IN THIS ISSUE:

MASTHEAD:

Publisher: AHEM
Editor: Arthur Hanks arthurhanks@hotmail.com
Sales, Sponsorship, and Distribution:
Jason Freeman jfreeman@ssm.net
Associate Editor:
Dr. Alexander Sumach rheading@becon.org

CONTRIBUTORS THIS ISSUE:
Peter Dragla pdragla@kent.net, Tracey Hucul tracyh@pangea.ca , Mathhew Huijgen matthew@hempworld.com, David Marcus nathemp@interlog.com, John Roulac john@nutiva.com, Gordon Scheifele gscheife@omafra.gov.on.ca , Cynthia Thielen thielen@aloha.net, Dave West davewest@pressenter.com

SUBMISSIONS: Submissions are most welcome. Please contact HCFR editor, Arthur Hanks, at arthurhanks@hotmail.com, with your story, research or information for inclusion in the HCFR. We are also looking for good quality pictures and photos.

Editorial

Fasten your seatbelts, and hang on, we are entering some turbulence.

The Canadian and North American Hemp industry was shocked, but not dismayed, by the announcement in early January that the US border was once again closing to Canadian hemp food products while the DEA and ONDCP review their policy of hemp as a controlled substance. And while to The HCFR's knowledge, no shipments have been stopped, as of press time, hemp imports and exports will proceed prudently in 2000 under the threat of continued heavy weather.

The industry doesn't need this and the situation cannot continue. We are supposed to be creating and capturing markets, not fighting rearguard actions against urine tests to keep what has already been achieved. Certainly, there is lots of unfavourable news everywhere: a recent USDA report painted a less than rosy projection of hemp's market future (although discounting the effect of secure supply on market development). Similarly, the European Commission has recently come out with a statement painting hemp foods as undesirable as well. Even more bizarrely, a recent bill that passed at Capital Hill designed to control methamphetamines includes language that would make it a felony "to teach, demonstrate, or distribute any information pertaining to the manufacture of a controlled substance." That would mean that if you are reading this hemp journal online or printed out, somewhere south of the 49^th parallel, one of us is breaking the law.

But there is good news. One upside to this political manoeuvring is the valuable PR hemp is receiving and the wider audience that is tuning in to this issue as a consequence. As well, the Canadian government is acting strongly; Ag Canada quickly tipped the industry off to the recent changes and Industry Canada is rightly concerned that trade issues are being confused with domestic drug control policies.

More? See Hawaii with a half acre of hemp in the ground, brandishing a hard-earned license issued by the same DEA. Listen to the nutritionists and dieticians who are beginning to recognise the powerful health benefits of hemp foods. Organic foods and fibres are gaining market share as consumers sicken of the toxic industries we created in the last millennium. Hemp has its place here. While more education is needed at this point to defeat the misidentification of hemp and fear of THC, and will continue to be a part of hemp's marketing mix for many years in the future, critical mass is being achieved. The hemp industry isn’t going home and is not asking for a refund or for coupons. Something has to give.

The big problem is not that the US has issues surrounding cannabis. The big problem is not that the DEA wants to regulate the industry through some form of license system. The big problem is that the agency has not developed any framework to issue licenses, and are trying to put the entire industry on hold while they do so.

Here’s a tip to the DEA: work with what Canada has already devised and take on the consultation of your counterparts in Health Canada. It took this country a half-decade to get here with stakeholder and government input. For free, to American taxpayers, we have a readily adaptable model of regulation. It's not to everyone's flavour, but it works. Now just get those crusty drug warriors out of our supermarkets and our kitchens and let’s see what hemp can give to our society.

January 2000
Vancouver, Canada
arthurhanks@hotmail.com
jfreeman@ssm.net

Have an opinion?: The HCFR invites commentary, opinions and letters to the editor. Feedback posted may be edited for brevity, grammar and content.

Top Of The Crop

1) Border Uncertainties Return as US DEA Makes New Recommendations to Customs

In a letter to customs dated December 30^th, 1999, Barry McCaffrey, director of the Office of National Drug Control Policy (ONDCP), requested Customs suspend the policy allowing for legal importation of sterilised hemp seed and hemp seed derived products containing any THC into the United States. This swift move overturns the guidelines, issued Dec 7^th, 1999 that expressly allowed products with a THC content of less than 0.3% to enter the US without a DEA license.

The suspension buys time for the ONDCP/DEA to " ... review the issue to determine whether the policy to allow for traces of THC in hemp products is consistent with their National Drug Control Strategy."

Governments and businesses, on both sides of the border, have been taken by surprise by this latest policy flip flop. The action has been questioned for its legality, for under US federal law, sterilised hemp seed, hemp seed oil and hemp seed cake are legal products, as was made clear in the December documentation. It is unclear whether McCaffrey's office has the executive power to make this decision, without new legislation.

Currently, Canadian companies moving product to the US are being careful with shipping, keeping an eye on what products may be stopped. Sterilised whole seed, whose shells may contain detectable trace elements of THC, are the highest risk. As of press time, no seizures have been reported. However, there are no assurances; the market is becoming "seller beware".

Under NAFTA and the UN Single Convention Treaty on Narcotics, industrial hemp is considered as a legitimate agricultural commodity. All the G8 countries, except the US, produce and export industrial hemp. Lawsuits are being considered, if diplomatic entreaties prove fruitless.

For up-to-date information and breaking media coverage go to www.hempembargo.com

Canadian companies with market access questions should contact Ron Krystynak, Deputy Director for the US, Western Hemisphere, International Trade Policy Directorate, Industry Canada at (613) 759-7653.

A copy of the original memorandum can be obtained from US Customs by calling: Vera Adams, Director, Commercial Processing, at (202) 927-0360.

A new USDA report, released on January 19th, Industrial Hemp in the United States: Status and Market Potential, discounts the prospects for hemp as an economically viable alternative crop for American farmers. The report holds that the US market for hemp is, and will likely remain, a small, thin market. As well, the study projects that the long term demand for hemp products is uncertain and notes that there is potential for oversupply (specifically pointing at Canada's 30,000+ acres in 1999).

The study notes that the issue of hemp cultivation remains controversial in the US because industrial hemp and marijuana are different varieties of the same species, Cannabis sativa, which is currently classified in the United States as a Schedule I controlled substance. The timing of this release corresponds with the renewed "Hemp Embargo" which is threatening Canadian hemp exports to the US.

Major objections presented within the study include:

• Given the average size of farms in the United States (near 500 acres), just a few farms could have supplied the hemp seed, fiber, yarn, and fabric equivalent of 1999 import levels.
• Despite the similarities between hemp and linen, the lack of a thriving textile flax (linen) US production sector (despite no legal barriers) suggests that hemp would not be able to sustain an adequate margin of profit for a large production sector to develop.
• Although the market potential for hemp seed as a food ingredient is unknown, it probably will remain a small market, like those for sesame and poppy seeds.
• The prospects for hemp oil in food markets are limited by its short shelf life, the fact that it can’t be used for frying, and its lack of US Food and Drug Administration approval as “generally recognized as safe.”
• Overall, hemp production was profitable only at the higher end of the estimated yields and prices reported in four State analyses summarised in the Estimated Costs and Returns Section of the USDA report. It seems questionable that US producers could remain profitable at the low end of the estimated net returns for hemp, particularly given the thinness of current US hemp markets.

  ---

3) Europe Changes Some Rules; Lowers Hemp and Flax Subsidies

The European Commission has proposed a change up in its subsidy regime for flax and hemp, reportedly designed to curb an explosion in production fuelled by farmers seeking EU aid payments.

Since 1995, the EU's aid for flax and hemp growers has grown from 70 million euros to nearly 160 million in 1999, despite limited sales outlets for much of the crop. Spain, in particular, has witnessed a huge jump in output (12,000 ha. in 1999) and has been fingerpointed as a case of subsidy-driven production.

The existing aid system fails to distinguish between high quality long-fibre flax, which is primarily used in the textile industry, and the lower quality short-fibre variety, mostly used in pulp making and as packing in furniture.

EU officials said the new proposals would cut the subsidy rate for both types, but at the same time introduce a processing aid purely for long-fibre flax.

The new regime is scheduled to come into effect from July 2000 and is estimated to cut aid payments by a third. Hemp aid will also be cut to the same level, which will also be comparable to that of linseed growers.

Under the new proposals the current THC threshold for hemp, set at 0.3% for crops in field, would be reset to 0.2%. Aid for hemp is currently set at EUR 662.8/ha while flax receives EUR 815.6/ha. The proposal also sets a maximum guaranteed quantity of 119,250 tonnes of short flax and hemp fibre per marketing year.

The recommendations also include a curious evaluation of hemp seed: "Hemp seed has one traditional but limited application as food for fish and birds. The oil from hemp seed can be used for specialist cosmetics applications. The use of hemp seed or the leafed parts of the plant for human consumption would, however, even in the absence of THC, contribute towards making the narcotic use of cannabis acceptable and, in any event, there is no nutritional justification for this. … None of these products should be encouraged in their own right by the European Community."

In this light, subsidy will be denied producers who are growing grain for use in human nutrition and cosmetics.

For more information and analysis on this issue, check out www.HempCyberFarm.com

Source: Commission of the European Communities, Financial Times (UK), HempCyberFarm.com, Reuters

4) Speakers Announced for Hemp 2000

Speakers have been announced for Hemp 2000 conference to be held Wednesday March 1^st, 2000 in Winnipeg, Manitoba (see Upcoming Events for full conference details and schedule). This event is expected to be Canada's largest industrial hemp conference since the successful Hemp Farming and Equipment Show (October 1998).

Speakers include: Bruce Brolley (New Crop Specialist, Manitoba Agriculture and Food) , Wade Chute (Alberta Research Council), Guy Cloutier (Manitoba Industrial Hemp Association) Kevin Edberg (Minnesota Department of Agriculture), Neils Hansen-Trip (Health Canada), Gero Leson (Leson Environmental Consulting) Brian McElroy, (President, Manitoba Industrial Hemp Association) Jack Moes (The Great AgVenture), Roman Przybylski (University of Manitoba), Ron Tone (Tone Ag Consulting), Don Wirtshafter (Ohio Hempery Inc). Opening remarks will be made by Rosanne Wowchuk, Minister for Agriculture and Food.

5) CGP Makes Moves

After a few months of silence, CGP has unveiled some new faces in their executive and some of their future plans.

Henry Yard has been appointed President and Chief Operating Officer.

Slavik Dushenkov, Executive VP of DEA and DEA-registered industrial hemp researcher, has pledged up to $250,000 for testing the effect of human consumption of regular hemp oil against standard marijuana abuse test results. Dr. Dushenkov directs the Company's collaborative biotechnology and seed breeding research & development programs at Rutgers University. His 20 years of research experience includes agricultural molecular biology, plant physiology and bio-remediation.

For the future, CGP has stated that they intend to produce a THC-free hemp seed variety in the year 2002. CGP is also forecasting planting 70,000 acres in Western Canada in 2000.

Alan Cade, a Director of CGP, will manage the construction of the planned, integrated straw/fibre and seed processing facilities in Dauphin, Manitoba. Cade is Senior Vice President of Dugan & Associates ("Dugan"), a construction management company in Los Angeles, CA.

According to Dauphin Mayor, Bill Nicholson, the city's old curling rink will be converted into a temporary processing plant come February. Growers under contract with CGP through Parkland Industrial Hemp Growers are optimistic that this facility will proceed.

Construction on the Dauphin plant, originally planned to begin in the fall, was postponed after the Manitoba Securities Commission seized over $450,000 and launched an investigation into possible Securities Act violations. The MSC became involved after monies were raised in the community last April, with no prospectus or IPO registered.

In October, CGP applied for an order exempting certain trades from the MSC's registration and prospectus requirements. The securities commission granted the exemption in late November, citing that the public interest was at stake - CGP owed farmers their first payment that month.

Conditions of the exemption included that CGP had to give shareholders a chance to get their money back as well as securing $500,000 US in financing by the end of 1999.

sources: www.congrowpro.com , Winnipeg Sun

ANALYSIS:
Hemp Freeze Out

By Dr. Alexander Sumach

1) The official United States view that industrial hemp is a cannabis derived product and therefore a Schedule 1 controlled substance provides a convenient stop play zero card to freeze hemp out of US markets until further notice.

This is continental industry, not Pokemon. The outcome of the game will determine the official fate of the entire modern New World industrial hemp initiative. Canadian hemp's recent listing on Americas' Most Wanted is not what we had in mind as an introduction. Canadian hemp arrives in America, setting off alarms in all the wrong places, somehow irritating our neighbours' watchdogs that bark at the delivery vans of Canadian hemp arriving in the modern American marketplace.

2) This sudden dumbing-down for hemp at the highest levels of policy making suggests that our great trading partner is a little behind schedule in implementing a tough new drug strategy and paving the toll road for hemp entering modern commerce.

3) Although Canadian law clearly distinguishes between varieties of the cannabis plant, the United States has not yet made a similar division between industrial hemp and recreational marijuana. When Canadian hemp arrived at their borders with all proper documents, US agencies were caught unprepared, and hemp arrived in their faces just as their ten year drug war funding platform was coming up for review. US federal drug market managers, facing the scorn of dope duty not done, elected to pull the THC zero card on hemp as a way to chill the industry's advance until after the presidential election. They have no interest in the business health of Schedule 1 substance producers.

This freeze conveniently stopped all play in the hemp arena and changed the game to houserules. Our advice remains "seller beware"

4) The American hard-line on hemp is likely a stall for time, as such door slamming serves no practical purpose in the War on Drugs. This Dragnet style delivery, presenting a first date gone wrong scenario may be little more than an in-house SOS to reduce the flow of hemp rolling across the border. This may have been done in order to keep the hemp harvest as low as possible for the time being. Hemp can be chained into position at hightide. The origins of this diplomatic vandalism aimed primarily at Canadian produced Industrial Hemp products has its origins in the July 29th, 1997 ONDCP Statement on Industrial Hemp (found at http://www.whitehousedrugpolicy.gov/, search for "hemp"). This official document concludes a study that discounts the potential of hemp referring to the emerging industry as merely " A novelty product with limited sustainable development values, even in a novelty market."

5) Hemp is regarded in this same report as an eco-swindle, a cover crop Trojan horse to advance the dishonest agenda of the legalisation of marijuana movement. This cynical overview insults the integrity of the Canadian government who thoroughly evaluated industrial hemp and saw fit to make it legal for Canadian farmers to grow under a comprehensive regulatory system. Other hemp-literate G8 nations were growing hemp as well and better off for it.

The same data that lead Canada to adopt responsible hemp culture has been discounted by American policy makers. Pro hemp information in modern America is ignored as invalid science; hemp market players are presumed guilty of pursuing an industrially insincere destiny. Hard words from friends next door with whom we share so many other good opportunities.

6) Deputy Director of Canada/US Agricultural trade Mr. Ron Krystynak referring to the US chill on Canadian hemp imports says, "this is an example of confusing drug policies with trade policies." However, nothing much is expected to happen until the US Counterdrug Technology Assessment Centre (CTAC) releases their requirements for tactical technological identification of THC at all ports of entry. They are in no hurry. Until such standards are operative, Canadian hemp imports into the USA might be frowned upon, and at the same time any domestic American hemp cultivation program discouraged.

7) The 1997 report does not exactly applaud the merits of hemp, and instead takes a suspicious view of the new industry. It goes on to cast their doubts in their negative assessment of the value of hemp, adding that " For every proposed use of Industrial hemp there already exists an available product, or raw material which is cheaper to manufacture and provides better market results"

8) The report estimates that the 1996 US hemp market was worth only $12,000,000; a much lower figure than industry estimates, nor does it offer any supportive data to qualify this lowball value. The report recommends that the modern hemp initiative in America be thwarted. The low estimated value of this bogus industry presented great difficulty in monitoring the crop from field to marketplace. In their view, hemp was simply not worth the trouble of enforcement for the drug war dollars spent. Rendering a Schedule 1 controlled substance legal for purposes indicated was clearly not a high priority at the time, considering the "anything -goes-till-the-Supreme-Court-says-otherwise" social style of their mighty nation when it comes to matters of balancing freedom and responsibility. The explanation given for this reluctance to accommodate hemp at that time is understandably cautious. Whatever, but the report goes on to say:

"Legalising hemp production (in the US) would send a confusing message of de facto (real life) legalisation of marijuana cultivation" —and then goes on to say— " The facts do not support hemp cultivation as a legally or economically viable option for US interests. ONDCP does not consider it prudent to change the current status of Cannabis sativa as a Schedule 1 controlled substance. "

9) Trickling behind the caution and countermeasures against hemp in the policy report was a most enlightening sentence that might be the crack where the light gets: "Certainly any new credible evidence should be given careful consideration." This will be the hemp industry's opportunity to show its integrity.

10) Even though this policy statement was released three years ago, just prior to the Canadian advance into the fully commercial hemp arena, most hemp industry insiders failed to recognise the aroma of disapproval towards all things cannabis from the Dope Hunters in Washington. Many US hemp industry players hoped it would not actually be adopted into US policy when the Canadian hemp crop arrived on the market. At that point, hemp would be able to pass any drug tests our US friends required. Surprise! Welcome to the new hemp casino and watch out for the wet paint signs.

11). We can clearly see that the success of the Canadian hemp initiative four years later produced results contrary to forecasts by the same US agencies that had damned hemp as a loser fraud crop going nowhere.

It went somewhere.

These same agencies are now bailing as fast as they can to keep up as leaders of drug eradication. While they place anti-drug commercials on the "Simpsons" show to reach target audiences (who are admittedly the least susceptible to this sort of message) to discourage demand for illicit substances. Saying hello to hemp and saying no to everything else would be a public relations nightmare. If Homer Simpson wouldn't do anything altruistic for hemp, why should the DEA? (editor's choice, check out How the U.S. secretly paid Hollywood to put anti-drug propoganda into some of America's most popular TV shows, by Daniel Forbes at www.salon.com )

12) Just in case hemp comes on like dandelions, US agencies are in the process of scrambling to put some sort of hemp review in place themselves. Several US federal agencies have been watching the emergence of industrial hemp since 1994.

How did they all miss the impact of hemp when everyone else saw it coming?

Perhaps they knew all along and missed an early window of opportunity to get on top of hemp. It's as if US Drug Agencies were NASA orbiting Mars negotiating a movie deal before actually landing. What's a little waiting when you own the clock when a Billion-dollar crop can be had by merely dealing out another policy card? And not every card says zero. One might even find a ready-made 0.3% card and away we go. Pass GO and keep out of jail. As always, Cool True Canadian Hemp can meet any reasonable THC ceiling and show the paperwork for purity. Zero may be a little harder to swing

13) This is not the hemp inquisition no matter how it is painted to be by the hemp-friendly media. It is a legitimate review of the safety and value of a rapidly emerging industrial hemp sector that was not expected to really make it this far.

Yet demand-reduction programs against hemp cannot really expect to shape a hempophobic future and any further chastisement will only serve to present hemp as a target for even more radical shopping and thus, ensure hemp as cool forever. Now that's marketing

14) There is movement towards installing a proper US permit system overseeing the distribution of hemp products circulating in America. Regulating a full free market American hemp cultivation program would be an enormous tactical and administrative task if zero tolerance standards are to remain in force.

Zero THC standards might make domestic American cultivation impossible, even behind razor wire.

15) Regulating hemp that should have died in its Canadian crib is not their sole concern. Noisy, low value modern hemp is a bug on their windshield while racing to install techno ultima drug sniffing gates at all ports of entry.

This ambitious drug wall project is way, way behind schedule and 2000 AD arrived without a full menu of services plugged in. All the state level clamour in support of local hemp initiatives are powerless to act until the US Federal law says otherwise

16) Counter narcotic technologies may well be fully operative, but strategy and personnel were clearly not yet in place nor are they prepared to monitor hemp and divide the food seed from the sowing seed, human cuisine or birdseed or the salad oil from the from bath oil. Hemp is an unwelcome hassle for US Drug Enforcement agencies to recognise right now, much the less deal effectively with. Low cost, decisive Blanket Prohibition is the operative mode once again

17) This sour embrace for hemp is suddenly very bad news for Canadian producers as we look ahead to spring sowing and wonder how our cool hemp will be welcomed when it arrives at US Customs with a clean bill of health and a purchase order to deliver same to an American address.

18) There are no special provisions to rescue industrial hemp and without decisive energy to carry hemp away from drug war target into a completely new direction, official US policy seems to be saying thanks but no thanks for hemp.

19) There will not likely be any relaxing of the present US position regarding hemp prohibition on the grounds that it is cannabis until some future president can iron it out and pull a federal domestic cultivation package together.

The next presidential election is coming up soon, and domestic American hemp cultivation may not exactly be viewed as a critical crop for US farm strategies, Industrial Hemp has many strong supporters but it is not welcome by everyone as a new crop in America right now.

But as we have seen, US hemp policy can change direction without apology.

20) Until then, hemp remains a thorny rose to handle as international hemp offerings on American markets face an orchestrated discouragement from US Federal agencies concerned that the dangers of allowing industrial hemp would be celebrated by youth and mistaken with approval of growing marijuana on many levels.

These agencies are not empowered to consider with any other standards for safe hemp when their own directives require zero THC. This is how Rumpelstiltskin operates. Assigning the impossible task of achieving zero THC seems a little over reaching to a responsible de facto Canadian hemp industry that manages to satisfy every other planetary sanitary requirement to grow and prepare our hemp.

Check out the comprehensive 1999 Canadian industrial hemp crop and market wrap-up prepared by  the Hemp Futures Study Group in the forthcoming issue of the Journal  the Interntional Hemp Association - (back issues online at www.HempCyberFarm).Look for  Dr Sumachs' feature story  "Canadian Hemp History- Part One" when you buy the latest issue of Hemp Times Magazine, an expanded version of the New World hemp history presentation to HIA in September.

BioHemp Technologies Ltd .: North America's largest wholesaler of certified organic hempseed oil products: Drums, pales, bottles, capsules
New! Certified Organic Hemp Flour.
For sales and inquiries, call Jason Freeman at 604 255 7979,
or email: jfreeman@biohemp.com

______________________________________________________________________
© 1999 AHEM, ARTHUR HANKS. INDIVIDUAL ARTICLES REMAIN PROPERTY OF THE AUTHOR (S). NOT TO BE DUPLICATED FOR FINANCIAL OR PERSONAL GAIN. CONTACT US ABOUT REPRODUCTION RIGHTS.