Canadian hemp exporter Kenex has filed its NAFTA Notice of Arbitration with the US State Department and will now work with the US to will select a three-member arbitration panel to determine if at least US$20m compensation is due to Kenex for losses stemming from the Drug Enforcement Administration’s (DEA) attempt to ban hemp seed foods.
Go deeper with GlobalData
Kenex has exported industrial hemp products to the US for the past five years, but its sales were affected when the DEA introduced a zero tolerance import policy on THC, the active ingredient in marijunana that is found in trace measure in hemp seeds.
On 9 August 1999, US Customs at the behest of the DEA impounded a Kenex hemp birdseed shipment, issued recalls on other shipments, and threatened Kenex with over US$500,000 in fines. DEA justified the seizure by its then unwritten “Zero THC Policy” that deems hemp seed containing any traces of naturally occurring THC illegal. Customs eventually released the shipment and dropped the case after finding that DEA lacked authority for its “Zero THC Policy.” By this time, however, Kenex said it had lost most of its major customers as well as a major investor, and was financially devastated.
“We met with the US government in March in the hope of avoiding a protracted trade dispute, but the Bush administration failed to recognise that Kenex’s products are legal under current law,” says Joe Sandler, a Kenex attorney. “Our client has no choice but to seek compensation under NAFTA.”
Kenex insists that the DEA’s attempt to ban hemp food sales is a clear violation of NAFTA because hemp is a recognised commodity of trade under both NAFTA and WTO; the DEA did not provide any notice and opportunity to US trading partners or foreign companies to provide input into its ruling; the US did not conduct a risk assessment or offer any science-based rationale for issuance of the rule; the DEA did not seek to minimise impact on trade; and it has not similarly regulated poppy seeds and their trace opiates.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe 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 on the US market is based on any risk assessment. Therefore, Canada objects to these measures.”
The US is the only major industrialised nation to prohibit the growing and processing of industrial hemp. However, the US is the number one importer and consumer of hemp products, including hemp foods.
