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Isotex Health wins state grant amid legal trouble

| February 6, 2020 3:19 PM

Lincoln County Port Authority officials will take a wait-and-see approach to administering a state grant won by Isotex Health given the company’s sudden legal troubles.

News of the grant came just days after officials learned a major backer of the hemp startup had filed suit against the company and moved to bar it from the former Stinger building, where it had taken up shop. A temporary restraining order has since been issued from Lincoln County District Court to keep Isotex employees from moving assets off the property.

“Right now, we’re not doing anything,” said Tina Oliphant, executive director of the Lincoln County Port Authority. “We really haven’t begun any activity on this grant. We need to make sure that the expectations for Isotex are there and understand what they want to do.”

The $307,500 grant comes from the Big Sky Economic Development Fund. Local officials learned Isotex had secured the dollars after a Jan. 27 announcement by Gov. Steve Bullock.

“Investing in the future of Montana means investing in the future of Montana businesses, and that’s exactly what these funds will do,” he said in a statement detailing how the $1,255,000 would get distributed.

The grant dollars would have reimbursed Isotex for creating new positions over a one-year period with pay commiserate with the county’s average salary, Oliphant said.

Isotex expected to make 41 hires meeting the requirements, according to state officials, but would have qualified for reimbursement for the positions created even if they fell short of the goal, Oliphant said. Officials will look at net new positions at the end of the period, she said, thus employee turnover would not count toward job creation, for example.

To secure the Big Sky grant, companies must apply through local governmental organizations. Oliphant could not recall whether her office reached out to Isotex or if the hemp startup asked the county port authority to submit an application.

Regardless, county officials applied for the grant in around November, she said. Applying for it is “something we should be doing no matter who made the first call,” Oliphant said.

Under ordinary circumstances, port authority officials would begin filing contracts with the state and Isotex would document jobs created since the grant’s awarding. At the end of the year, the company would get reimbursed for the new hires.

Given the sudden uncertainty, Oliphant said her staff was waiting for direction from Isotex to begin the paperwork. There is no deadline for filing, she said.

“The award came out and then we were notified of the investor — that they were filing a lawsuit — and then within days of that, I believe, Isotex Health filed counterclaims,” Oliphant said. “So they’ve come back and have their own counter claims going on. The port authority is trying to understand what’s going on.”

A spokeswoman for the Montana Department of Commerce said the state agency was coordinating with Lincoln County officials on how to move forward. They were unaware of the litigation prior to getting contacted by The Western News.

When Isotex arrived in Libby last fall, company officials said they hoped to hire as many as 120 workers. They planned to turn the old Stinger building into a hemp processing plant, where they would produce an isolate necessary for cannabidiol, better known as CBD.

Isotex is not the first local company to win the award. Alpine Precision, a machine shop, used the grant during an expansion in recent years, Oliphant said.

The grant specifically is designed for what are called basic sector companies, businesses that bring revenue to a region, she said.

“We just don’t have a lot of job growth in isolated, rural Montana, for obvious reasons,” she said. “So, unfortunately, we don’t get to use this grant often. You may [as a small business owner] create jobs, but do they meet the county wage average? … This grant prioritizes the role, the economic impact, of those projects that bring in new dollars to the area.”