The Details of The Issue

Drug Enforcement Agency Attacks Canadian Hemp Mogul
Demands All Birdseed Be Recalled

September 30, 1999

Pain Court, Ontario.
The Industrial Hemp Industry faces its greatest legal
challenge as a Southern Ontario hemp farmer fights for the right to export
hemp materials to the United States.

On August 9th, US Customs officials seized a truck carrying sterilized hemp
seed grown at the Kenex farm near Chatham, Ontario. U.S. Customs and the
DEA then demanded that Kenex, Canada's leading producer and processor of
industrial hemp products, recall previous shipments of other hemp products
such as oil, granola bars, horse bedding and animal feed.

These actions were taken even though all of the products are clearly legal
under the US CODE (TITLE 21, SECTION 802.16) and many have been sold in the
U.S. for years.

The effect of this action on the hemp industry is staggering, and it
threatens Canadian farmers as well as American manufacturers. Kenex
president, Jean Laprise says, "Kenex, along with many other U.S. companies,
are suffering irreparable damages due to the illegal actions taken by the
DEA and US Customs. It seems like the DEA could be spending the taxpayer's
drug war money in better ways than chasing around after bird seed and horse

U.S. Customs is threatening $500,000 in fines against Kenex if their
granola bars, oil, animal feed and other products are not redelivered to
Detroit Customs in the next few days. These fines are in addition to the
fines and possible criminal charges that may be laid in relation to the
birdseed load itself. A 30 day extension request to clarify the situation
was denied by U.S. Customs.

U.S. Companies stand to lose tens of millions of dollars or be forced out
of business as a result of the DEA's actions. Canada is now the only source
for sterilized hemp seeds and hemp seed oil in North America.

Hemp industry leaders also claim that DEA is systematically trying to put
the hemp birdseed industry out of business by harassing sterilizers whose
services allow hemp seed to be legally imported to the U.S. Most recently,
a seed sterilizer in New Jersey voluntarily relinquished their DEA license
to handle hemp seed due to the extreme demands by DEA to police their
clients and to complete voluminous amounts of paperwork. In 1994, there
were 5 seed sterilizers in the United States; now there are none.

"The DEA's action endangers the nascent Canadian hemp industry," said Hemp
Industries Association president Cindy Biggers. "Canadian government and
farmers have worked too hard getting hemp off the ground to let the US
government mess things up."

Kenex is now considering the possibility of filing a NAFTA case which would
pit Health Canada against the US DEA.

Jean Laprise says, "All the proper documentation has been supplied to
Customs in the past in accordance with our custom broker's instructions.
Kenex has always acted in good faith and has never violated any U.S. laws.
Our legal counsel has advised us that the DEA and U.S. Customs are acting
in clear violation of U.S. laws as well as NAFTA."

Mari Kane, Hemp Industries Association Press Director,
Tel: 707- 887-7508, Email:
C. Penn, HIA Secretary - Tel: 707 874 3648 Email:
Websites: &





Kenex Attorney Letter to Canadian Trade Dept. & Embassy

[Gowling, Strathy & Henderson Letterhead]

September 24, 1999

Mr. Jonathan T. Fried
Assistant Deputy Minister, Trade and Economic Policy
Department of Foreign Affairs and International Trade
125 Sussex Drive
Ottawa, Ontario K1A 0G2

Dear Mr. Fried:

Re: Kenex Ltd. Chatham, Ontario
Seizure and Recall of Kenex Hemp Products by US Customs

We are legal counsel to Kenex Ltd. ("Kenex"), a Chatham-based grower and manufacturer of industrial hemp. Kenex produces a non-germinating hemp seed and hemp oil and meal products that are fully compliant with all aspects of Canadian law.

The production and sale by Kenex of these industrial hemp products also complies fully with all relevant American legislation including the US Controlled Substances Act which specifically excludes from scrutiny non-germinating hemp seed and the related oil and meal products.

Because of its many environmentally friendly applications - from clothing to paper to auto parts - the production of industrial hemp is quickly becoming a billion dollar industry. The development of this industry has been guided by the explicit endorsement and financial support of the Canadian Government. Kenex, a recipient of federal grants, has become the leading producer in North America.

Despite the fact that the manufacture and sale of non-germinating hemp seed is perfectly legal under US law, on August 9, 1999, a truck load of Kenex hemp seed was seized and confiscated at the Windsor/Detroit border crossing by the US Customs Service, apparently acting on the advice of the Drug Enforcement Administration ("DEA").

In addition to the seizure of August 9, 1999, US Customs and the DEA also ordered the recall of some 16 earlier loads that had already been delivered to customers in the US and have threatened Kenex with more than US$700,000 in fines.

Counsel for Kenex in the US has written to the DEA to advise them that their actions are contrary to law and to ask that the matter be resolved as quickly as possible. To date, the DEA has not responded.

With each passing day, Kenex continues to suffer increasing injury. The loss of customer and investor confidence, the decline in trans-border sales, and the overall negative impact on the company's business reputation and financial profitability is substantial - already in the millions of dollars.

We have advised Kenex that these actions on the part of the US Customs Service and the DEA are tantamount to an expropriation by the US of the Kenex Industrial Hemp business and we have recommended that Kenex commence proceedings under Chapter Eleven of NAFTA.

We would very much welcome your advice and assistance in resolving this matter with the US Customs Service and the DEA.

We look forward to hearing from you at your earliest convenience.

Yours very truly,

Gowling, Strathy & Henderson
/s/ Edward P. Belobaba

cc: Mr. George Haynal
Assistant Deputy Minister - Americas
Department of Foreign Affairs and International Trade

Mr. Douglas Waddell
Deputy Head of Mission
Canadian Embassy
Washington, D.C.


Seizure Update & DEA Position Revealed

The Drug Enforcement Administration has changed their interpretation of the Controlled Substances Act to include many hemp products, especially those made of the nutritious seeds. Kenex, Inc., the most established Canadian producer had a truck of birdseed seized at the border and has been ordered to recall 17 loads that were already shipped to the United States. Many businesses, including Ohio Hempery, have received a Summons from Customs ordering us to disclose all of our imports of hemp.

Washington, D.C.
October 4-8: Don Wirtshafter met with dignitaries at the Cato Institute and Bruce Schwartz and Jeff Klein, the Washington-based attorneys for Kenex. Don also met with Ned Daly, Leda Huta and John Richard of Ralph Nader's organization to discuss the implications of the recent actions on our outstanding petition for rescheduling industrial hemp from the DEA to the Department of Agriculture.

The best meeting was with Congressman Ted Strickland's Legislative Assistant, Brandy Tomhave. She called the congressional liaisons from U.S. Customs and the DEA. Eventually we got good news from the congressional liaison at U.S. Customs. She said the DEA had relented and agreed to release the shipment of Kenex grown birdseed. Much later, Brandy Tomhave was told that a supervisor in Customs apologetically said he had to insist that the DEA put their policy in writing before Customs would release the shipment.

Motive Revealed:
More phone calls made it apparent that very little had been resolved. Bruce Schwartz, Kenex's lawyer, called saying the DEA told him they only meant "birdseed" in their decision. Food products and sterilized seed
intended for food products were still subject to seizure at the border. The DEA finally admitted it was acting on concerns over the allegations that legal hemp products could affect the outcome of the commonly employed urine tests.

Reality of Drug Test Issue:
There is no possibility that any product that meets Canada's strict regulations for industrial hemp could ever affect urine tests. Canada set a maximum limit of 10 parts per million for any hemp product. Even if someone’s entire diet consisted of food at this level, it could NOT be detected in the highly accurate urine tests used by the military, by employers and by the judicial system to monitor for drug use. Canada went through rulemaking where these issues were discussed in detail. The decision of that sovereign must be respected under the North American Free Trade Association (NAFTA) Treaty.

Research Stalled:
The Research Triangle Institute was scheduled to do a series of human trials on this issue for SAMHSA, the federal agency that accredits urine testing labs. The purpose was to prove there was an impossibility that
any imaginable consumption of commercial hemp products could affect urine tests. Unfortunately, I understand that Research Triangle has not been able to start their human research due to holdups with paperwork by the DEA.

The issue is similar to poppy seeds affecting urine tests providing a false positive for heroin consumption. The urine testing industry has learned to deal with this issue by requiring a medical examination of any failed employee who claims poppy seeds as an excuse. Nobody has ever called for a ban on poppy seed imports.

Effects of DEA Policy Change:
This is a policy change by the DEA that has been coming for months. The issue is not the use of hemp for food but the use of hemp foods as an excuse for failing urine tests. To support their corrupt drug testing industry, their answer is to attack hemp and keep it off the market. Every company that wants to do anything with hemp seed is at great risk, criminally, civilly and economically as long as this policy is in place.

The most important issues are still on the table. We still have to comply with the Customs subpoenas that we received. Product recalls are still in effect.

Lesson Learned - Action Required:
Congressional pressure works wonders. It is really important for any business at risk here to get on the horn to their congressman and senators. Call up the local office and talk to any aid that you can. Find out the schedule of the district visits and go armed with as much information as you can. Visit Washington if you can. Emphasizing the potential harm to your business is the key - and the employment that could be lost if the DEA does not quickly reverse its position.

Raise a crescendo of calls! The alternative is a long, drawn-out court battle. We need a quick solution and our elected representatives are our best weapon.

Canadian Action:
Citizens of Canada have a different path toward a solution. Canadians should see the DEA blocking the border as a tremendous affront to their country. Is the DEA accusing Canada of harboring and even encouraging drug production? What happened to Free Trade that we heard was going to be good for business. The Canadian embassy in Washington has already sent a letter protesting this action. More pressure on Ottawa will strengthen their resolve to push for a solution here.

The Hemp Industries Association has posted several sample letters for you to modify and send in at There is also a link to where Americans can find the names and addresses of their state and federal legislators.

Contact: Don Wirtshafter -