Oregon Cracks Down on Lab-Made Cannabinoids

Regulators in Oregon will enact a ban on cannabinoids produced through laboratory processes, making the state the first in the nation to restrict the sale of so-called synthesized cannabinoids at grocery stores and other general retailers. The ban from state cannabis regulators, which goes into effect on July 1, prohibits the sale of lab-made cannabinoids including delta-8 THC at supermarkets, drug stores, and other retailers that have not obtained a special license. The new regulations will go into effect only weeks after a federal appeals court ruled that delta-8 THC and other cannabinoids derived from hemp are legal under federal law.

Delta-8 THC and minor cannabinoids derived from hemp have become business across the country since the federal legalization of hemp agriculture and processing with the 2018 Farm Bill. Although these cannabinoids are generally found in hemp at very small concentrations if at all, many of the substances can be created in a lab through the chemical conversion of CBD. But the Oregon Liquor and Cannabis Commission (OLCC) is concerned about the safety of the process and the chemicals used to carry it out and more than a dozen states have instituted bans on delta-8 THC.

Steven Crowley, the hemp and processing compliance specialist with the OLCC, told Oregon Live that delta-8 THC and other cannabinoids became increasingly popular with hemp processors after a glut of CBD flooded the market.

“The supply of CBD was outstripping the demand for CBD,” said Crowley. “And so, the people who had CBD on hand were looking for other ways that they could market it. People started working on different products that they could convert the CBD into. This is where you get the delta-8 THC products.”

FDA Issues Delta-8 THC Warning

Last month, the Food and Drug Administration and the Centers for Disease Control and Prevention issued a warning about delta-8 THC, noting that more than 100 reports of adverse effects caused by products containing the cannabinoid were recorded over the span of 15 months. And the OLCC is concerned about the safety of the chemicals used to process CBD into other cannabinoids and whether trace amounts of the substances can be retained in finished products.

“We have testing for pesticides,” said Crowley. “We have testing for residual solvents from the extraction process. We don’t have any testing for any of the whole universe of chemical reagents that you could use to synthetically turn one cannabinoid into something else, or for any of the byproducts of that reaction.”

The new OLCC regulations prohibit the sale of products containing synthesized cannabinoids at general retailers beginning on July 1. At that time, the sale of such products will be allowed exclusively at retailers licensed by the OLCC, but only after they have undergone rigorous safety testing and receive approval from the  FDA.

The decision by the OLCC is opposed by companies that produce and market cannabinoids derived from hemp including Wyld, an Oregon firm that manufacturers gummies with the cannabinoid CBN, which can be processed from CBD and has been shown to promote sleep. Gabe Lee, general counsel at Wyld and Wyld CBD, said that the new regulation will help the company’s bottom line and have a negative impact on consumers, as well.

“The Wyld elderberry CBN gummy is the number one selling gummy on earth right now,” said Lee. “It’s 20%-30% of our revenue depending on the state. People love it.”

Instead of a complete ban, Lee said that Oregon should draft best practices to be followed in the production of hemp-derived cannabinoids.

“There are ways to regulate it and there are definitely ways that we can ensure that the end product that’s being sold is subject to enough safety testing and safety standards to ensure, to the degree possible, the safety of the product without any sort of larger federal research grants or anything like that,” Lee said.

The attorney also noted that with the ban, consumers who have already been using the products without problems will see higher prices at licensed retailers.

“They may not want to go shop at an OLCC retailer or pay the prices that are up there,” Lee said, “because they are definitely charging a higher price in the OLCC regulated market than they are at New Seasons,” referring to a chain of neighborhood grocery stores popular in the Pacific Northwest.

Appeals Court Rules Delta-8 THC Is Legal

The new regulations go into effect only weeks after a federal appeals court ruled that delta-8 THC and other cannabinoids derived from hemp are legal under the 2018 Farm Bill. In an opinion from the 9th Circuit Court of Appeals released last month, Judge D. Michael Fisher wrote that products made with delta-8 THC are generally legal under federal law, which defines hemp as “any part of” the cannabis plant, including “all derivatives, extracts, [and] cannabinoids,” that contains less than 0.3 percent delta-9 THC by weight.

Federal statute “is silent with regard to delta-8 THC,” the court said in its 3-0 ruling.

“Regardless of the wisdom of legalizing delta-8 THC products, this Court will not substitute its own policy judgment for that of Congress,” Fisher wrote in the appeals court’s unanimous decision.