A company that sold hemp products to treat mental and physical symptoms applied for verification as an SDVOSB. The government denied the application because (1) verification would amount to government endorsement of a controlled substance, and (2) the applicant was controlled by a non-veteran. The company appealed, but OHA denied the appeal. OHA found that the company was controlled by a non-veteran affiliate. OHA declined to decide the endorsement-of-hemp issue, reasoning that the control issue made the hemp issue moot.
CVE Appeal of Holistic Serendipity LLC d/b/a Native Ceuticals Tampa, SBA No. CVE-242-A
Background
Holistic Serendipity sells organic hemp products for the treatment of mental and physical illnesses. Holistic submitted an application to the VA’s Center for Verification and Evaluation  (CVE) seeking verification as a service-disabled, veteran-owned small business.
CVE rejected the application. First, CVE reasoned that verifying Holistic may give the appearance of the government endorsing the use of a controlled substance. Second, CVE determined that Holistic was controlled with by a non-veteran. Holistic had an affiliate agreement with another company, Native Ceuticals. The agreement gave Native control over Holistic. The agreement required Holistic to only sell Native’s products, allowed Native to approve marking marketing materials, and prohibited Holistic from competing with Native.
Holistic appealed to the SBA’s Office of Hearings and Appeals.
Analysis
OHA found that the restrictions in the affiliate greatly curtailed the ability of Holistic’s veteran-owner to independently operate the company. Holistic argued that OHA should disregard the affiliate agreement because Native did not really view it as binding and had no interest in interfering with Holistic’s business operations.
OHA was not swayed. While it may be true that Native didn’t want not enforce the affiliate agreement, that did not mean Native lacked power to do so. It could choose to enforce the provisions at any time, which would limit the ability of Holistic’s veteran owner to control the company.
As to the cannabis issue, OHA found it unnecessary to decide whether verification would amount to government endorsement of a controlled substance. The control issue had made the cannabis issue moot.
Holistic Serendipity is represented by its owner Zachary K. Zindler.
–Case summary by Craig LaChance, Senior Editor
