Oregon Hemp: New Rules (Part 3)

13 Jan Oregon Hemp: New Rules (Part 3)

The end of 2021 was marked by significant regulatory changes adopted by the Oregon Liquor and Cannabis Commission (the OLCC), including new rules for hemp and cannabinoids. Today I will cover a few of the big changes affecting artificially derived cannabinoids, including CBN and Delta-8 THC.

In the big picture, Oregon stakeholders knew new regulations would be adopted in December 2021, but most hoped for less stringent final rules. Unfortunately for the industry, the OLCC decided to proceed with the adoption of rather stringent regulations, including burdensome rules impacting the manufacture and sale of finished hemp products sold in the State.

Two of the most noteworthy changes impacting these products include:

1. the prohibition on the sale and distribution of “adult use cannabis items” to minors as well as restrictions on the ability to sell these products outside the recreational market, which I covered last week; and
2. burdensome requirements imposed on “artificially derived cannabinoids,” including the popular and lucrative cannabinoid: cannabinol (CBN), which is the topic of today’s post.

Reason for artificially derived cannabinoid rules

Back in March 2021, the OLCC released a public statement in which the agency expressed growing concern about the general availability–including to children–of unregulated, intoxicating products derived from hemp. Delta-8 THC was a primary example. To address this public health threat, the OLCC initiated the rulemaking process for Delta-8 THC and other psychoactive components of hemp that then fell outside the OLCC market. It also adopted emergency rules in July, which banned the sale of these “artificially derived cannabinoids” to minors under the age of 21.

Yet, in the month following the enactment of this emergency rules, the OLCC expanded the definition of the term “artificially derived cannabinoids” to include “semi-synthetic cannabinoids created from chemical reactions with cannabis-extracted substances,” including non-psychoactive cannabinoids like CBN.

Authorized artificially derived cannabinoid-related activities

The new OLCC rules distinguish between intoxicating and non-intoxicating artificially derived cannabinoids by imposing different sale restrictions on these products. Specifically:

• Beginning July 1, 2022, the sale of artificially derived cannabinoids won’t be allowed if sold outside of the OLCC recreational market; and
• Following the July 1 deadline, the sale of intoxicating artificially derived cannabinoids, such as Delta-8-THC, will be strictly prohibited inside and outside the OLCC market.

It is worth pointing out that the cutoff for the sale of CBN product is extended to July 1, 2023. Until then, OLCC licensees can continue to transfer, sell, transport, purchase, accept, return, or receive CBN and products containing artificially derived CBN as long as:

1. The CBN product was manufactured in a facility with an Oregon Department of Agriculture (ODA) food safety license by an OLCC processor or ODA hemp handler;
2. The CBN product is not intended for human inhalation;
3. The CBN product is going to be sold at an OLCC-licensed retailer; and
4. The CBN product meets the labeling requirements in OAR 845-025-7145.

After the July 1, 2023 deadline, OLCC licensees will be able to transfer, sell, transport, purchase, accept, return, or receive artificially derived cannabinoids and products containing artificially derived cannabinoids, including CBN products, provided the following conditions are met:

1. The artificially derived cannabinoid is not impairing or intoxicating;
2. The artificially derived cannabinoid or product is not intended for human inhalation;
3. The artificially derived cannabinoid was manufactured in a facility with an ODA food safety license by an OLCC processor or ODA hemp handler;
4. The artificially derived product meets the labeling requirements in OAR 845-025-7145;
5. The artificially derived cannabinoid has been reported as a naturally occurring component of the plant Cannabis family Cannabaceae in at least three peer-reviewed publications; and
6. The manufacturer of the artificially derived cannabinoid provides OLCC with a “Generally Recognized as Safe” (GRAS) determination for the artificial cannabinoid.

Why the new rules hurt

Most of all, requirement #6 above is incredibly burdensome. This is because: (1) the FDA has yet to establish a federal regulatory framework for hemp-derived products (also, the agency has yet to approve any premarket approval submitted by hemp companies), and (2) this pre-approval process is long and onerous.

Many in the Oregon hemp industry see the OLCC’s decision to impose a GRAS determination requirement on artificially derived cannabinoids as arbitrary and unfair. Indeed, the OLCC does not impose such GRAS determination on naturally derived cannabinoids sold in the state. But regardless of where hemp companies making and selling artificially derived cannabinoid products stand on this issue, all will be required to make the necessary changes to comply with the new OLCC rules.

For previous posts covering the new OLCC rules, check out the following: