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U.S. hemp group calls GenCanna ‘fraud corporation’ in wake of bankruptcy

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Kentucky’s leading industrial hemp trade group has called U.S. hemp giant GenCanna “a fraud corporation,” after learning of the company’s bankruptcy filing last week. GenCanna filed for bankruptcy on Thursday, Feb. 6, 2020, following a series of legal actions from angry creditors that started in October 2019.

“GenCanna is a fraud corporation. They knew they weren’t going to have the money to pay the farmers,” Tate Hall, president of Kentucky Hemp Industries Association (KYHIA), told the Louisville Courier Journal newspaper last week. KYHIA is the state chapter of the national Hemp Industries Association, based in Washington, D.C.

GenCanna is listed as a member of the KYHIA on the Association’s web site.

Kentucky legislators also weighed in with criticism. “GenCanna has certainly given a black eye to the industry,” said U.S. Congressman James Comer, who was Kentucky’s agriculture commissioner when GenCanna set up in Kentucky in 2014, and who publicly backed the company in its early days.

‘Sickening’

“I’m very disappointed in how GenCanna has left so many contractors from my district high and dry with their (processing) plant, when they just walked away from them,” Comer told the Courier Journal. “It’s pretty sickening to see the spending spree they’ve been on, knowing how much money they owe farmers and contractors in Kentucky,” Comer said.

GenCanna had ambitions to become a global player in CBD production, with the planned $40 million hemp processing plant in Mayfield, Kentucky one of its key initiatives. But the project suffered delays and cost overruns. The company’s troubles came to light last October when a group of contractors said GenCanna owed them $13 million and filed liens against property the company had leased for the new processing facility. Other legal actions followed. Farmers were left stranded in part because the turmoil caused that the facility would not be able to process their crops this year.

The trouble has prompted farmers and politicians to question GenCanna’s poster-boy status in Kentucky. Ryan Quarles, Kentucky’s current agriculture commissioner, said GenCanna had delivered “a gut punch” to the state’s hemp industry. 

Farmers’ hopes dashed

“A lot of farmers spent a lot of time, a lot of hope and a lot of risk on this crop and it’s clear some processors overextended themselves in this unstable market,” Quarles told the website kentucky.com last Thursday. “We want to make sure our farmers are first to get paid because they put sweat equity into a new crop and their success depends on the processor’s success. We support anything that gets farmers paid.”

And Quarles worries about the knock-on effect of the GenCanna troubles: “We have over 200 hemp companies in Kentucky, all of which are startups, and we anticipate even more processors in 2020.” 

Yet Quarles himself had been one of GenCanna’s biggest boosters, praising the company upon its announcement of the new Mayfield processing facility for which, according to GenCanna, the company received “several million dollars” in state and local tax incentives. 

Failed plans

“We’re going to spend a lot of money in terms of the new construction and bringing in a lot of equipment and machinery and setting up a new lab and administrative capabilities,” GenCanna President Steve Bevan told WKMS, a Kentucky radio station, at the end of 2018, and credited then-agriculture commissioner Comer for his support of the initiative. “We don’t know how to quite quantify that economic impact at this time but we know it’s going to be positive,” Bevan said at the time.

The bankruptcy filing will let GenCanna continue to operate while undergoing reorganization as it seeks refinancing or a potential buyer.


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