In a lawsuit over breach of contract, a Kentucky hemp farming company is arguing that its agreement with an Oregon hemp processing company should be terminated because of the coronavirus.

Third Wave Farms, headquartered in Mount Vernon, Ky., signed a contract with Canby, Ore.-based Pure Valley Solutions in May 2019 to act as a broker for Pure Valley’s winterized cannabidiol (CBD) oil. The contract required Third Wave to sell up to 5,000 liters of it, according to the lawsuit. 

In the contract, Third Wave also said it was still working to raise the $2 million it needed to fulfill its agreement. 

That contract quickly crumbled on both sides. According to the lawsuit, Pure Valley never had the capacity to make 5,000 liters of CBD oil, and the oil it did make didn’t meet the contract’s specifications. Meanwhile, Third Wave never raised its $2 million.  

Because both ends failed to meet their obligations, Third Wave said it believed the contract was no longer in effect. Yet, in February, Pure Valley sent a bill to Third Wave demanding $9 million, along with an interest rate of 9% and nearly $10,000 in storage fees for every day Third Wave didn’t ship the oil.

Now, in a lawsuit moving through the U.S. District Court for the Eastern District of Kentucky, Third Wave Farms, LLC v. Pure Valley Solutions, LLC, Third Wave is arguing the contract should be terminated because neither side fulfilled their obligations.

In addition, Third Wave is arguing that the current spread of the coronavirus, which has become a global pandemic, triggers the contract’s force majeure clause, which allows contracts to be terminated when situations arise beyond the control of both parties. 

Because both Oregon’s and Kentucky’s governors have declared states of emergency, Third Wave argues the coronavirus is a force majeure event. 

The case was filed March 20.

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