San Francisco, California — A US firm involved in hemp growing deals with hundreds of Canadian farmers has declared bankruptcy, saying Canadian legislative changes and “bureaucratic bottlenecks” had made it impossible to do business.
Consolidated Growers and Processors Inc. (OTC BB:CGPR.OB – news) filed for bankruptcy protection under USC Chapter 7, Charles Shumash, a Los Angeles lawyer representing the company, said in a news release dated Feb. 28.
Canadian farm representatives said recently that Consolidated owed some 220 farmers who grew hemp seed in the Prairie provinces of Manitoba and Saskatchewan C$1.5 million due at the end of February.
The news release quoted company officials as saying that during their first year of operations in Canada, an investigation of the company’s money-raising activities by officials at The Manitoba Securities Commission had made it “extremely difficult” for the company to complete fund-raising.
It further alleged that in January, Canadian tax authorities put a C$100,000 tax lien on Consolidated without warning, saying it could take up to three months for a ruling on any objections filed by the company.
Company officials acknowledged “certain poor management, consulting and business associations” in Canada, but laid the blame for their bankruptcy squarely on Manitoba authorities.
“Industrial hemp is such a fabulous opportunity for Canadian farmers and CGP had such great potential, it’s too bad we had to set up business in Manitoba,” Mark Kaeller, a company spokesman, said in the news release.
Shamash was not available for immediate comment Wednesday, and Kaeller could not be located.
Canadian farmers grew nervous in mid-February when payments failed to arrive from Consolidated, which last year said it would built two hemp processing plants in Manitoba after the Canadian government legalized the growing of hemp in 1998.
The growing of industrial hemp has been viewed as controversial because it is grown from the same cannabis sativa plant that produces marijuana. Industrial hemp contains much less of the drug than its illegal brother.
Industry estimates said Canadian growers were expected to plant some 18,000 acres to hemp in 1999, compared to 600 acres the previous year.
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