Aug. 2, 2002 -- The drug war is boiling over into a trade dispute along America's northern border.
A small Canadian company is using the 1994 NAFTA treaty to sue the U.S. government, claiming restrictions on hemp-containing foods have devastated their business.
"Under international law they actually have the obligation to compensate the people whose business they're taking," said Todd Weiler, the lawyer representing Kenex, the company bringing the suit.
In 1999, U.S. Customs agents impounded a shipment of Kenex hemp birdseed and issued recalls on other shipments by the company.
Kenex expected to file papers today under Chapter 11 of the NAFTA treaty, claiming the United States had illegally undermined its ability to do business in the country.
The company is seeking at least $20 million in compensation. The next step in the dispute is the appointment of outside arbitrators to decide the case.
U.S. State Department officials said they could not comment on the matter until they had seen the allegations filed by Kenex.
Seeking a ‘Zero Tolerance’ Policy on THC
The dispute stems from the Drug Enforcement Agency's decision to consider foods containing even trace amounts of THC, the psychoactive chemical in marijuana, controlled substances. The DEA announced its policy in February 2001, saying it was simply clarifying its longstanding position on THC and marijuana.
Proponents of hemp — which is made from the stalks of low-THC, high-fiber breeds of the marijuana plant — tout it as an extraordinarily versatile and environmentally friendly product that has little to do with marijuana smoking.
Health food producers sell hemp products including granola, ice cream, burgers, cheese, chips and chocolate bars. Hemp fiber is also used to make clothing, backpacks, and paper goods, and advocates praise the plant's oil for its nutritious qualities.
Kenex and other hemp companies say — and the Justice Department agrees — the products contain far too little THC to produce any psychoactive effects.
"Our stand is that DEA's regulations and policies are ridiculous," said David Bronner, president of Dr. Bronner's Magic Soaps, some of which contain hemp oil.
"This is really just a kind of a knee jerk drug war action."
DEA officials said in February that the new enforcement was an attempt to give the public a clearer interpretation of the Controlled Substance Act. Products derived from hemp that contain no traces of THC are still permitted.
At least one hemp food company said it was in compliance with the DEA's mandate, and had tests showing its products were THC-free. Most in the hemp industry insisted it was impossible to remove absolutely all the THC from hemp products.
"There is no zero," said Bronner. "At some point they're going to see [trace amounts of THC]. You can never get it completely out of there."
Hemp food companies went to court to challenge the government's restriction. In March, the U.S. 9th Circuit Court of Appeals stayed the ban on foods with trace THC levels, pending its decision, expected in the next few months.