May 31, 2021 Addendum:
It appears that BC Hops was made aware of this post and provided the password to view it. BC Hop’s lawyers have raised some objections about the content of this post. The word “defamation” was tossed around.
For those of you who aren’t aware, a defamation claim can be made when one party makes false statements that have caused damage to another party. The defence against a defamation claim is if the statements you have made are true. To the best of my knowledge and ability, after a very careful multi-day review process, I am confident that every word that I have written here is true.
For clarity, I’ve added two sections to the original post. Those additions are in italics.
The truth is far more helpful to us in this matter than anything we could dream of fabricating.
As such, I have removed the password protection from this document and made it available to anyone who wishes to view it.
Let’s allow the light of truth to shine on this matter and let the chips fall as they may.
Dearest friends, family, investors, and supporters:
I’ve got a story to tell you, and it’s about the thing that’s been consuming every spare moment that we at EnCann have been able to afford during the past two years, two months, and 0 days, to the minute.
We won our arbitration against BC Hop Co.
That company breached a contract that was entered into in good faith.
That breached contract cost us $5,305,999.
In the beginning…
Dwayne Stewart, founder and CEO of BC Hop Co., first contacted us at EnCann on August 16, 2018, immediately prior to the Canadian legalization of hemp cultivation for CBD, after he discovered that hemp was a crop worth selling on August 10, 2018 via a hemp farmer who contacted Dwayne about harvesting and drying services.
Dwayne told us he had some 8% CBD hemp for sale. We knew that this was likely to be a very rare commodity at the dawn of legalization so of course, we jumped at the opportunity.
Dwayne was quite new to the industry, we were somewhat less so.
So we educated him. Helped him understand how extraction works and what his customers would care about, as the primary purchaser of this high CBD hemp would be companies planning to extract it to turn it into high-CBD finished products. We talked about working together in the long term – there wasn’t (and still isn’t) anyone who could process the amount of biomass he would be handling. It was a natural fit for our companies to work together.
We entered into a contract to buy 10,000 kg of hemp from the BC Hop Company Ltd.
We contracted to purchase the available material at a price that BC Hop set. We accepted that price without negotiating on it because we felt it was a fair price to all parties.
We provided $100,000 + $5,000 GST to secure the contract in November of 2018. This was over 90% of the money that EnCann had in the bank on that date.
We started making sales from this hemp supply in February and March 2019. We did well on these sales, with significant profits to EnCann.
Eventually, in mid-March of 2019, the rarity of this specific crop became obvious to us all. Demand far outstripped the available supply as most farmers were not prepared to produce a high-CBD crop that year. As time went on, we heard of sales happening at over one thousand dollars per kilogram.
Around this time, Dwayne finds out that he could be selling his hemp for at least twice what we had contracted to pay in November of 2018.
Dwayne decides that he needs more margin for himself, and he realizes that he could make way more money by cutting us out.
So that’s what he does.
On March 25, 2019, at 09:41 PST, Dwayne Stewart notifies us in writing that BC Hop is breaching the contract.
By our numbers, this costs us $5,305,999.20 in lost profit.
We lawyer up.
Dwayne then takes the money he makes and buys a big chunk of land – a farm in Abbotsford – in an “all-cash deal” according to his own words – in early May 2019. He then posts on social media about going on a number of vacations to tropical destinations.
We hire some people, secure a location with the money we made, and start building the business. We don’t have enough money, and we know that, but we can find more. We’ve got some of the best people in the industry, have a significant technological edge, and a solid business plan.
We file for our first patent. This is a critical milestone for us, and the culmination of countless hours of work.
Dwayne has an idea for a new business venture.
EnCann has ups and downs, strikes and gutters, wins and losses.
For the arbitration, I generate, document, and cross-reference over three thousand pages of evidence and put a similar number of hours into making sure we dot every i, cross every t, and leave no stone unturned in bringing BC Hop to justice.
We find some more investors who believe in our dream. We’re doing not too bad.
Dwayne does a podcast.
Things are now very not good.
We had momentum, but the universe tossed another obstacle in our path. This one stops us in our tracks. Everything grinds to a halt. Our headcount goes from eight to four – including the loss of one founder who chooses to part ways with the company – and we stop paying salaries for the remaining team.
We find ways to move forward. Batten down the hatches and try to do something positive every single day. We trust the process and carry on.
We optimize everything we can, sell some equipment, and use our funds to get construction going. After an ordeal that could fill a novel, we get our building permits from the city.
We do a lot of the work by hand. While we could pay other people to do this, if we do it ourselves, that money can instead be put towards things we cannot do ourselves. So all winter, we put on our gloves and work clothes and build our cleanrooms ourselves. How many executive teams can say that? We didn’t turn the heat on because do you have any idea how much it costs to keep 16,500 square feet of warehouse at a comfortable working temperature?
Many breakfasts and lunches get consumed at the Potterton Road facility – and more than a few dinners.
After many delays, we finally have the arbitration hearing in January 2021. We feel it went well, but feelings don’t mean much in the land of lawyers and contracts.
In March, we submit our Health Canada application for a Standard Processor license.
In early May, Health Canada lets us know we are under Active Review. That’s the final stage before they give us a license.
We file for our second patent on the morning of Monday, May 10, 2021.
The Partial Final Award in the arbitration comes in at the end of the day on that same day.
That document awards us the return of our deposit and $760,763.40 in damages. Costs and interest are still to be determined by the arbitrator.
I can tell you all of this because we filed an enforcement Petition in the BC Supreme Court under proceeding no. S-214966 against BC Hop Company Ltd. on Friday, May 21, 2021, so that we can legally collect the damages owing.
We had to file this because BC Hop has made it crystal clear they have no intention of paying us, but I promise you that EnCann will collect its due in this matter.
Instead of interjecting my own additional commentary here, I will let Dwayne speak for himself as he did when we met in July of 2020 to discuss settling this matter.
He told me that, if we did win an arbitral award, that his response would be to “shut the company down, and we start a new one and move on.”
That he would “use every tool at my disposal to never pay you.”
And that he has “lots of ways of making you not get anything.”
I want to tell you so much more, as there is so much more to tell. But the story I can tell on this day ends here.
I can only tell you about things that have been filed in public court and are thus part of the public record. The rest has to remain confidential, or all of this could be for naught.
Take heart, as while we all know that this is just the first round, it is the most important one, and sets the stage for the remaining bouts. We have emerged victorious in the first, and we are prepared to go the distance.
We will fight on, as we always have done.
On May 15, 2021, two full weeks after our application was put under Active Review, Health Canada sent us their first set of RMIs.
These are extended questions from the Reviewer regarding our application. They used to be called RFIs – Request for Information – so that all who heard their name would understand what they are. So it goes.
Every one of us here at EnCann is burning the midnight oil to get those questions answered to their satisfaction. [May 31: We submitted these today. The team will catch up on some well-deserved rest this week.]
When we have finished this final stage of the process, we will finally have an operating business. The business we should have had over two years ago. The business that, through his choice to breach our contract, Dwayne denied us the benefit of. The business that Dwayne ensured our families and friends and shareholders could not benefit from this past 28 months.
I feel for the companies we regularly hear from – the ones that cannot wait to have our services finally available to them at long last. The ones that are sick of dealing with individuals and companies that don’t honour their commitments.
When asked “So is that something you do often, Mr. Stewart? Do you enter into contacts that you’re not sure you can fulfil?” during cross-examination, Dwayne responded with: “Yes, it’s been my entire career. That’s how I figure stuff out.”
I personally believe that says everything you need to know about Dwayne Stewart and how he operates as the Chief Executive of BC Hop. You may feel otherwise, as is your right.
We have persevered, and we will succeed, no matter what the future brings. The EnCann that we have built in the intervening years will be far more robust than the one we would have brought into the world 28 months ago.
The long dark night is finally breaking, and the dawn of a new day is upon us all.
We look forward to the future.
Thank you for walking this road with us.