HEMP GROWER TO SUE U.S. FOR $20-MILLION

Ontario's Kemp Says DEA Preventing Sale Of Industrial Product

Reuters OTTAWA - Canadian hemp grower and processor Kenex Ltd. said
yesterday it will sue the U.S. government for $20-million under the
North American Free Trade Agreement for stopping the company from
selling its hemp food products in the United States.

"If the DEA is not stopped, we are finished. Tallying our current and
future losses, we expect to be compensated at least $20-million under
NAFTA," Kenex president Jean Laprise said .

The Ontario company said it intended to sue after the U.S. Drug
Enforcement Administration last October deemed illegal any hemp foods
containing traces of tetrahydrocannabinol (THC), which is the active
ingredient found in marijuana.

Industrial hemp, legalized in Canada in 1998, is still illegal in the
United States because the cannabis sativa plant -- from which hemp is
derived -- is used to produce marijuana.

But industrial hemp contains minuscule amounts of THC compared with
its illegal brother. Foods made from hemp include pretzels, tortilla
chips, waffles, bread, salad dressing, candy, cereal and ice cream.

"Hemp seeds and oil are as likely to be abused as poppy seed bagels
for their trace opiate content, or fruit juices because of their
trace alcohol content," Kenex said .

The company, which produces and processes hemp oil, seed and fibre
products in Canada, distributes three-quarters of its goods in the
United States and has done so for the past five years.

The company said studies have shown the consumption of hemp foods
cannot cause psychoactive or other health effects, or result in
positive urine tests for marijuana.

The company said the DEA's action conflicts with NAFTA because the
agency did not provide an opportunity for input into its decision and
failed to offer a science-based rationale for the ruling, nor did it
seek to minimize the impact on international trade.

Kenex said it has "suffered previously" because of the DEA, which in
1999 had U.S. Customs impound a Kenex shipment of birdseed.