DEA PLAN COULD HAMPER HEMP RETAILER

When Kathy Barr opened Paia's Hemp House in 1998, she had so many visitors
she thought she would make her first million in a year if each of them
spent a nickel. Curious customers wanted to see what was referred to as the
"pakalolo store." Barr's store sells clothing, shoes and bath-and-body
products made from hemp.

But Barr faces a dilemma she shares with other hemp retailers and
wholesalers: The U.S. Drug Enforcement Administration still considers all
hemp a controlled substance. Hemp, which grows in a number of varieties, is
a plant related to cannabis but doesn't contain high percentages of the
chemical that gives marijuana its euphoric effect.

The anger against the DEA is at its fiercest now, as hemp advocates fight a
proposed DEA regulation expected to be enforced in October. The order calls
for a ban of products that contain traces of tetrahydrocannabinol or THC.

Industrial hemp is viable as a commercial crop because it is cheap to
produce, creates durable goods and grows with minimum fuss, says Cindy
Biggers, president of Hemp Industry Association in Hawaii.

The hemp retail industry is estimated to be worth $150 million nationally.
The United States imports all of its hemp and in 2000 brought in 1.9
million pounds of hemp fiber, 440,900 pounds of hempseeds, and 330,690
pounds of hempseed oil.

Barr says proposed DEA measures threaten the livelihood of her store and
the state's blossoming hemp-based industry. And nationwide, the hemp
industry is expected to lose $40 million as a result. Many small businesses
may have to close, according to the Hemp Industry Association.

The hemp industry hopes to come up with some solutions to the DEA's stance
at a conference to be held next week on Maui.

Current imports of hemp products contain less than 1 percent of THC in its
natural form, Biggers says.

Nearly 50 percent of products sold at Barr's Hemp House are hemp-oil- based
products, including an exclusive lotion line called "Absolutely Natural"
that contributes to 25 percent of the store's $200,000 annual revenue.

"Apart from selling Absolutely Natural at our store, last year we started
wholesaling our lotion line," Barr says. "It just started building up and I
was looking for it to be a big part of our revenue."

Other Maui-based businesses like Pauhana Farm Candle and Hemp Stock will be
affected by the DEA rule as well. Jenny Silva of Pauhana Farm uses hemp oil
in her candles.

In Hawaii, hemp-based raw material users include a handful of stores
retailing natural products such as the Down to Earth chain and small- scale
producers of soaps, lotions, resort wear and food products.

The federal stance against hemp is nothing new. Industrial hemp cultivation
was banned in the United States until December 1999 when a quarter-acre
plot in Wahiawa was allowed to grow it for research.

The Hawaii Industrial Hemp Research Project, headed by David West, began to
grow European hemp varieties here. The project obtained $200,000 funding
for the first two years from Alterna Applied Research Laboratories, a
California company that uses hemp oil in its hair-care products.

The Hawaii research received funding for another year from a mainland-
based nonprofit. West would not disclose the amount or sponsor.

West, an applied geneticist, is in the process of developing a root stock
that can be used to grow industrial hemp in the state. The ideal prototype
will be able to grow five cycles a year.

Local advocates hope that the research will convince officials to allow the
growth of industrial hemp in the United States.

Rep. Cynthia Thielen, who was instrumental in bringing hemp research to
Hawaii, says industrial hemp has potential to replace the sugar industry in
Hawaii. But for that to happen, the federal government has to allow hemp's
commercial cultivation and transfer its jurisdiction to the U.S. Department
of Agriculture, she adds.

But even under the USDA, industrial hemp may not be on friendly ground. A
report by the USDA concluded that because Canada allows industrial hemp
production, an entry by the United States would saturate an already small
market.

"Uncertainty about long-run demand for hemp products and the potential for
oversupply discounts the prospects for hemp as an economically viable
alternative crop for American farmers," the report stated.