AMERICAN POLICY HAZE CONFOUNDS HEMP SHIPPER

Jean Laprise declared it a "win" for the Canadian hemp industry when
hemp seed shipments to the United States resumed in November.

So he was shocked to find hemp exports are again under a
microscope.

"I couldn't believe the U.S. government could be so irrational and
change their mind so quickly," said Laprise, a farmer and president of
Kenex Ltd., a processor in Chatham, Ont.

On Dec. 30, the Office of the National Drug Control Policy instructed
U.S. customs officials to start seizing hemp seed and products that
contain any amount of tetrahydrocannabinol. THC is the psychoactive
ingredient that produces the euphoric feeling in hemp's illicit
cousin, marijuana. Industrial hemp contains only minute levels of THC.

Kenex spent considerable time and money last fall fighting a U.S.
custom seizure of hemp birdseed.

When the three-month-long trade argument was resolved in late
November, hemp seed processors thought exports would go back to normal.

But the peace was short-lived.

Now, U.S. drug czar Barry McCaffrey and the U.S. Drug Enforcement
Administration will review hemp imports to make sure they're in line
with the U.S. war against drugs. The Canadian government is monitoring
the situation.

Since January, Kenex has made small shipments of hemp products with
undetectable levels of THC.

But Laprise is waiting to find out how the U.S. government plans to
test THC levels, and what its tolerance levels will be. If it decides
to test in parts per billion, the industry would be in trouble, said
Laprise.

"I think there should be a very cautious approach to production unless
there are firm markets for all goods," said a weary-sounding Laprise.

If trade grinds to a halt, the government should consider a trade
challenge, or the industry should consider a legal challenge, said
Laprise.

But he and his business partners, after enduring months of business
interruption last fall, and extensive legal bills, are doing some
"soul searching" to determine whether more legal action is worth the
effort.

Industrial Versus Narcotic

Geof Kime of Hempline, which produces hemp fibre products in southern
Ontario, said his shipping schedule has not been affected.

Hemp fibre does not contain THC, said Kime. But his company has been
hurt by negative publicity linking industrial hemp to its narcotic
relative.

Kime said misleading media headlines have prompted questions from
potential customers about the legality of shipping hemp fabric and
carpet across the border.

Greg Herriot, whose company Hempola buys hemp from Manitoba farmers,
said his company's blended oils, salad dressings and cosmetics contain
non-detectable levels of THC, and haven't been affected by the U.S.
action.

But Hempola is sponsoring a study in Berkeley, Calif., that will
measure whether THC from its products show up in urine analysis tests,
the random employee checks done by many U.S. companies. Herriot
suspects the products will come up clean.

In September, his partner Kelly Smith took a drug test after eating up
to two tablespoons of Hempola oil per day, washing with hemp soap
daily, and using other hemp cosmetic products for three years.

She tested negative.