A powerful North Carolina state lawmaker is in a legal fight with his former business partners in the hemp industry. Rep. John Bell’s district includes Goldsboro in eastern North Carolina. Those former business partners are accusing him of threatening to use his “power and influence” to jail them. The fight provides a rare peek into the highly competitive hemp industry and the politics that accompany it. For more, I'm joined now by Jeffrey Billman, who wrote about it for the Assembly.
Marshall Terry: First, briefly tell me more about John Bell and his connection to the hemp industry.
Jeffrey Billman: Yeah, John Bell is the chairman of the House Rules Committee. He used to be the majority leader, so he's one of the most powerful state House Republicans. He also is president of a company called Asterra Labs, which is a hemp manufacturing and distribution company out in Nashville.
Terry: And that's Nashville in eastern North Carolina, just in case people didn't know. So, who's suing him and what are they accusing him of?
Billman: So earlier this year, he entered into a business partnership with a company called MC Nutraceuticals, a company based out of Texas, which is one of the largest hemp companies in the world. And they entered into a really complex kind of arrangement, which I won’t get into. Essentially, the deal went south in May and in June of this year when MC Nutraceuticals missed a scheduled payment in excess of a million dollars.
Accusations of bad faith have gone back and forth. What MC Nutraceuticals says in its lawsuit is that John Bell and a guy named Harry Smith, who used to be a member of the Board of Governors of the UNC system, who owns Asterra Labs’ parent company, Rise Capital, essentially bullied them to coerce them into paying about $1.6 million and threatened to prosecute them and leverage their political contacts to do so.
I should say there's not a lot of evidence that actually happened, that they ever leveraged their political contacts, although they have threatened criminal charges. Again, the story is pretty complex, but it's basically a business deal that went bad and there has been a lot of accusations going back and forth.
Terry: So what has this fight revealed about the hemp industry that consumers don’t see?
Billman: I think how much of it is political. The hemp industry, especially in North Carolina, is very unregulated right now. You can buy a lot of these products in gas stations. You can buy them pretty much anywhere, and they're not age-restricted. You don't have to be 18, you don't have to be 21.
And there's a lot of fighting over what the ground rules should be, whether these products should be tested, certain quality standards, what the restrictions should be on who can buy them, where they can be sold, that sort of thing. And there's a lot of money that goes into trying to set up those rules. Everyone involved in this story is politically connected, either at the federal or state level, and they spend a lot of money trying to sort of build influence, so they can sort of shape the rules that the game is played by.
Terry: Finally, what has Bell said about all of this, and what comes next with that lawsuit?
Billman: Bell hasn't commented. I do think they're going to file a countersuit. They provided documents to us that suggest some of the claims made in the lawsuit by MC Nutraceuticals were, at best, incomplete and, in other cases, inaccurate, and I do think they are going to try and get money they say is owed to them — about 1.6 million. I think this legal battle will probably draw out for months.
