California Lawsuit Alleges Business Fraud in Cannabis Industry Partnership

California Lawsuit Alleges Business Fraud in Cannabis Industry Partnership

H2 Partners asserts that United Cannabis Corporation misled them in a CBD production enterprise.

August 22, 2018

A lawsuit filed in the Superior Court of the State of California describes a business partnership that sought to produce hemp-derived CBD products until a web of allegations brought the enterprise into the courtroom.

H2 Partners, a distribution company with roots in the tobacco industry, is suing United Cannabis Corporation (UCANN), a biotech company that developments cannabis products. The two companies had entered into a partnership earlier this year to grow 600 acres of industrial hemp in Colorado for the purposes of CBD production.

Things did not go well, according to the suit.

Read the full document below.

“Within a few weeks of entering into the joint venture with UCANN,” the lawsuit states, “it became clear to H2 that UCANN had no idea what it was doing and had never planted industrial hemp for CBD production.

When the hemp seeds failed to germinate, UCANN foisted blame upon a hailstorm that struck Colorado. UCANN CEO Earnie Blackmon reportedly texted H2 leadership and said that the field was a total loss. H2 furthermore asserts that the farmer selected by UCANN “overplanted the fields and did not even understand that he needed to weed field planted with hemp seed for CBD production.”

H2 invested $650,000 into the operation, according to the suit.

The companies dissolved the partnership plans July 20.

(UCANN is also presently embroiled in a patent lawsuit; UCANN is suing Pure Hemp Collective for infringing on its patent of “[a] liquid cannabinoid formulation wherein at least 95% of the total cannabinoids is cannabidiol.”) 

“When [CFO John] Walsh and others at UCANN were confronted with their fraud and lies, they could only hem and haw, and could offer no coherent explanation of what they had done and why they had lied,” the lawsuit states. According to the civil complaint, H2 has yet to recoup the money that it had invested in the joint venture.

H2 is seeking its original investment and the lost profits, referencing total of “at least $16 million.”

H2 Partners v UCANN by sandydocs on Scribd

Top photo courtesy of Adobe Stock