Forced labor and cannabis – the fresh toast
In the past few weeks I have spoken to several entrepreneurs interested in growing cannabis in Africa for export to the US and other markets. It’s not hard to see their attraction to the idea: the areas in question have a suitable climate for growing cannabis, while inputs such as land and labor are relatively inexpensive. There is still a long way to go before it becomes as easy to import hemp into the US as it is to import oranges, but importing raw materials is the logical direction to follow when considering market forces.
As the cannabis industry continues to internationalize, it would be good to look into the subject of forced labor. Enforcement actions against imports of goods manufactured using forced labor have become a major focus of U.S. Customs and Border Protection (CBP). The cannabis industry has the opportunity to do everything right from the start and avoid the pitfalls of companies in other sectors.
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As a background, US law prohibits the importation of “goods, goods, objects and goods which are wholly or partially dismantled, manufactured or manufactured in a foreign country by convicts and / or forced labor and / and indented labor under criminal sanctions” (19 USC § 1307). Forced labor, in turn, is defined as “any work or service that is required of a person under threat of penalty for failure to perform and for which the employee does not volunteer”.
This ban has long been on the books, but in recent years it has really come to the fore. In addition to the ethical need to do whatever it takes to avoid getting involved in forced labor, U.S. importers must also be concerned about the potential for supply chain disruptions, fines, and even jail terms.
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For overseas business opportunities, cannabis companies need to focus on forced labor concerns. Obviously, any suggestions that forced labor be used by a supplier must immediately raise red flags. However, CBP demands a lot more from importers as those who see themselves as the target of a CBP (Focused Assessment, Audit) are learning.
The necessary work begins at home and companies have appropriate internal guidelines for forced labor. Relevant employees must be trained on this topic. The supplier review must include risk assessments for forced labor. Contracts with suppliers must expressly prohibit the use of forced labor and ensure access to internal or external auditors.
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While no industry should be relieved of the risk of their supply chain being contaminated by forced labor, agricultural production is of particular concern, as some recent forced labor cases demonstrate. As early as December 2020, the Supreme Court had heard arguments in a case against Nestlé and Cargill from the USA from six Malians “who claim to have been kidnapped as children and sold to cocoa plantations along the Ivory Coast”. A few months earlier, CBP had issued a forced labor order against a stevia producer in the Inner Mongolia region of China. However, cannabis companies need to watch out for all the products they import, not just the cannabis itself. This includes goods such as clothing and smoking accessories.
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Conducting a CBP audit is unlikely to be a pleasant experience for a company. However, preparing for the eventuality of a business is critical to a successful outcome. Furthermore, there is no reason to believe that CBP will harm the cannabis companies. As they say, however, be forewarned.
Fred Rocafort is a former diplomat who joined Harris Bricken after more than a decade of international legal experience, primarily in China, Vietnam and Thailand. This article originally appeared on the Canna Law Blog and was republished with permission.