A settlement has been reached in the $69 million lawsuit between the original owners of Bluegrass BioExtracts and Reno, Nevada-based DTEC Ventures.
While no money was awarded to original BBE owners Gerald Edds and Bruce Peters, the settlement returned not only their access to the former BBE building at 931 Wing Ave., but gave the duo back full use of their equipment as they move forward under a new name, Precision Biotech LLC, said Edds.
“Basically, DTEC defaulted,” he said. “We sold Bluegrass BioExtracts on an installment plan with no cash up front. That first installment was due in January and was never paid. There was never any money, it was all Monopoly money. We simply exercised our right to repossess the equipment in case of default. The lawsuit against them was solely based on getting the equipment back. We only get the equipment, no money changed hands.”
Edds and Peters filed suit against DTEC Ventures’ managing members Leonard Chartraw, Christopher Martin, Todd Owen and Edward Vrab on Jan. 21 in Jefferson County Business Court. Edds and Peters were represented by Louisville-based law firm Bingham Greenebaum Doll LLP.
The suit claimed that DTEC, after taking ownership of BBE, “unequivocally failed to honor their obligations under the Purchase Agreement and the Royalty Agreement,” according to the suit. Now, DTEC, as well as Bluegrass BioExtracts, are a thing of the past, Edds said.
“We are going forward with the new company to try and correct the damage that has been done,” he said. “Bluegrass (BioExtracts) is out of the building, the town and the state. We are done, thank God, with DTEC. DTEC and BBE are no longer a part of us and we are no longer part of them. The contract that they “bought” us in, they agreed to accept all liabilities and debts of BBE and they have taken that totally on and that went with them. We were out of the picture as far as that goes.”
Everything else related to BBE, aside from the hemp biomass and the equipment in the building, remains with BBE and DTEC, Edds said.
“Because of the order, the only thing we get is the equipment, we get no money,” he said. “They have assumed all liability. For any grower that had contacts with BBE, those contracts stay with BBE. For those growers that want to deal with the new company, there will have to be new agreements. Our goal is to work with the growers with new agreements to make them happier.”
In December 2019 and leading into 2020, hemp farmers that had originally signed with BBE under Edds and Peters began to cry foul as DTEC-run BBE, under Managing Director Nathan Yates, started to divvy out alleged false heavy metal reports as a way to not honor contracts, forcing many to leave their crop at the former BBE building. There are roughly 100,000 pounds of biomass stored in the building and now that Edds and Peters have regained control, those farmers are able to either enter into new contracts with the new company or pick their material up, Edds said.
“The growers own their material,” he said. “It is only being stored here. If the farmers wish to have someone else process it, all they have to do is call. They have most of our cell numbers. We will help them load it and get it out. They could get it today if they wanted. If they want to talk to us about a new agreement, we will do that. Due to the surplus, we are getting calls daily from people looking for something to do with their crop. If all of the farmers took out the material that is here now, it wouldn’t take us a day to replace it because there is so much out there.”
For those farmers that choose to once again throw their hats in the ring with Edds and Peters, the new contracts won’t be as lucrative as the $4 per cannabidiol point per pound that many originally signed, given the overabundance of hemp grown in 2019, Edds said.
“In June or July of 2019, farmers were getting paid slightly more than $4,” he said. “Now farmers are getting around 74 cents a point according to PanXchange. There is a huge surplus of hemp and because it is an agricultural commodity it does what any other would do. If there is a vast oversupply, prices will go down. The prices are at levels no one could have predicted. Personally I think that will change but it will never go to $45 a pound again. What the farmers have to look at is if the current market is even worth growing. It is a crazy market and everyone has been hurt by it for sure.”
The new company’s business model will focus on generating THCl-free distillate and broad-spectrum oil, which they will begin working on after receiving new Environmental Protection Agency permits and finishing building out the building, he said.
“Our whole approach is to use science and technology to get the THC out,” he said. “We have made product on the experimental basis and we feel that there is a good market for that, it will be our business model going forward. It can take 60 to 90 days to get our EPA permits and, because GenCanna blew up their lab, the state has changed its building codes. There is a lot of work to be done in regards to the plant, storage, etc; that will be required.”
Now that the fear of DTEC having removed material and equipment is gone, Edds is looking forward to making his new venture successful, he said.
“There is a misconception that we got money,” he said. “But there has been no money changing hands, not one dollar changed hands. The only result of us winning that litigation is that we got the equipment back. If there is one thing I want them to know is that that is the absolute truth. For the most part, the growers that we have been with have been understanding and they are anxious to work with us. There are groups of naysayers that are unhappy and we will do what we can to mend that. We are a new company with new owners and buyers and we will work with new agreements. We are starting over.”
Jacob Mulliken, 270-228-2837, firstname.lastname@example.org