Hemp Company Debates Alleged Supply Agreement in Colorado District Court

American Hemp Ventures, a Colorado company, filed a lawsuit against Klondike Agricultural Products, LLC, after the defendant demanded millions of dollars for not following through with a supply agreement the plaintiff claims was entered into fraudulently. Klondike requested $810,000,000 in damages in its response, saying it already spent $1 million in costs for marketing and machinery. The case was moved to the Colorado District Court last week.

The complaint, originally filed in Colorado state court, stated that in fall 2019, representatives from both companies negotiated a contract for American Hemp Ventures to supply industrial hemp seeds to Klondike Agricultural Products. It alleges Klondike represented themselves as a legitimate company that would help their business. “Plaintiff believed it was contracting with an active, well-funded, and viable company in good standing with innovative and proven seed-capsule technology named Klondike Agricultural Products,” the complaint said.

The plaintiff, represented by Burk & Burk, claimed they were told the technology had been thoroughly tested on hemp seeds for results, and the defendants said they would provide data from the tests. The plaintiffs added that they believed terms of the contract were agreed to and the defendants had guaranteed certain things. The complaint went on to say that the representatives from both companies “began drinking heavily” before signing the supply agreement “while heavily intoxicated,” and the representative from American Hemp Ventures did not read the agreement but was assured it had the terms that were previously agreed to.

American Hemp Ventures says the agreement was signed with Klondike, LLC when that entity was converted to Klondike, Inc. five years previously. The agreement also had a start date of October 16, 2019, instead of the agreed date, January 1, 2020. The plaintiffs claim they learned after signing the seed capsules did not improve seed germination for hemp seeds and they were not provided agreed-upon test data.

“Defendants are now demanding millions of dollars in payments from Plaintiff, despite the fact that the Supply Agreement was fraudulently entered and Plaintiff does not have any guaranteed obligations to pay Defendants,” the complaint said. They claimed even if the agreement were enforceable the seed sales season begins in late spring, and the COVID-19 pandemic would have shut it down due to its status as a non-essential activity.

Klondike Agricultural Products, represented by Otto Law, admitted in their response that it negotiated a contract and agreed to incorporate seeds from American Hemp. It denied the agreement was fraudulent and that the signers were drunken. They argued the plaintiff was the only party to break the agreement, which was entered in good faith by both sides. Their response says “one Klondike is the alter ego of the other,” and reiterated that the company plans to go forward with the supply agreement. The company requests damages and court enforcement of the supply agreement.