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March 15, 2000

TO:
Sen. Daniel K. Inouye
Fax: 808-541-2549

Sen. Daniel K. Akaka
Fax: 202-224-2126

Concerns Regarding ONDCP and DEA Interference with Legitimate Industry

Dear Senators Inouye and Akaka:

As you may recall, I met with your staff in February to discuss certain environmental matters that are of concern to myself and my clients. At that meeting, I provided your staff with information concerning the interference by the Office of National Drug Control Policy (ONDCP) and its Director, Gen. Barry McCaffrey, and by DEA and US Customs, with legitimate business involving non-drug industrial hemp. This letter is to alert you to ONDCP's and DEA's interference with legitimate hemp industry and to ask your help. Please obtain a copy for me of ONDCP's March 5, 2000 directive regarding industrial hemp which has not been made available to the public. Also please contact ONDCP and DEA to ask for a written statement of their legal authority for the positions they have taken regarding industrial hemp and send me a copy of their responses, if any. By a copy of this letter, I am asking ONDCP and DEA directly for these materials.

December 1999 saw the $200,000 Alterna hemp planting test project in Hawaii with bi-partisan support. On December 14, 1999, Gov. Benjamin Cayetano declared it to be "Industrial Hemp Day." In Hawaii, hemp is recognized by governmen  leaders as a possible replacement for failing sugar and pineapple crops. The benefits of industrial hemp as an economically viable, environmentally friendly, renewable, and sustainable agricultural resource are further discussed at the end of this letter.

The December 1999 Hawaii hemp planting was done in accordance with a DEA permit which is required under current regulations because industrial hemp is currently classified with its high-THC cousin, marijuana, on Schedule I under the Controlled Substances Act (CSA) .

As you may also know, in August 1999 based on the advice of ONDCP and DEA that it was a Schedule I controlled substance, US Customs seized a truckload of sterilized hemp birdseed which is expressly excluded from the definition of "marihuana" (also referred to as "marijuana") under the CSA. Such seizure was illegal because none of ONDCP, DEA or US Customs had any legal support for the proposition that the sterilized hempseed was a controlled substance. In fact, sterilized hempseed has never been a controlled substance under United States law.

The psychoactive ingredient, i.e., the drug, in marijuana is tetrahydrocannabinol (THC). For your information, drug marijuana generally has between 5% and 20% THC while substances with 1% or less THC have been scientifically found not to be psychoactive. In Europe and Canada, the legal threshold for industrial hemp is 0.3%THC.. The truckload of seized sterilized hempseed was tested by a laboratory that is certified for THC testing under both US and Canada law and it was marked as having 0.0014%THC - 14 parts per million THC.

In order to justify the seizure, ONDCP and DEA argued that under their "Zero THC Tolerance Policy" even though non-germinating hemp seed is expressly excluded from the definition of marijuana, such materials contain trace amounts of THC and, they argued, that Schedule I lists THC separately as a controlled substance and therefore they concluded that any material that contains trace amounts of THC, such as the non-germinating hemp seed at 14 parts per million, became a controlled substance because of the trace amounts of THC thereon. As discussed below, without a rule change, Schedule I only lists synthetic not organic THC and, accordingly, there is no legal basis for including naturally occurring trace amounts of THC on Schedule I or for banning the import of hemp containing such trace amounts.

The 1999 Birdseed Case was resolved on December 7, 1999, when the Canadian company, Kenex, Ltd., that shipped the birdseed to a US customer, signed and delivered to Customs a written release in exchange for a return of the birdseed which by then was contaminated. On that date, US Customs also issued a Notice to all Port Directors that clarified that it is legal to import sterilized hemp seed and other hemp products containing trace amounts of THC, which was defined in the Notice as 0.3%THC or less. On December 29, 1999, Customs suspended the Notice and re-established a Zero THC Tolerance Policy at the request of Gen. Barry McCaffrey of ONDCP.

In a recent February 28, 2000 letter to the Illinois Legislature which is considering hemp legislation similar to that recently passed in Hawaii, North Dakota and Minnesota, Gen. McCaffrey again attempted to influence state legislators by statingthat "all hemp products that contain any quantity of THC are considered Schedule I controlled substances and cannot be imported into the United States or cultivated domestically without DEA registration and permits for importation." How can Gen. McCaffrey state this when it is contrary to the DEA's own definition of THC in Schedule I?

Gen. McCaffrey goes on to make the accusation that "hemp cultivation may be a stalking horse of the legalization of marijuana." This accusation has been used time and again to block the research and development of industrial hemp as a renewable agricultural resource and it is without any merit. How would hemp cultivation under appropriate security regulations such as exist in Canada and Europe (where no law enforcement problems have been reported) serve as a "stalking horse" for marijuana legalization? The answer is that it cannot and ONDCP and DEA are using this issue to strike fear in the hearts of state legislators so as to frustrate a legitimate hemp industry.

I believe the real motivation of ONDCP and DEA lies in the $500 million per year marijuana eradication budget and with the fact that university studies indicate that between 96%-99% of the "marijuana" eradicated under that budget is really wild growing, feral hemp. In fact, the DEA is making more money harvesting industrial hemp than any other entity in the world and budgetary motives may be a factor in its aggressive stance against industrial hemp.

The current ONDCP directive and any related DEA interpretations constitute new law which has not been subject to any public hearings. This new law is also contrary to the existing Congressional definition of "marihuana" and the legislative history that led to that definition. It is also contrary to the express provisions of Schedule I, all as discussed below.

Congress adopted Section 802(c)(16) as part of the Controlled Substances Act but carried over the exact language of the definition of marijuana contained in the Marihuana Tax Act of 1937. The Marihuana Tax Act's legislative history therefore provides the source of Congress's intent when it chose to define marihuana so as to exclude, among other things, "the sterilized seed of such plant which is incapable of germination."

The legislative history makes it very clear how that exclusion came about. The initial proposed bill contained no exclusion for sterilized seed, with the result that "the effect of the bill [was] to prevent the use of marihuana seed in bird seed." Taxation of Marihuana, Hearings Before the Comm. on Ways and Means on H.R. 6385, 75th Cong., 1st Sess., 1, 47
(1937). It appears that seed was initially included in the bill based on testimony before Congress that indicated that "the seeds and other portions other than the dried flowering tops contain positively dangerous substances." Id. at 19, 29. 

This initial definition of marihuana, however, was not to last. Commercial bird seed producers testified before Congress that without an exclusion for hemp seed, their industry would be severely damaged. Id. at 44, 73-77. "The United States Tariff Commission has reported that somewhat over 4,000,000 pounds of hempseed are sold annually in the preparation of bird-seed mixtures." Id. at 44. They explained that hemp seed was a very valuable source of bird feed, "and we have not been able to find any seed that will take its place." Id. at 73-74. Significantly, the producers acknowledged that some small quantity of the active substance in marihuana might be present on their seeds; they argued, however, that seeds should nonetheless be excluded, on the sole condition that they be sterilized so that they could not be used to grow new marihuana plants. Id. at 73-77.

Congress, on the advice of the Treasury Department, accepted this view, and adopted exactly the language that the bird seed producers recommended. Congress concluded that although the "seeds of the hemp plant contain a dangerous drug known as marihuana," the legitimate uses of the seed should nonetheless be protected: "under the definition of marihuana, the bill will not apply to their sales of birdseed, if the hempseed contained therein is sterilized so as to be incapable of germination." S. Rep. No. 900, 75th Cong., 1st Sess., 2-4 (1937); see also 81 Cong. Rec. App. 1440 (1937); Taxation of Marihuana, Hearing Before a Subcomm. of the Comm. on Finance on H.R. 6906, 75th Cong., 1st Sess., 5-7 (1937). What this extensive legislative history makes clear is that Congress -- knowing that hemp seed might contain traces of the active ingredient in marihuana -- nonetheless excluded sterilized seed from the definition of marihuana.

The legislative history likewise makes clear that oil was also exempted, notwithstanding Congress's recognition that oil too might contain the drug element of marihuana. As was the case with seeds, the definition of marihuana set out in the initial bill contained no exception for oil derived from the hemp plant. As a result, manufacturers of products such as linoleum, drying oil, soap, paints, and varnishes protested to Congress that their industries would be adversely affected if they could no longer use hemp oil and cake. Taxation of Marihuana, Hearings Before the Comm. on Ways and Means on H.R. 6385, 75th Cong., 1st Sess., 1, 43, 46-47, 53-54,  67-70 (1937). They proposed excepting these products from the definition of marihuana. E.g., id. at 43. After consideration, Congress agreed, and reached a compromise with the industry: Congress would exempt these products from coverage under the Marihuana Tax Act in return for the industry paying a tax. Id. at 67-71. Pursuant to this compromise, Congress amended the definition of marihuana to exclude oil or cake products made from hemp seeds. Id. at 70-71; see also S. Rep. No. 900, 75th Cong., 1st Sess., 3-4 (1937).

In short, as was the case with hemp seed, despite the potential presence of marihuana's active ingredient in the oil and meal, the definition of marihuana nonetheless excluded these products from coverage even though Congress knew at the time that the excluded products (i.e., hemp seeds incapable of germination, hemp oil and hemp meal) might contain trace amounts of marijuana's psychoactive component now known as THC.

Thus, both the language and legislative history of 21 U.S.C. §802(16) permit of only one conclusion: as that statutory provision explicitly states, "marihuana" as used in the Controlled Substance Act "does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant . . . or the sterilized seed of such plant which is incapable of germination." In light of this explicit statutory language, and its clear legislative history, I respectfully suggest that the contrary interpretation and Zero THC Policy now being espoused by ONDCP and DEA is completely without statutory warrant.

In addition, there is similarly no statutory basis for any ONDCP or DEA argument that the term "tetrahydrocannabinols" in Schedule I, 21 U.S.C. §812(c), and C.F.R. §1308.11(d)(26), refers to organic THC. As an initial matter, such a reading would, of course, make no sense, since it would render meaningless Congress's carefully-crafted exceptions to the definition of marijuana discussed above. But beyond this, ONDCP's and DEA's new reading of the term "tetrahydrocannabinols" is clearly wrong.  

Under DEA's own regulations, 21 C.F.R. § 1308.11(d)(26),"tetrahydrocannabinols" in Schedule I are defined as "synthetic equivalents of the substances contained in the plant, or in the resinous extractives of Cannabis, sp. and/or synthetic substances, derivatives and their isomers with similar chemical structure and pharmacological activity such as the following … delta 1, delta 6, delta 3 or 4, trans-tetrahydrocannabinol… . ." (Emphasis added.) This definition is specifically limited to only synthetic forms of THC, and does not extend to organically occurring THC.

If DEA desires to make a rule change to include organic THC within Schedule I, it should be required to comply with the Administrative Procedure Act and public notice requirements therein.

The Department of Justice has repeatedly taken exactly this position in federal court, and every court to have considered this issue has come to the same conclusion. For example, in United States v. McMahon, 861 F.2d 8, 11 (1st Cir. 1988), the court, accepting the argument of the Department of Justice, explained that Schedule I of the Controlled Substances Act creates an "organic-synthetic distinction." "[T]he substance referred to in Schedule 1(c)(17) is synthetic, not organic, THC." Id. For this reason, the court ruled that "[h]ashish and sea-hash, both of which are concentrated forms of THC-containing marijuana resins, properly are characterized as marijuana derivatives - not as substances containing synthetic THC." Id. The court explained that these substances were controlled only by Schedule I(c)(10) ("marihuana"), and not by Schedule I(c)(17) (THC).

All other courts to have considered the issue have likewise accepted the Department of Justice's consistent position that the THC listed in Schedule I refers to synthetic THC. E.g., United States v. Wuco, 535 F.2d 1200, 1202 (9th Cir. 1976) ("[i]t is now conceded that in fact the substance [described as THC in Schedule I] is synthetic THC. . . . [organic marijuana THC] was not the synthetic THC defined as a Schedule I controlled substance . . . ."); Taylor v. United States, 550 F.2d 983, 986 (4th Cir. 1977) (citing hashish as a controlled substance covered by Schedule I(c)(10) ("marihuana")); United States v. McMahon, 673 F. Supp. 8, 11-12 (D. Me. 1987) ("The main active ingredient of marihuana is naturally occurring (organic) THC . . . . By contrast, the THC listed in Schedule I is synthetic THC, a pure form of the primary active ingredient of marihuana synthesized in the laboratory."), aff'd, 861 F.2d 8 (1st Cir. 1988); see Few v. State, 588 S.W.2d 578, 582 (Tex. Ct. Crim. App. 1979) ("By thus defining marihuana and listing it separate and apart from tetrahydrocannabinols, the clear purpose and intent of the drafters was that the latter meant and included only synthetic THC.") (interpreting the Controlled Substances Act). Indeed, our research has revealed no court which has held to the contrary.

Nor can DEA now simply abandon its prior interpretation. That prior interpretation is required both by Congress's definition of "marihuana," and DEA's own definition of THC in Schedule I, see 21 C.F.R. § 1308.11(d)(26). Even if ONDCP and DEA could overrule Congress's explicit exclusion of sterilized seeds, oil, and fiber from the definition of "marihuana" -- which could not lawfully be done - they would have to comply with the public notice and hearing requirements of the Administrative Procedure Act which has not been done.

The ONDCP and DEA actions in this matter are also in clear violation of the North American Free Trade Agreement (NAFTA) and have already caused irreparable harm to individuals and businesses in Hawaii, throughout the US and in Canada and Europe. Moreover, ONDCP and DEA's new interpretation clearly will damage, if not destroy, the numerous United States companies that rely on industrial hemp in their manufacturing processes - the very companies Congress explicitly sought to protect. All this will be to the detriment of the nascent Hawaii hemp industry.

In February 2000, a group Canadian governmental trade and agriculture representatives met with ONDCP - Gen. McCaffrey did not attend. They discussed the NAFTA violations inherent in the Zero THC Tolerance Policy and provided ONDCP information about hemp agriculture and Canadian hemp regulations and security (Canada has allowed hemp research since 1995 and commercial hemp production since 1998). ONDCP informed the Canadian trade delegation that it did not want any media attention to this matter and that ONDCP preferred to wait until after the November 2000 Election.

In March 2000, US Customs began seizing all products of Toronto-based Hempola, including lip balms and salad dressings. Customs also seized a small load of sterilized hemp seed from a Canadian company. ONDCP and DEA are clearly taking actions outside of their legal authority specifically designed to restrict the transaction of business in industrial hemp products. A recent First Circuit Court of Appeals decision highlights the zeal with which the DEA has been lobbying against industrial hemp.

In New Hampshire Hemp Council, Inc. and Derek Owen v. DEA, (1st Cir., 99-1082 Feb 2000), a three judge panel understood the difference between hemp and marijuana. In that case, Derek Owen, a member of the New Hampshire legislature and a co-sponsor of its hemp bill sued for a declaratory judgment that the existing definition of "marijuana" supported the legal growing of industrial hemp. The DEA first argued that the plaintiff did not have standing as DEA had argued in a prior federal lawsuit brought by Kentucky farmers. The District Court had agreed with the DEA but the Appeals Court found that the plaintiff had standing, stating:

Standing, in its Article III aspect, requires (generally speaking) an actual injury to a plaintiff traceable to the defendant's conduct and likely to be redressed by available judicial relief. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). The district court reasoned that since New Hampshire law forbade production of cannabis sativa for industrial use, Owen could not grow the plants for this purpose, however the federal statute might be read.

Some might think this an unseemly argument by the government. After all, the DEA urged its own reading of the federal statute on the New Hampshire legislature to defeat, as fruitless, Owen's effort to legalize "industrial hemp" production under state law; and now, when a challenge is made by Owen to the DEA's reading of the federal statute, the DEA points to the continued existence of New Hampshire's ban as a reason why it is useless for us to review the DEA's interpretation. Joseph Heller's phrase "Catch-22" was not intended as a compliment. 

Next, the DEA argued that the court should not exercise its power to render a declaratory judgement to foreclose federal criminal prosecutions in the absence of a reasonably clear and specific threat of prosecution. The Court cited the government's clear objection to hemp and its position that hemp and marijuana are the same and its zeal in prosecuting medical marijuana cases as a clear and specific threat of prosecution and rejected the DEA's argument.

While rejecting the DEA's technical challenges, the Court found that a literal reading of the existing definition of "marijuana" requires a conclusion that such definition includes all cannabis sativa plants, whether grown for industrial or drug use. 

As a point of interest, the Department of Justice had 4 lawyers working on the brief to come up with all the technical objections. The case record also indicates that at least one DEA agent traveled to New Hampshire to testify against their industrial hemp bill. Please provide me with the legal authority for the Department of Justice, DEA or ONDCP to lobby state legislators regarding state bills using federal budgetary funds.

It is difficult to understand why industrial hemp is even on Schedule I. Pursuant to CSA Section 812(b), substances should not be listed on Schedule I "…unless the findings required for such schedule are made with respect to such drug or other substance. The findings required for each of the schedules are as follows:

(1) Schedule I. - 
(A) The drug or other substance has a high potential for abuse.
(B) The drug or other substance has no currently accepted medical use in treatment in the United States.
(C) There is a lack of accepted safety for use of the drug or other substance under medical supervision." 21 U.S.C. §812(b)(1).

In reviewing the foregoing requirement, how can hemp have any relevance to clauses (A), (B) or (C)? How can these findings be made with regard to industrial hemp?

In 1937, Congress weighed the pros and cons of permitting certain industrial hemp products even though they were thought to contain trace amounts of the drug now known as THC. At that time, the environmental and health benefits of industrial hemp products were not recognized but purely on the basis of the economic benefits of industrial hemp products, Congress created an exclusion for the mature stalk, fiber, seed cake, seed oil and non-germinating seeds.

Now, in 2000, the environmental and agricultural benefits of industrial hemp in addition to the economic benefits demand a full hearing of the issue. For your convenience, I would like to summarize why industrial hemp is such an important issue to me and my clients. This will give you a basis to understand why my clients have invested millions of dollars in order to develop industrial hemp technologies to grow and process the crop and to develop markets for the crop. At the present time, these efforts have been successful and hemp products are now representing a fully integrated market from farm to supermarket, automaker, and family homes in the form of food, bio-composite auto parts and body care products.

In fact, while the recent USDA Research Service Report regarding industrial hemp failed to consider some of the expanding markets for hemp such as non-woven textiles, bio-composites and bio-fuels, it did recognize that a market, albeit a thin one, existed for this crop and its derivatives.

American Farmers can ill afford to pass up an opportunity to grow and sell a cash crop such as hemp as commodities prices for corn, soybeans and wheat hover near historical lows. These farmers, especially in Hawaii, North Dakota and Minnesota where hemp legislation has been enacted, are expressly looking to hemp to make up their losses on other crops.

However, it is more than just money and rural economic development that makes hemp such an important renewable resource. From an environmental standpoint, the Union of Concerned Scientists has identified seven (7) human activities that cause eighty percent (80%) of the ecological harm on an ongoing basis: (1) cars and light trucks; (2) meat and poultry production; (3) non-organic agriculture; (4) home lighting and appliances; (5) home heating and air-conditioning; (6) home construction; and (7) home water and sewage.

Hemp reduces or eliminates the ecological harm in each of these seven activities when incorporated into the manufacturing and/or design process. Hemp fiber is mixed with flax to make bio-composite auto parts such as arm rests, dashboards and seatbacks reducing the need to use toxic fiberglass or wood based products. Hemp meal is used for animal feed which improves the animal's uptake of nutrients and, therefore, reduces the volume of feed eaten by the animal for the same nutrition. Hemp crops used in rotation with corn and soybeans reduces the incidence of cyst nematodes by 70% without the use of pesticides and such rotation returns valuable nitrogen to the soil. Hemp bio-composite plastics serve various uses in the home from fabrication of appliance housings to non-wood planks and panels for construction and home water/sewage pipes.

Since hemp has demonstrated its practical and economic utility to reduce the ecological harm caused by prevalent human activities, hemp must be given due consideration even in light of countervailing policy considerations.

Statistically, one-half (1/2) of men and one-third (1/3) of women will get cancer due to avoidable causes related to toxics in the environment. Everyone, including myself, has either had cancer or has had cancer cases in their families. Reducing the saturation of toxics in our environment in order to minimize cancer rates requires incorporating non-toxic renewable resources such as hemp into manufacturing processes. Accordingly, when making decisions related to industrial hemp, the health, safety and welfare of the entire American population is implicated. I hope you will keep this in mind when discussing with Gen. McCaffrey, ONDCP and DEA the recent hemp directive and the Zero THC Policy.

You have an opportunity to keep further delay from impairing this nascent industry. Your opportunity includes a chance to promote the health, safety and well-being of all Americans and world citizens by allowing this renewable resource to develop with a minimum of government interference. I hope you will rise to meet the challenges of these opportunities.

Thank you for taking the time to address this important matter with ONDCP and DEA. Please contact those offices as soon as possible this week and request a copy of the recent ONDCP directive as well as a written statement of the legal authority supporting the positions they are taking.In the absence of valid legal authority, I would like you to demand that ONDCP and DEA cease and desist in such illegal activities.

Please call me at 808-283-3283 to discuss any questions you may have. I will call your office later in the week to get an update regarding your progress in communicating with ONDCP and DEA.

I AM,
Sincerely,
David C. Frankel

cc: Gen. Barry McCaffrey, Director of ONDCP (by fax: 202-395-6680)
Mr. Donnie Marshall, Acting DEA Administrator (by fax: 202-307-4689)
DEA Public Relations Officer Michael McManus (by fax: 202-307-7965)
Hawaii State Rep. Cynthia Thielen (by fax: 808-586-6481)