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A former part owner of a failed venture sued the venture’s former CEO, Paul Smith, alleging he misappropriated trade-secret hemp strains, selling them to a Canadian cannabis company for nearly $4 million.

In its September 21, 2020 complaint, Big Wuf Enterprises, LLC and its principal, W. John Short, allege their former venture, YCG Holdings LLC, owned the trade-secret hemp strain “Relief Now” as well as its trademark, equipment, and other assets. Big Wuf asserts that YCG was formed by Big Wuf, JP Consulting, and the non-party Kelly Martin.

According to the complaint, the venture failed after less than a year and JP Consulting and Smith were “tasked with liquidating the assets, paying off the creditors, and distributing the remaining proceeds.” Instead, JP Consulting and Smith allegedly transferred YCG’s assets, including the Relief Now genetics and intellectual property, to new a venture, Go Farm Hemp, LLC. Go Farm Hemp then sold the Relief Now seeds to a Canadian cannabis company, Canopy Growth, for $3,825,000 as part of a $13 million growing contract, said the complaint.

Big Wuf claims it is owed 45 percent of the proceeds from the sale of Relief Now seeds and seeks an additional $5 million dollars in punitive damages under the Defend Trade Secrets Act “to deter like conduct in the future.”

As of the date of this post, the defendants have not yet filed any response to the complaint.

The case is Big Wuf Enterprises, LLC et al. v. Go Farm Hemp LLC et al., 6:20-cv-01634, in the U.S. District Court for the District of Oregon. For more information on the budding topic of cannabis law, see Perkins Coie’s Cannabis page.