Pubdate: Thu, 24 Jan 2002
Source: Western Producer (CN SN)
Copyright: 2002 The Western Producer
Contact:  http://www.producer.com/
Details: http://www.mapinc.org/media/740
Author: Barry Wilson

CANADIAN HEMP COMPANY TO SUE U.S. DRUG AGENCY

A Canadian company that produces hemp-based products is using a 
controversial section of the North American Free Trade Agreement to try to 
force its way into the American market.

Kenex Ltd. of Chatham, Ont., said last week it plans to sue the American 
government for $20 million because of harassment by the United States Drug 
Enforcement Agency.

On Feb. 6 the DEA plans to enforce a ban on hemp-based food on the 
assumption such products contain hallucinogenic drugs.

Jean Laprise, Kenex president, said in a Jan. 21 interview the proposed ban 
is the latest in a long list of DEA actions that have kept many company 
products out of the U.S. market in the six years since the company was formed.

"We have invested millions of dollars and every step of the way, we have 
had to fight the U.S. government," he said. "We've been shut out of most of 
the American market by tactics which scared away our buyers. We are asking 
for $20 million in compensation."

A panel of experts assembled by NAFTA officials will hear the suit.

"I think it will take months or years to decide," said Laprise.

Kenex was formed in 1996 with a business plan that called for up to 90 
percent of its Ontario hemp-based products to be sold into the U.S.

"That got jerked around early in the game," he said. "Over years, we have 
had to be more cautious. That has cost us jobs and a significant amount of 
money."

Staff at the Chatham plant has fallen from a peak of 22 to fewer than 10.

Laprise said the DEA is acting illegally because American drug laws exempt 
hemp seed, oil, fibre or other derivatives.

But the DEA has never accepted that and has used tactics as diverse as 
seizing a load of birdseed in 1999 and issuing statements before the launch 
of new Kenex products warning that they are illegal.

American-based hemp products companies also have been fighting the DEA in 
court but as a Canadian company, Kenex had the ability to use NAFTA's 
chapter 11, which allows a company to sue a government if it believes 
policies illegally damage the value of investment or return on investment.

One of the most controversial chapter 11 actions is a move by the American 
courier giant UPS to sue for compensation on the claim that Canada Post is 
an unfair competitor.

"Chapter 11 is a very loosely worded section of NAFTA and I don't think it 
is being used the way its drafters intended," Ottawa trade consultant Gerry 
Shannon said Jan. 19. "I'm not sure it was intended for a situation like this."

That is the question a NAFTA panel will have to consider.

Said Laprise: "The DEA has put a big scare into the marketplace and a lot 
of our buyers have backed off," he said. "If the DEA is not stopped, we are 
finished."
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