, IHM had no choice but to file a lawsuit against AHSG, which was done on October 12, 2018.  
 

AHSG moved to dismiss the lawsuit for lack of personal jurisdiction on December 31, 2018. That motion was denied on February 25, 2019. AHSG entered an appeal on March 18, 2019. Norton was able to delay the trial for almost one year. While he may have thought the delay was a great tactical strategy, he only prolonged the inevitable. On March 3, 2020, AHSG’s appeal was denied.  
 

The contract had a clause that was quoted by the appellate judge in denying AHSG’s appeal.  
 

“The contract additionally stated in relevant part that any dispute arising out of or related to this Agreement shall be venued [sic] in Raleigh, North Carolina.”  
 

IHM is now able to proceed with the lawsuit. 

“This was an unfortunate situation that will take more time but we won’t quit until this has been adjudicated. This lawsuit could award IHM $10,000,000 or more for incidental and consequential damages so it’s worth the wait” said Bruce Perlowin, CEO of Hemp, Inc. 

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You can read the full annual report below as well as the lawsuit filed against Jerry Norton below.