STATEMENT OF MATT RENS,

REPRESENTING RENS HEMP CO., BRANDON, WIS.

MR. RENS: We have no objection whatever to controlling narcotics. Personally I am a producer, a farmer, and also a mill owner, a hemp mill owner, and we grow this hemp solely for the purpose of fiber. It is American hemp, which we sell to the Navy and to other industrials in the East, the spinning companies.

We have prepared an interpretation of this bill as we see it, and also a general summary of the discussion and suggested changes and reasons for these changes. This is quite lengthy. I do not know as you want to take the time for me to read it. We might have it ins the record and give it to you folks.

SENATOR BROWN: We would be glad to have you present the statement and put it in the record.

(The memorandum presented by Mr. Rens. is as follows:_

Interpretation of H.R. 6906 -- Marihuana (Hemp) Bill

This attempt to interpret H.R. 6906 is intended to help legitimate hemp producers and processors to understand these provisions in H.R. 6906 that directly affect them.

RELATTION TO PRODUCERS

There are in the United States two rather distinct classes of hemp producers; one produces hemp for seed; and the other produces hemp for the fiber that is in the stalks The same person may produce for both purpose, yet the usual situation is for persons to produce for one or the other purpose only. the bill H.R. 6906, affects each class of producers alike so far as taxes and registrations are concerned.

Occupational Registration of Producers

Each producer of hemp, regardless of whether he is producing for seed or for fiber, is required to register with the internal revenue collector in the district in which the producer is locate. While the specific procedure is not stated in the bill, it is assumed that the producer will obtain the required forms for occupational registration, and that the will execute these forms and deliver them to the collector of internal revenue, when this is done and the required tax in paid , the producer is then registered. (Sec. 2a-5c)

There is nothing in H.R. 6906 to indicate the exact procedure; such as whether the forms must be purchased, whether they may be obtained by mail; or whether they must be obtained in person. Neither is there any indication of the specific information that must be supplied; such as acreage grown, or to be grown; intended disposition of the harvested crop, or the like.

Transfer Registration of Producers:

The producer of hemp seed can transfer the seed which he produced to any other registered producer without additional registration or tax, or without an order from the purchaser (sec. 6b-5). The producer of hemp see. can also transfer to any nonproducer, who is a registered dealer, upon the presentation of an official (written) order for; or he may sell to an unregistered dealer on the presentation of a properly executed official order form (sec. 6a)

The producer can deliver this mature hemp straw (stalks) to any person without any additional registration or tax and without any order on an official form from the purchaser of the straw (stalks) (sec. 1b)

Producers Taxes: Any person who grows hemp plants, regardless of the purpose for which they The tax is paid to the collector of internal revenue of the district in which the crop is grown and the amount as now provided in the bill is five dollars per year for each producer. (sec. 2a-2)

RELATION TO DEALERS

There are several classes of dealers, including registered producer-dealers, registered dealers, who are not producers, and dealers who are neither registered as producers nor registered as dealers. Also there are dealers in seed, and the dealers in hemp straw (mature stalks). Dealers in hempseed will be affected by the proposed legislation while dealers in hemp straw (mature stalks) are exempted.

Occupational registration of dealers: A dealer in hempseed who is also a registered producer of hempseed, is not required to register (reregister) as a dealer (sec. 2a-5). Those not registered as producers, who wish to deal in hempseed must register as a dealer (sec. 2a-5)

Transfer Registration of Dealers: All dealers who purchase hemp seed, except registered producers, are required to use official order form (register each purchase) (sec. 6b-5)

The foregoing means that, if anyone who is not a registered producer, wishes to purchase seed, he must execute and official blank for each purchase which he makes and pay a tax in each case. this applies, regardless of whether or not the person from whom the seed is purchased is a registered producer. The official forms (order blanks) are bought from the collector of internal revenue and must be prepared (filled out) by the collector (not by the dealer) (sec. 6d)

The foregoing indicates that dealers, not registered as producers, who wish to purchase hempseed, must visit the internal revenue collector, supply him with whatever information is required, and the collector must enter this information on the order form.

Dealers' Occupational tax: Any persons dealing in hempseed, who is not a registered producer must pay and occupation tax of three dollars per year.
this is paid in connection with is registration (sec. 2-5)

Dealer's Transfer Tax: Any person who deals in hemspeed and who is not a registered producer pays a transfer tax. This is in addition to his occupational tax. The amount of the transfer tax is one dollar per ounce.

The foregoing means that anyone who is not a registered producers and wishes to purchase (transfer) hempseed is required to pay a tax of one dollar per ounce.

It is also provided in the bill that any person, who is not registered either as a producer or as a dealer, can purchase hempseed from a registered producer or dealer by presenting an official and properly executed order form, and by paying a tax of $100 per ounce.

GENERAL SUMMARY AND DISCUSSIONS

The utilization of hemp fiber is an old, well established, and legitimate industry in the United States. Every person engaged in the hemp industry would be affected by the proposed legislation. The farmer-producer of hemp for fiber -- the person who plants, grows, and harvests the fiber crop-- would be obliged to register as a producer and to pay the producer's occupational tax. He would probably register and pay the tax at the time he obtains the seed. The seed would be distributed to him by the hemp milling company. The producer of hemp for fiber would be obliged to submit to no other registration, nor pay any additional tax, in order to distribute all of his hemp straw (mature stalks) to the hemp company; thus the procedure for growing and handling the crop for fiber is reasonably clear cut and understandable.

Hemp companies in order to obtain the seed and distribute it to the farmer-growers would be obliged either to qualify as a producer or as a dealer. To qualify as a producer, the hemp company would be obliged to grow hemp on its own account and to register as such and to pay the producer's occupational tax. To qualify as a dealer, a hemp company would be obliged to register and pay the dealer's occupational tax, and in addition sell only against properly executed order forms.

Relative to the requirements concerned with the producing, distributing. and purchasing hempseed, the proposals in the bill are decidely complicated and involved. In an attempt to trace the procedure from the producer of hempseed to the final consumer, who plants the seed for fiber purpose, we arrive at the following: The person who grew hempseed would be obliged to register and pay an occupational tax of five dollars. 'As a registered producer, he could sell seed to any other registered producer without any further registration, or payment of taxes for the crop year concerned. If he were to sell to any person other than a registered producer then the person to whom he sells would be obliged to present a properly executed order form (a form filled out by the collector of internal revenue). This purchaser would have to register and pay a dealer's occupational tax of three dollars and in addition pay a tax of one dollar per ounce for the see purchased. This of course, means that no on, except those registered as producers, could do business in hempseed. In other words, this means that the only persons who could buy and sell hempseed would be those registered as producers; thus a registered fiber hemp grower in Illinois or Wisconsin would be obliged to buy his hempseed from a registered hempseed grower in Kentucky. This would exclude all legitimate dealers in hempseed other than those who are producers as well as dealers. It would also exclude hemp milling companies from acting as dealers unless they want to qualify as producers.

Relative to the proposed tax on producers, there appears to be no good reason why the amount should be five dollars per year for each producer. Such a tax would force all small producers out of the business of growing hemp and the proportion of small producers in considerable. The tax should not be more than one dollar per year for each grower,

SUGGESTED CHANGES IN H.R. 6906

These suggestions are proposed in the interests of those persons only who are connected with the legitimate hemp industry in the United States, including hem fiber milling and processing companies, farmers who produce hempseed, and farmers who produce hemp for fiber.

1. I ever instance in which the word "marihuana" is used in H.R. 6906, the term "Cannabis" should be substituted.

2. Viable hempseed should be excluded from the definition of Cannabis (marihuana); thus excluding all transfers of hempseed, but not excluding producer of hemp seed (sec. 1b)

3. the definition of "producer" should be clarified so that there can be no misunderstanding as to what persons are producers. (sec. 1c)

4. The occupation tax for producers should be reduced from five dollars per year to one dollar per year (Sec. 2-2)

REASONS FOR PROPOSED CHANGES

1. As used in the bill (H.R. 6906) the term "marihuana" is synonomous with true hemp, the scientific name of which is Cannabis sativa L. The chemical substance found in hemp which produces the narcotic effects has been officially termed "Cannabis indica", and is known throughout the world as Cannabis indica. Since botanists now recognize hemp as consisting of one species, the term "indica" should be discontinued; thus in referring to hem in a narcotic sense, the term "Cannabis" is most appropriate and more universally understood. There can be no good reason for using the term marihuana, which is purely a localized term of Mexican (Indian) origin, and has no more general significance and is no more universally recognized that "bhang", "hashish", and similar local terms. Furthermore, in all national narcotic acts and in all state narcotic acts the term Cannabis is used. Also in the Senate bill (S. 326), introduced in the 75th Congress on January 25, 1937 the term "Cannabis" is used.

2. By excluding hemp seed from the definition of cannabis (marihuana) no registration or tax will be necessary by those who transfer, import, or otherwise deal in either viable or sterilized hemp seed. No evidence has been obtained, either by scientific investigation or by practical observation to indicate that hemp seed, as handled in the trade, contains an appreciable proportion of the chemical substances which cause the narcotic effect. The substances producing the narcotic effect have never been specifically isolated or discovered. No one knows what specific chemical compound or compounds produce the narcotic effect. Biological tests on experimental animals are therefore necessary. A recent and thorough-going inquiry indicates that there are no biological tests or other researches which show that narcotic-producing substances are present in the seeds themselves in a sufficient proportion to be harmful, in fact, there is nothing that shows that true seeds cause any of the narcotic effects.

The technical evidence given in the hearings on H.R. 6385 shows that the seed does not contain an appreciable proportion of the narcotic substances. The hearings also show that the seed was considered so harmless as to warrant omitting sterilized hemp seed from the definition of marihuana; thus in H.R. 6906 sterilized hemp seed is excluded (compare sec. 1 b, H.R. 6385 with sec. 1 b G.R. 6906.) There is also no evidence, either practical or technical, to show that hemp seed has ever been used to produce the drug effect.

All of the foregoing indicates very clearly that hemp seed as such is not a source of marihuana. The requiring of registration and tax payment by producers who transfer hemp or dealers who trade in hemp seed must be construed as for the sole purpose of obtaining information concerning where and by whom hemp as a plant is being grown. It seems reasonable to assume that little or nothing would be accomplished by registering and taxing the transfer of hemp seed; that seed which would thus be registered is not the source from which illegitimate producers of handlers would obtain their supply; that those who use hemp for illicit use would not report such transactions nor is it likely that any transactions that such persons would make would be detectable through the registering and taxing of legitimate dealers in hemp seed. Illicit producers either carry over the seed from year to year, or obtain it from others who deal in the same traffic, or obtain it from plants that grow in a wild state in practically all sections of the United States. Another thing, hemp plants are noticeably conspicuous. They are large and readily observable, and thus wild patches and all other areas can be easily detected if any attempt is made to do so, and it seems reasonable to assume that the use of Cannabis as an illicit drug will not be controlled unless there is a thorough-going surveillance of the growing plant.

In consideration of the foregoing, it is sincerely contended that any tax or registration required of those who deal in hemp seed to be used for legitimate purposes would not reduce to any extent whatever the use of hemp for producing Cannabis (marihuana).

3. The term "producer" as defined in H.R. 6906 includes both the persons who cultivate and grow the plants as a crop, and also those who transfer (sell or deal in) use, compound, process or consume Cannabis (marihuana).

In the definition there is no distinction between a true producer and a dealer, yet the tax on a producer is different than that on a dealer and the whole set-up of the bill rather definitely distinguishes between the producer and the dealer.

It is urged, therefore, that the term "producer" be limited to include only those persons who plant, cultivate, harvest, or in any way facilitate the natural growth of marihuana. There should be no mention in connection with the term "producer" of such functions as transferring, or making use of the plant. If it seems proper to include volunteer hemp (which grows without planting); then the definition should specifically include such hemp. (sec. 4b)

4. In H.R. 6906 it is proposed to tax each producer of hemp (Cannabis or marihuana) five dollars per year. The tax proposed for dealers is three dollars per year. and the tax proposed for physicians, dentists, and the like is one dollar per year. Now there does not seem to be any good reason why a producer should be taxed any more than a physician, dentist, and the like. It cannot be contended that a tax of five dollars would be necessary in order to finance the enforcement of the bill because the income obtained, if producers were taxed five dollars per year, would not be greater than $3,500 per year. A reasonably accurate estimate of the number of producers in the United States in 1937 shows that there are approximately 300 in Illinois, 120 in Wisconsin, 50 in Minnesota, 200 in Kentucky, and 10 in Texas -- a total of 680, which if taxed five dollars each, would provide an annual revenue of $3,400. Now, this clearly indicates that, as a source of revenue, a tax of five dollars per grower would be of little consequence. On the other hand, individual growers in many cases would be severely taxed, for in some sections it is common practice for farmers to grow very small acreages.

In the Kentucky River bottom, where hemp is grown for seed, an acreage per grower of less than one acre, and as little as one-fourth acre, is not unusual. Also in Wisconsin, where hemp is grown for fiber only, farmers may grow as little as one acre and they frequently grow as little as four acres. For such small growers, the tax would amount to from $1.25 per acre to as much as $20 per acre. Thus, this bill, if enacted, would eliminate all small growers. Thus it seems reasonable, fair, and in every way in keeping with the intention of the proposed legislation that the occupational tax for producers of hemp should not be more than one dollar per year per individual producer.

CONCLUDING STATEMENT

It is maintained that the foregoing proposed changes would in nowise defeat te purpose of the bill or weaken its effectiveness. Sufficient authority is contained in section 10a to allow the Treasury Department to prescribe legislation covering reports, records, and the like. In addition, the proposed changes if made would permit those now engaged in the legitimate phases of the hemp industry to continue as heretofore without any serious disturbance.

SENATOR BROWN: With the general purposes of the bill you are in agreement?

Mr. Rens: Yes

SENATOR BROWN: You suggest a few modifications to it?

MR. RENS. Yes, sir.

SENATOR BROWN: Have you discussed that with Mr. Hester or anyone in the Treasury Department?

MR. RENS: We have written to Mr. Anslinger, and we have sent a copy of this to Mr. Edwards, of the Division of Cotton and Other Fibers, of the Bureau of Standards. He has a copy of this also.

SENATOR BROWN: Mr. Rens, unless you have something else to present you are excused and we thank you.

MR. RENS: No, not particularly, I think this covers it. As a farmer, I am interested.

SENATOR BROWN: We will take this into consideration.

MR. RENS: The reason I would state for reducing the fee from five dollars to one dollar is this, that there are so many farmers in Kentucky especially that grow this. That is where we get our seed, in Kentucky. They have perhaps one-eighth or a quarter of acre. It would discourage those farmers from growing hemp

SENATOR BROWN: How much would they get from say an eighth of an acre in way of total return?

MR. RENS: Perhaps 12 or 14 bushels.

SENATOR BROWN: What would that be worth?

MR. RENS: They may get two or three dollars a bushel. I do not think they get more. We have to pay more. We have to pay the man over there, the dealer.

SENATOR BROWN: That is all he would get at his farm?

MR. RENS: Yes, and another thing, the fiber, our farmers will hesitate. It will hurt us in getting the acreage for the mill. We have 600 acres, personally; that is, the mill has; and we have some 60 growers. Now, the tax I think we will have to pay for the grower will come to one man. The grower will hesitate.

SENATOR BROWN: Mr. Hester, do you hear what he says to the effect that farmers in Kentucky that produce for his mill, some of them grow as small an amount as one-eighth of an acre and their total return at the farm would be somewhere from twelve dollars to fifteen dollars?

MR. RENS: Bushels -- bushels per acre.

SENATOR BROWN: How much in dollars?

MR. RENS: Sometimes the yield will be less -- maybe from $20 to $30.

SENATOR BROWN: $20 to $30?

MR. RENS: An acre; yes.

SENATOR BROWN: Well, of course, taking $5 out of $20 -- is a high percentage.

MR, HESTER: They would just have to add that five dollars tax onto the price that this gentleman would pay for it.

MR. RENS: Then you have first the price of the seed, and then you have your transfer again. Another thing is the transfer of this. If the man that buys it from Kentucky is a delaer, and not a producer, that will mean one dollar an ounce. That man is out of business.

SENATOR BROWN: I do not follow you there.

MR. RENS: As we see this bill, the interpretation of that is that the dealer, who is not a producer ----

MR, HESTER: Let me say this. I think I can case the committee time on that. We did not know until you have just made the statement there, and I think Mr. Johnson brought it to our attention, that there are some dealers in this country who act as a broker for seeds. Now, we have no objection to an amendment in this that would take care of that situation.

SENATOR BROWN: Exempting them?

MR, HESTER: Yes, so there will not be any transfer tax.

SENATOR BROWN: Will you take care of that?

MR, HESTER: Yes. We will take care of that so they will save that.

MR. RENS: I see no reason why growers should be charged five dollars and the dentists or the doctors one dollar. They use the drug which you are trying to prohibit, which you are tryng to control.

Now, we harvest our hemp in the state when it is still green, with no seed in itt and we field-wet it. All these leaves are gone. There is no marihuana drug there in the way we handle it in Wisconsin, and still the grower must pay. We often have grower that only have say, two or three acres of hemp.

SENATOR BROWN: Do you think, Mr. Hester, an arrangement whereby you would cut that five dollars down one dollar for fractions of an acre would be any serious impediment?

MR, HESTER: Just how do you mean, Senator Brown?

SENATOR BROWN: Suppose you made it five dollars for an acre or more, or something like that, and one dollar for fractional parts of an acre.

MR, HESTER: The question would arise then as to whether that would be a proper classification under the due process clause of the Constitution.

SENATOR BROWN: Will you give that consideration?

MR, HESTER: We will be very glad to look into that.

SENATOR BROWN: I can see something in your point there.

MR. RENS: Personally I have grown 100 acres or better. Well, that is five dollars. but I have men that have two acres or three acres.

SENATOR BROWN: It is the fellow as you said who has a quarter or an eighth of an acre who has a small amount, who will have to bear a proportionately heavier burden.

MR. RENS: The real purpose of this bill is not to raise money, is it?

SENATOR BROWN: Well, we are sticking to the proposition that it is.

MR. RENS: It will cost a million.

SENATOR BROWN: We thank you, Mr. Rens.

The next witness will be M.G. Moksnes.