For Immediate Release
August 2, 2002

Contact Adam Eidinger / Mintwood Media at (202) 986-6186

Hemp NAFTA Suit Begins Arbitration Phase
Canadian Hemp Grower and U.S. to Select Arbitrators for Chapter 11 Claim

WASHINGTON, DC — Kenex Ltd., a Canadian firm exporting industrial hemp products to the U.S. for the past five years, filed its NAFTA Notice of Arbitration with the U.S. State Department on August 2nd. Kenex and the U.S. will select a three-member arbitration panel to determine if at least $20 million compensation is due to Kenex for losses stemming from the DEA’s attempt to ban hemp seed foods.

"We met with the U.S. government in March in the hope of avoiding a protracted trade dispute, but the Bush administration failed to recognize that Kenex’s products are legal under current law," says Joe Sandler, a Kenex attorney. "Our client has no choice but to seek compensation under NAFTA."

The U.S. is the only major industrialized nation to prohibit the growing of industrial hemp. However, the U.S. is the number one importer and consumer of hemp products, including hemp foods. Hemp seed is an exceptional source of protein, omega-3 and omega-6 essential fatty acids, and independent studies and reviews conducted by foreign governments have confirmed that the trace tetrahydrocannabinol (THC) found in the hemp seed and oil cannot cause psychoactivity or other health effects, or result in a confirmed positive urine test for marijuana, even when unrealistically high amounts of hemp seed and oil are consumed daily (see http://www.TestPledge.com). Popular hemp foods include waffles, bread, cereal, snack foods, energy bars, ice cream and non-dairy milk.

Three years ago, on August 9, 1999, U.S. Customs at the behest of the DEA impounded a Kenex hemp birdseed shipment, issued recalls on other shipments, and threatened Kenex with over $500,000 in fines. The DEA attempted to justify the birdseed seizure by its then secretive unwritten "Zero-THC Policy" that deems hemp seed containing any traces of naturally-occurring THC, no matter how insignificant, illegal. This policy contradicts the 1970 Controlled Substances Act (CSA), in which Congress specifically exempts sterilized hemp seed and oil from control notwithstanding trace amounts of THC, just as poppy seeds which contain trace amounts of opiates are exempted by Congress from the CSA under the definition of the "opium poppy."

The hemp exemption in the CSA was enacted under the definition of "marihuana" in the 1937 Marihuana Tax Act originally, and coincidentally, Aug. 2nd is the 65th anniversary of the Congressional exemption for legitimate industrial hemp products such as Kenex’s. But according to the DEA, Kenex’s birdseed was a Schedule I controlled substance because of miniscule insignificant trace amounts of naturally-occurring THC. Customs eventually released the shipment and dropped the case after finding that the DEA lacked authority for its "Zero-THC Policy." By this time, however, Kenex had lost most of its major customers as well as a major investor, and was financially devastated.

In March 2000, the U.S. Department of Justice confirmed that the DEA lacked authority to implement a "Zero-THC Policy" because of the Congressional hemp exemption. In an effort to circumvent that ruling without public notice or comment, the DEA issued an "Interpretive Rule" on October 9, 2001 that effectively established its "Zero-THC Policy" on that date. The hemp industry, including Kenex, took the DEA to court, and on March 7, 2002, the 9th Circuit Court of Appeals blocked DEA’s rule pending the forthcoming decision on the case, and hemp foods remain perfectly legal to import, sell and consume.

The DEA’s attempt to ban hemp food sales in the U.S. is a clear violation of NAFTA. Hemp is a recognized commodity of trade under both NAFTA and WTO; the DEA did not provide any notice and opportunity to U.S. trading partners or foreign companies to provide input into its ruling; the U.S. did not conduct a risk assessment or offer any science-based rationale for issuance of the rule; the DEA did not seek to minimize impact on trade; and it has not similarly regulated poppy seeds and their trace opiates. The Government of Canada, in response to the DEA’s new rule, stated that, "In reviewing the interim rule there is no evidence that the effective ban on relevant Canadian food products in the U.S. market is based on any risk assessment. Therefore, Canada objects to these measures."

Visit www.VoteHemp.com to read court documents and numerous scientific studies concerning hemp foods. For more information or to arrange interviews with representatives of the hemp industry, please call Adam Eidinger at 202-986-6186.

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