The Option of Bankruptcy Grows Clearer for Hemp Businesses
As we’ve written about before, bankruptcy hasn’t been a viable option for cannabis businesses, including ancillary businesses that derive any portion of their revenue from cannabis. That was expected to change for hemp and CBD businesses after the 2014 Farm Bill, and especially after hemp was legalized as a commodity under the 2018 Farm Bill (and removed from the Controlled Substances Act). But things didn’t change much, notwithstanding a Ninth Circuit suggestion that bankruptcy courts may now be more open to industry debtors. The actual number of bankruptcy plans actually confirmed in the past few years is very low.
Last week however, the Eastern District of Kentucky Bankruptcy Court approved and confirmed Kentucky hemp giant, GenCanna Global/OGGUSA’s Chapter 11 Plan of Liquidation, finally closing one of the first bankruptcy cases for the hemp industry. GenCanna was a vertically integrated hemp producer and CBD manufacturer. This case was particularly tumultuous since its filing in February 2020. Back in October 2019, several contractors and suppliers filed approximately $13 million in liens against GenCanna for its failure to pay. GenCanna was also facing pressure and accusations from farmers who allegedly were asked to expand their acreage to grow hemp while GenCanna knew