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Canadian Company Files NAFTA Challenge to DEA Hemp Rule

CHATHAM, ONTARIO, CANADA — Kenex, Ltd., a Canadian agro-firm that has been growing and processing hemp oil, seed and fiber products in Canada for distribution throughout the United States for the past five years, has filed a notice of intent to sue the U.S. government under the North American Free Trade Agreement (NAFTA). Kenex is filing this NAFTA action because the U.S. Drug Enforcement Administration (DEA) has previously impeded and, through its recent ruling, seeks to effectively prevent Kenex from accessing American markets for its hemp food products, on which the firm depends for over three-quarters of its business.

On October 9, 2001, without public notice or opportunity for comment, the DEA issued an “Interpretive Rule” purporting to make hemp foods containing any traces of naturally-occurring tetrahydrocannabinol (THC), the active ingredient found in marijuana, immediately illegal under the Controlled Substances Act (CSA) of 1971. Because trace THC does not pose any potential for abuse as a drug, the U.S. Congress had exempted non-viable hemp seed and oil from control under the CSA. Similarly, Congress exempted poppy seeds from the CSA, although they contain trace opiates otherwise subject to control.

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.”

Sterilized hemp seeds have been available in the U.S. for decades and are recognized as an exceptional source of protein, omega-3 and omega-6 essential fatty acids (EFA’s) and Vitamin E. Independent studies and reviews conducted by foreign governments have confirmed that trace THC found in the increasingly popular hemp foods 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. Hemp seeds and oil are as likely to be abused as poppy seed bagels for their trace opiate content, or fruit juices for their trace alcohol content. Yet, the DEA has not banned poppy seed bagels, despite their trace opiates that have interfered with workplace drug testing, unlike hemp foods.

Kenex has suffered previously at the hands of the DEA’s myopic and absurd refusal to distinguish between industrial hemp and drug varieties of cannabis. In 1999, U.S. Customs at the behest of the DEA impounded a Kenex shipment of hemp birdseed. Customs relinquished the shipment only after an experienced legal team demonstrated that the seizure was not justified by either the law or common sense and the New York Times published an embarrassing expose. Jean Laprise, the president of Kenex states that “A few million dollars would not even begin to cover the cost of the financial hardships Kenex has suffered through the DEA’s harassment of our business and the hemp food marketplace in general. Since the DEA’s new rule was announced, our U.S. hemp seed and oil sales have virtually ceased. If the DEA is not stopped, we are finished. Tallying our current and future losses, we expect to be compensated at least $20 million under NAFTA.”

The DEA’s ban of hemp food sales in the U.S. is clearly in conflict with NAFTA for several reasons. The DEA did not provide any notice and opportunity to U.S. trading partners or foreign companies to provide input into its ruling; the agency did not conduct a risk assessment or offer any other science-based rationale for issuance of the rule; the DEA did not seek to minimize impact on international trade; and it has not similarly regulated poppy seeds and their trace opiates. Anita Roddick, an investor in Kenex and founder of The Body Shop, which markets a highly successful line of hemp oil-based cosmetics, stated in regard to the DEA’s current attempt to sabotage the hemp industry: “The blind prejudice and bloody-mindedness of the DEA takes my breath away, especially when its actions are in direct contradiction to Congress. This is one instance when we have to invoke NAFTA. Without its protection, the future is bleak for hemp companies like Kenex.”

The 10-year-old global hemp market is a thriving commercial success. Popular hemp foods include pretzels, tortilla chips, energy bars, waffles, bread, salad dressing, candy, cereal, ice cream and even non-dairy milk. In addition to its recent attempt to ban the sale of hemp foods, the U.S. is the only major industrialized nation to prohibit the growing of hemp.


Vote Hemp is a national non-profit organization dedicated to the acceptance of and a free market for industrial hemp and to changes in current law to allow U.S. farmers to once again grow hemp commercially.