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.