Representatives of Canadian agro-firm Kenex Ltd and the Hemp Industries Association (HIA) met with various federal agencies at the US State Department this week regarding Kenex's NAFTA action filed in January.

Kenex filed notice of its intent to arbitrate under NAFTA chapter 11 in response to the US Drug Enforcement Administration's (DEA) recent ruling, which seeks to effectively prevent Kenex from accessing US markets for its hemp food products.

The DEA ruling was issued on 9 October 2001, purporting to make hemp foods containing infinitesimal traces of naturally occurring tetrahydrocannabinol (THC), the active ingredient found in marijuana, immediately illegal under the Controlled Substances Act (CSA) of 1970. The Government of Canada, in response to the DEA's new rule, has stated that, "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."

Kemex argues that the DEA's ban of hemp food sales in the US conflicts with NAFTA for several reasons; no notice or opportunity to provide input was given to US trading partners or foreign companies of the ruling; the DEA did not conduct a risk assessment; the DEA did not seek to minimise impact on international trade; and it has not similarly regulated poppy seeds and their trace opiates.
 
At the meeting with representatives from the State Department and DEA, as well as the Departments of Justice, Treasury and Commerce, lawyers representing Kenex argued that the US government will be forced to compensate Kenex for tens of millions of dollars in lost investments if Kenex proceeds with its claim.

Kenex's NAFTA challenge complements a lawsuit brought by the HIA and numerous hemp food companies, including Kenex, in the US Ninth Circuit Court of Appeals. The Court has already granted the hemp industry's Motion to Stay the new DEA rule on hemp foods, effectively blocking the DEA from enforcing the rule pending the Court's final decision, and oral arguments are scheduled in San Francisco on 8 April 2002. 

Eric Steenstra, President of Vote Hemp, who represented Kenex at the State Department meeting, stated: "We unfortunately received no indication from the officials that we met that they understand the gravity of their position or are in any way interested in finding some middle ground so that we can all put this nonsense behind us."