GST Dispute Stalls Hemp Paycheque

GST Dispute Stalls Hemp Paycheque
Posted by FoM on February 17, 2000 at 11:12:26 PT
By Roberta Rampton, Winnipeg Bureau
Source: Western Producers
Jan. 31 was a red-letter day for farmers contracted to troubled hemp buyer Consolidated Growers and Processors Inc. Jan. 31 was the company's contractual deadline to pay most of its growers for half of the 18,200 acres worth of hemp they grew in 1999. 
But Jan. 31 has come and gone without farmers getting their cheques in the mail. As of Feb. 14, they had not yet received payment. The company owes its Manitoba and Saskatchewan farmers about $3 million for their hemp seed now, and another $3 million by the next contractual deadline of March 31, according to grower estimates. The company contracted most of its 18,200 acres of hemp with 75 to 80 farmers in the Dau-phin, Man., area who belong to Parkland Industrial Hemp Growers Co-operative Ltd. Farmers are anxious, said Joe Federowich, chair of the co-op. Because of poor grain prices, many growers are counting on the income from their hemp fields. "There were a few guys depending very heavily on this," Federowich said. The co-op is working with CGP in the hope the company will pay farmers by March 4. "Myself and the (co-op) board, we're still very confident we're going to get paid," said Federowich, who farms near Gilbert Plains, Man. "Everybody's just sitting and waiting," he said. Three officials from CGP Inc. -- chair Susan Brana, vice-president Mark Kaeller, and new chief operating officer Henry Yard -- did not return phone and fax messages. An employee at the company's Winnipeg office, who wouldn't give his last name or his position in the company, would not comment. "I've been informed not to talk to the media," he said. Paperwork Needed: Another official, director Alan Cade, said some farmers didn't meet the "administrative requirements" of their contracts. "I'm not really involved in the details of those," said Cade, a construction management consultant in Los Angeles, California whose firm Dugan and Associates has been retained to design and build hemp processing plants for the company. "My only comment would be I'm not aware of any farmer who is actually due money having not been paid," Cade said on Feb. 4. Some farmers had failed to submit log sheets for their crops by Jan. 31, said Federowich. But those administrative requirements are now virtually complete, he said. CGP officials have told farmers in meetings with the co-op board that the Canada Customs and Revenue Agency, the new name of Revenue Canada, froze CGP Canada Ltd.'s bank account on Jan. 28 over a goods and services tax dispute. CGP paid GST on seed it imported last spring, said Federowich. But CGP did not charge farmers GST on planting seed, said Federowich. Seed Sales: CGP's financial statements posted with the United States Securities and Exchange Commission show it sold $1.18 million worth of hemp seed to farmers this spring. Seven percent GST on that figure would work out to $82,600. CGP has asked farmers to pay the GST before they get their payment. For a farmer who grew 150 acres of hemp, the GST would total about $1,000, said co-op vice-president Jim Pavlin. Farmers will pay the GST because they can claim it back, said Federowich, adding it will cause some farmers cash flow problems. The company has told the co-op it cannot deduct the GST from the growers' payment because it needs a record that GST was billed. The company must also pay farmers GST on their hemp, and is concerned about when and how it will recoup the tax. A spokesperson for the revenue agency said it keeps all tax matters confidential. The agency cannot confirm or deny any GST dispute, said Michel Cléroux. Cléroux said companies that sell hemp seed to farmers must collect and remit GST to the agency. Speaking in general terms, Cléroux said the agency freezes bank accounts only as a last resort. The agency freezes only what's owed in taxes from an account, said Cléroux. This means a company involved in a GST dispute could pay its suppliers all but the money frozen by the revenue agency. Companies disputing a GST ruling can appeal the agency's decision, said Cléroux. But in the meantime, companies must pay the GST, or provide security from their bank to guarantee they will pay if they lose the appeal. Co-op vice-president Chris Dzisiak said he believes CGP will pay up because farmers still hold the hemp seed and fibre on their farms, and because he said the company has invested money and time in the crop. "You don't go through any of that stuff if you don't think you're going to have an outcome," said Dzisiak. Dauphin, Man.Published: February 17, 2000© The Western Producer.Related Web Site, Archives & Search Of Hemp Articles:Consolidated Hemp Growers
Home Comment Email Register Recent Comments Help

Post Comment

Name: Optional Password: 
Comment: [Please refrain from using profanity in your message]
Link URL: 
Link Title: