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Law360 (June 15, 2020, 6:00 PM EDT) -- A Laotian agriculture company has filed a $6.1 million arbitration against a subsidiary of Australian cannabis company Cann Global Ltd. after the country's borders closed in the face of the coronavirus, leading the cannabis grower to back out of a joint CBD hemp project.
Sun Agriculture Promotion Industry and Commercial Co. filed its claim in the Centre of Economic Dispute Resolution in Laos when discussions between it and Cann subsidiary Cann Global Asia Pty Ltd. fell apart, according to Cann.
A team of CBD hemp cultivators from Cann Global Asia, or CGA, had planned to arrive in Laos on April 1, but the border closed March 30 because of the coronavirus pandemic. CGA and Sun briefly discussed hiring more Sun staff on a temporary basis to begin a planned hemp seed pilot, but CGA did not like Sun's terms, Cann said.
"Due to what CGA felt were unreasonable and uncommercial demands for money by Sun, outside the terms of the agreement, CGA decided not to go ahead with the negotiations and to wait until the borders reopen to send their own staff as per the original agreements," Cann wrote. "Following this decision, Sun made further claims for money which CGA believed to be outside the terms of the service agreements."
Sun could not immediately be reached for comment. Counsel information for both parties could not immediately be determined.
Sun's claims constitute a breach of CGA's original agreement with it, Cann said, calling them "vexatious and baseless."
Cann added that it is not a party to the contracts, but chose to update shareholders to "address any misinformation and associated speculation."
In the meantime, the company said, CGA has made a new cultivation agreement with a Thai company, AA Bio Co Ltd.
"We envisage little to no impact to the hemp cultivation CGA and its partners are planning in Asia as a result of the dispute with Sun," Cann said, noting CGA will collaborate with Uttaradit Rajabhat University, a public university in Thailand.
Chris Waldron, CGA's business development manager, met on May 22 with AA Bio and officials, including the deputy governor of Phrae Province, according to the release.
"We look forward to the successful partnership with AA Bio and we will keep the market updated of the progress of this project," CGA managing director Sholom Feldman said in a statement.
CGA and Sun first announced their agreement for CBD hemp cultivation in Laos in October, according to Cann's website. The agreement involved three projects: CBD hemp cultivation, a trial cultivation of hemp seed grains, and a third project "relating to the interim extraction plant," the company said.
--Editing by Adam LoBelia.
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