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Oregon Marijuana Extract Industry Temporarily Shuts Down Amid Legal Limbo

The Oregon Health Authority says the production of cannabis extract is now a class B felony.

An Oregon Health Authority announcement that unlicensed production of marijuana concentrates will be considered a felony has effectively shut down Oregon's extraction industry for more than two weeks.

At a March 15 forum hosted by the Oregon Cannabis Association at Refuge PDX, marijuana business owners were surprised to learn that, under a state law that went into effect March 3, unlicensed production of cannabis extracts—potent oils used to make concentrates and edibles— is considered a class B felony.

The law is a side effect of new regulations requiring marijuana concentrate manufacturers to be licensed by the Oregon Health Authority. Extraction companies will be allowed to operate legally after Friday, April 1—but that has left businesses in legal limbo for nearly a month.

The news has caused panic in Oregon's cannabis industry.

Genny Kiley, co-founder of Emerge Law Group, a Portland firm that specializes in marijuana law, says the new regulations—and subsequent shutdown—have had industrywide repercussions.

"Folks are halting operations," Kiley says. "It's the extractors, it's the edible makers, it's the whole manufacturing chain."

Carla Kay, a co-founder of Portland's Skunk Pharm LLC, a marijuana research company, says extractors are "scrambling" to comply with the laws. Skunk Pharm has shut down its extract production.

"It was really ugly for a while," Kay tells WW.

The Oregonian first reported on the new rules earlier this month.

"We stopped processing the minute we heard about it," says Tai Hornsby, who works in research and development at Portland Extracts. "We took all of our extraction equipment out."

But Hornsby says sudden shifts are not uncommon in Oregon's rapidly evolving marijuana laws. "It's pretty indicative," Hornsby says. "We're always on our toes."

In a news bulletin published March 18, the OHA clarified the cannabis extract law. "In the 2016 Legislative Session, the Legislature passed HB 4014, which makes the unregistered or unlicensed manufacture of marijuana extracts illegal," the bulletin says.

Five days later, after an industrywide uproar, the OHA sought to soften the surprise effects of the law with an amendment to the rules.

"A medical marijuana processing site that has submitted a complete application for registration with OHA is exempted from criminal liability," a March 23 bulletin states.

But extraction licenses will not be available until April 1.

The result is an awkward interval during which extractors are not allowed either to produce or apply to produce cannabis extract.

"We're all kind of standing in limbo right now," Kay tells WW.

Kay says that the shutdown will have long-term consequences for producers and patients.

"There are going to be some people who are not going to make it because of this month of being shut down," she says. "There are a lot of patients who are going without right now."

The shutdown may also have far-reaching effects for the marijuana legalization movement, Kiley tells WW.

"The rest of the country's looking to Oregon, too, to see how we're doing it," Kiley says. "I hope we're doing it right."