Oregon Cannabis Processor Hit With CBD Oil Violations

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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.”

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.”