Oregon Implements Cannabis Vaping Product Rules

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Vaping Products Derived from Cannabis and Hemp Subject to
New Additive Restrictions

On Friday, October 4, Oregon
Governor Kate Brown issued Executive Order 19-09.
The order directs the Oregon Health Authority (OHA) and the Oregon Liquor
Control Commission (OLCC) to immediately adopt emergency rules, effective for
180 days, banning the sale of all flavored vaping products. Additionally, the
two agencies are to take immediate action in the future to address any sources
that are found to be causing or contributing to vaping-associated lung injuries
or death. Furthermore, OHA and OLCC are to develop plans within 90 days for
consumer warnings, ingredient disclosures, testing, and other similar actions.

Later that day, the OLCC clarified
via a press release
that
it, “will act on temporary rules proposing to ban licensed marijuana retailers
from selling any cannabinoid (marijuana and hemp) products containing any
flavor, including non-marijuana terpenes.” The statement continued, “In this
interpretation the OLCC does not include terpenes derived from marijuana as a
“flavor.” The temporary rule will also prohibit licensed processors from
manufacturing or distributing those same products.”

Additionally, “the OLCC will
provide further guidance to licensees about taking inventory of flavored or
non-marijuana terpene-containing products, removing them from retail store
shelves and setting those items aside.” The press release also warns that
compliance checks will be undertaken to ensure that the new emergency rules are
being followed.

While there will undoubtedly be
some significant impacts on Oregon’s legal cannabis market due to the executive
order and subsequent emergency rules, the Oregon Retailers of Cannabis
Association (ORCA), an industry group, stated, “We are very grateful that the
Governor did not implement a complete ban on cannabis vaping products like
Massachusetts.”

Still, those who manufacture vape
products with flavors or non-cannabis derived terpenes will face high hurdles
in order to continue operating in the legal market. According to Willamette Week,
such businesses cannot simply stop adding flavors to their products. New
packaging and labeling must be approved by OLCC, and new products must clear
required testing before being brought to market, a process that can take
between two and four months.

Although manufacturers of flavored
vape products and those containing non-cannabis terpenes will be impacted
directly, other consequences will reverberate up and down the supply chain.
Growers that have arrangements to sell their flower and trim to such product
manufacturers may have to find new buyers, an unfortunate prospect with the fall
harvest in full swing. Additionally, shops that have significant amounts of the
soon-to-be-banned products in stock appear as if they will be forced to take a
loss on that inventory, at least for the time being.

The Willamette Week report quotes
one industry participant as stating that he estimates over half of the cannabis
vape cartridges sold in Oregon will be subject to the ban due to containing
flavorings or non-cannabis terpenes.

It remains to be seen whether
consumers who typically purchase flavored vape products will switch to those
that remain allowed or move to purchasing flower or other products. Increased
demand for flower could buoy wholesale prices in Q4 of this year, when they
usually fall with the harvest. However, if fewer processors are taking in plant
material from growers, it is possible that farmers that find themselves without
buyers may end up offering their wares at lower rates in order to secure at
least some portion of the revenue that they had planned on.

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