A bitter legal fight between two hemp companies has revealed the chaotic and largely unregulated state of North Carolina’s hemp sector, while raising questions about conflicts of interest at the highest levels of state politics.
MC Nutraceuticals, a Texas-based supplier of hemp-derived cannabinoids, filed suit in U.S. District Court for the Eastern District of North Carolina, accusing Republican North Carolina state lawmaker John Bell and his business partners of attempting to extort more than $1.6 million. The allegations stem from a collapsed supply and distribution deal involving Bell’s company, Asterra Labs, and its parent firm Rise Capital.
MC claims Bell and Rise Capital founder Harry Smith used political influence to coerce repayment after a contract dispute. The lawsuit suggests Bell and Smith threatened criminal prosecution and promised to leverage government contacts unless MC paid what Asterra claimed it was owed.
Court documents show no direct evidence of these threats. Bell is not named as a defendant, though his business role is central to the narrative. The suit is the latest flashpoint in a volatile market driven by high-stakes speculation in non-psychoactive CBD isolate, and high-producing delta-8 THC and other unregulated intoxicating hemp derivatives.
Deep ties to politics
Bell is a powerful figure in North Carolina’s Republican-controlled legislature. As Majority Leader and Chair of the House Rules Committee, he holds sway over whether bills move forward—including legislation that could sharply restrict the types of hemp products Asterra sells.
His company, based in Kinston, North Carolina, is one of dozens operating in a legal gray area. Asterra manufactures CBD topicals, oils, and capsules; it has also distributed intoxicating hemp products under private label.
In public comments, Bell has defended his dual role, saying his business gives him firsthand knowledge of the industry. Critics say the arrangement amounts to a conflict of interest, especially as proposed legislation would close the very market loopholes on which Asterra depends.
Counterclaims escalate fight
Asterra and Rise Capital responded to MC’s claims with a counter-lawsuit, accusing the Texas firm of fraud, racketeering, and operating what they called a “Ponzi-like” business model. According to their filing, MC failed to meet financial obligations, misrepresented its products, and attempted to poach staff from Asterra.
The counterclaim also alleges that MC misused Asterra’s name and contacts to attract other partners, even falsely suggesting ties to President Donald Trump. Asterra is seeking punitive damages, claiming the dispute has caused financial harm and reputational damage.
The case underscores how far ahead the intoxicating hemp market has moved compared to state-level regulations. North Carolina has no licensing requirement for most hemp processors or product sellers, leaving enforcement to under-resourced federal agencies or local law enforcement. Lawmakers have floated various reform bills, but none have passed.
Meanwhile, sales of hemp-derived THC products—especially delta-8 and HHC—remain widespread in gas stations and vape shops across the state.
Reform efforts stalled
North Carolina’s hemp reform bills have repeatedly stalled in committee, some under Bell’s leadership. He has expressed opposition to full prohibition of hemp-derived cannabinoids but signaled openness to basic regulation, such as age limits and labeling requirements.
With both companies now seeking damages in federal court, the lawsuit could shape not only the reputations of the parties involved but the outcome of pending legislation. Industry leaders say the case highlights the need for a clear regulatory framework—and for policymakers to be held to standards of transparency.