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Oregon Cannabis Processor Hit With CBD Oil Violations

May 14, 2018
(PLAINVIEW/iStock)
Correction: An earlier version of this story incorrectly stated that Modern Medicinals would be exiting the cannabis industry following the expiration of its Oregon cannabis processor license. The company says it has not left the industry and remains committed to producing CBD oil. “We still source and process from the same genetically superior Oregon CBD flower as we always have—only now we are able to sell it to anyone through our [Oregon Department of Agriculture] license,” a company representative told Leafly. The story has been updated to reflect the change and include comments from Modern Medicinals.


An Oregon cannabis company was hit with a number of violations for allegedly delivering CBD oil to unlicensed retailers, state cannabis regulators announced this week.

Portland-based Modern Medicinals routed CBD oil to at least two health and wellness centers in Oregon, the Oregon Liquor Control Commission said on Monday. The company also allegedly falsified track-and-trace data in order to allow the products to be diverted.

Oregon cannabis producers are exploring growing hemp for CBD in light of rapidly falling cannabis prices.

According to the Oregon Liquor and Cannabis Board, Modern Medicinals delivered the CBD oil to Mandala Medicine & Wellness, which offers acupuncture and massage therapy in Portland, and Salem Hypnosis Solutions, which uses hypnosis in therapies to promote things such as weight loss, smoking cessation, stress reduction, and memory improvement.

Regulators announced Monday that Modern Medicinals has accepted a letter of reprimand for the charged violations, withdrew its request for a hearing, and allowed its processor license to expire. Regulators ratified the stipulated settlement on April 19.

In an email to Leafly, a company representative stressed that Modern Medicinals will continue to produce CBD oil under a Oregon Department of Agriculture license. The company denied willfully disregarding the law.

“Operating under the advice of our then-cannabis attorney, we drafted a position paper that spelled out a legal pathway for bringing CBD-only products into the non-dispensary market,” the representative said. “We immediately stopped this practice when notified by the OLCC that our position was not in keeping with the OLCC rules. (And we strongly disagreed with the OLCC assertion that we willfully falsified data to deliver product.)”

In addition to three violations for the alleged diversion, Modern Medicinals was hit with a fourth violation for claiming its CBD oil, which was produced as an adult-use cannabis product, had “comprehensive pain relief properties” and other “medicinal effects.”

Related

Oregon Cannabis Growers Turning to Hemp as CBD Extract Booms

More and more state-licensed cannabis producers are exploring growing hemp for CBD oil production in light of rapidly falling cannabis prices in Oregon. Since 2015, the price for a gram of cannabis has fallen about 50%, according to a report by the Oregon Office of Economic Analysis. Meanwhile, farmers can reportedly make more than $100,000 an acre growing hemp.

As grower Jerrad McCord told the Associated Press, “Word on the street is everybody thinks hemp’s the new gold rush.”

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Leafly Staff

Leafly is the world’s largest cannabis information resource, empowering people in legal cannabis markets to learn about the right products for their lifestyle and wellness needs. Our team of cannabis professionals collectively share years of experience in all corners of the market, from growing and retail, to science and medicine, to data and technology.

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  • John E

    I used to get this oil for my dad. Then my dispensary said they couldn’t stock it because the company been slapped with violations. Now I know why…

  • Brad Swn

    Unfortunately, the regulations are more strict intra-state in Oregon (and Washington) then if you did that type of business interstate, with businesses in other states. Until there is a federal solution, these types of actions will continue to occur.

  • Jace Robinson

    the industry of LEGAL hemp products is hard to regulate and we should focus on puting cash strapped farmers back to work, the dea shouid decrim weed and focus on poppy

    • E.L. Bl/Du

      Agreed! We ALL know they could stop it if they wanted to. All the do-gooders cant stop the flow of Illegals. HA! Yet instead they concentrate on confiscating James White (above comment) CBD oil. Thats just nuts IMHO

  • James White

    How to sensibly buy LEGAL cbd oil? Because I got a letter saying customs has confiscated my package two times already and I’m pissed.

    • Never_Speechless

      walmart sells it. Any vitamin store sells it too.

  • The point of this article is unclear. Is the point That they were shutdown for making claims about it’s medicinal properties or is the point that hemp is more profitable than marijuana?

    • oldtimer

      I agree!

      It appears the lack of good editing may be the issue.
      The last paragraph probably belongs to another article.

      I have repeatedly complained, to the powers-that-be at Leafly, of all the typos, incorrect spellings, glaring errors in syntax/grammar and other errata that appear in this journal.
      It displays, to me at least, a sloppiness and an attitude of who gives a damn.

      I’ve always fervently believed that proper editing will either make or break any manuscript, journal or
      document.
      It also should be done by a person, who was not the author, but devoting their entire oversight to editing only.
      Maybe this person or persons, so appointed, should be non-cannabis users.

      But, I’m an old codger; possibly in the new world of writing/journalism these things are considered
      unimportant.

    • justadbeer

      Seems pretty clear to me. The allegations state:

      Delivering CBD oil to unlicensed retailers.

      Allegedly falsified track-and-trace data in order to allow the products to be diverted.

      In addition to three violations for the alleged diversion, Modern Medicinals was hit with a fourth violation for claiming its CBD oil, which was produced as an adult-use cannabis product, had “comprehensive pain relief properties” and other “medicinal effects.”

      Also, they were not shut down. Modern Medicinals has accepted a letter of reprimand for the charged violations, withdrew its request for a hearing, and allowed its processor license to expire.

      There’s a good lesson here for all growers and would be growers. Follow the regs to the T. Do not for a minute think that someone isn’t watching you. Most growers are hauled into court on some technicality for unwittingly doing something wrong, like the guy in Michigan who took his plants outside to spray for mites. Busted. If you follow the law, you’ll fair much better. Granted Modern Medicinal’s appears to have completely tried to circumvent the laws by falsifying data and got everything they had coming to them. Weeding out shady business will only help the industry

      • Silvia San Nicolas

        This is right on point and clear. Falsifying data and selling to non-licensed operations is an unsustainable business model. This is an example of one fate that could fall on a non-compliant operator. Another fate could be much worse, including criminal charges depending on the circumstances. All types of operators need to follow the regulations to a T and make sure their partners and associates are following applicable laws as well. An ounce of prevention is worth a pound of cure.

  • Auryan

    The CBD oil market is a shit show….I have been researching info on it for months (casually) and there is soooo much conflicting info on CBD, that I would personally be cautious on just jumping into CBDs. The ‘opinions’ are all over the place from the best way to process it, the best percentages of CBDs, Full Spectrum or pure…on and on…plus the best hemp plants and parts of the plants to process. Then throw in the shady regulations within the US and …well it has left me scratching my head as to who to believe. Even if I had millions to invest, I would still hold back on it till there are better dialogues on CBD. Don’t believe me? Just do a google search and read some of the conflicting info out there. Not saying people are lying, just that the overall rhetoric is inconsistent and at times polar opposite of each aspect of CBD lore.

    And one more thing…in Oregon, at the beginning of the summer of 2017 the price per gram of CBD oil was super high, by the end of the summer it plummeted and left some growers with no where to sell it (the market was flooded), not to mention the difficulty on finding someone reputable to process it…lots of flakes in the cannabis world.

    Bottom line…if you get into CBDs, know that it’s not necessarily a get rich quick direction…BUT HEMP has lots of other product potentials that will surely expand its value. Once you get the dollar signs out of your eyes you will be able to sanely create a business utilizing the vast potential of Hemp.

  • What isn’t noted here was that this was (from my reading) High CBD Medical Cannabis Oil, not Hemp Oil, so this represents diversion.
    If they’d been a licensed hemp producer, this penalty wouldn’t have occurred (the the unsupported medical claims could have still got them into trouble).

  • shmuelman

    And it’s a good thing too! Unlicensed CBD’s on the street can only lead to an epidemic of stoned zombies streaming across the Hawthorne Bridge.

  • Modern Medicinals

    Modern Medicinals is very much still in business and continues to make the same great CBD Oil you’ve always come to expect.

    We did not (as some have suggested) willfully disregard the law. Operating under the advice of our then-cannabis attorney, we drafted a position paper that spelled out a legal pathway for bringing CBD-only products into the non-dispensary market.

    When notified by the OLCC that our position was not in keeping with their rules, we immediately stopped this practice. And we strongly disagree with the implication that we willfully falsified data to deliver product.

    Modern Medicinals CBD Oil has always been THC-free and 100% Bio Available. We still source and process from the same genetically superior Oregon CBD flower as we always have – only now we are able to sell it to anyone! We still track our plants from the farm to the bottle, still rigorously test for purity & potency, and still provide the best product we possibly can to the most number of people.

    Please visit modern-medicinals.com to learn more!

    Modern Medicinals

  • gomez K
    • Jeorge

      Very good company by the way. Their CBD Rich oil has literally changed my life. I was able to abandon some strong opiates, and my health is doing just fine. Highly recommend..