Soon to Be Banished From Grocery Shelves, Makers of Some Hemp-Infused Candies Are Threatening to Leave Oregon

State regulators say edible companies have, in effect, been selling a manufactured additive on grocery shelves.

Last year, Christine Smith put a new candy of hers on the shelves of New Seasons Markets. The Snooze Fruit Chews promised restful sleep.

In the past 18 months, Smith’s chews have become a tentpole of her Portland business, Grön Chocolate, a local maker of chocolate bars and fruit chews infused with compounds from marijuana and hemp plants.

Snooze Fruit Chews on grocery shelves make up one-third of Grön’s $3 million in annual sales outside of dispensaries. The gummies can be found at New Seasons and other health food stores, just like any other CBD product that isn’t intoxicating.

But the chew, which is infused with compounds derived from hemp, not marijuana, doesn’t contain only CBD, or cannabidiol. Its main draw is that it also contains CBN, or cannabinol: a derivative of hemp processed through a machine that prematurely ages CBD.

And while CBN does not have intoxicating properties, it is, according to the state cannabis regulators, an artificial ingredient.

Those regulators now say Smith and other edible companies have, in effect, been selling a manufactured additive on grocery shelves. And they’re removing CBN products from grocery stores July 1, limiting future sales to marijuana dispensaries.

The two biggest CBN edible makers in the state, Grön and Wyld CBD, are threatening to leave Oregon—the only state in the country that has raised a red flag about CBN—over the ban.

“We’ve been based in Oregon forever,” says Gabe Parton Lee, general counsel for Wyld CBD. “But if this is the way the state of Oregon addresses cannabis policy going forward, why would we be interested in sticking around here when we could find any other state that has a much more progressive view?”

The fight over CBN showcases the speed at which Oregon cannabis companies are discovering new uses for their plants—and the scramble by regulators to determine whether the risks to consumers outweigh the touted health benefits.

While known for decades, CBN became a popular ingredient in edibles only two years ago, when several companies created new production methods for processing it. With the July 1 rule, Oregon became the first state to ban the substance from grocery shelves—an example for other states to prioritize consumer health over the profits of cannabis companies, the Oregon Liquor and Cannabis Commission says.

“It’s not the standard of any other food or dietary supplement ingredient—let’s sell something for 18 months, and if it’s OK, keep selling it,” says TJ Sheehy, director of data and research for the commission. “The whole premise is that we don’t experiment on humans when we sell things.”

Two laws passed by the Oregon Legislature in 2021 authorized the OLCC to develop more oversight over the cannabis industry. On Dec. 28, the agency finalized its resulting slate of new rules and regulations.

Some rule changes relaxed standards for the cumbersome seed-to-sale tracking system, softened penalties for minor rule violations, and raised the limit for how much THC makers could put in edibles.

But the new CBN rule is clearly the most controversial. It applies to any substance that the OLCC deems an “artificially derived cannabinoid”—that is, any compound derived from cannabis that undergoes a molecular change during processing.

That includes delta-8-THC, a highly intoxicating substance derived from the hemp plant that was previously unregulated at the state or federal level.

It also includes CBN.

Edible makers say CBN sold on grocery store shelves helps users sleep without any intoxicating effects. Because it doesn’t get anyone high, they argue, the commission should leave CBN alone. “It’s worrisome to see the OLCC is using its new authority to arbitrarily ban things,” says Parton Lee of Wyld.

But state regulators argue that any chemistry experiments on hemp need government supervision—and, until then, shouldn’t be sold next to Burt’s Bees lip balm in grocery stores.

“Whether it’s intoxicating or not, that’s kind of a secondary concern,” says Steven Crowley, the OLCC’s hemp specialist. “The primary concern is whether it’s manufactured in a way that’s safe to consume.”

Alleh Lindquist, co-founder of FloraWorks, a Portland processing company that started producing CBN in 2019, says the commission’s apprehension about chemically altered cannabinoids is legitimate. Yet he still thinks the state is overreaching.

“From a chemist’s perspective, I see the concern, that you can make anything and sell it to people,” says Lindquist. “But the OLCC made all [cannabinoids] fall into the same category, whether intoxicating or non-intoxicating.”

Come July 1, 2023, the rules get even stricter.

Beginning on that date, CBN products can only be sold at dispensaries if they get a federal designation declaring them “Generally Recognized as Safe” or if they get approval by the U.S. Food and Drug Administration as a “new dietary ingredient.”

That’s unlikely. The makers of CBN candies believe their best strategy is to self-publish toxicology and health data showing their product is safe—a GRAS self-determination—and avoid a judgment by the feds. Even then, the OLCC says it will require a copy of the evidence.

For the already reeling hemp industry, the new rule is a nightmare.

In 2019, the price for a pound of hemp was $43. By late 2021, it had dropped to $1.50.

CBN edibles were one remaining market for hemp. According to a data firm who looked at sales across four states, CBN products that also contain THC generated $8.4 million in revenue in the first nine months of 2021 (this could be an undercount, as the firm only looked at sales of the top 20 leading brands).

Grön’s CBN products, including the non-intoxicating chews at New Seasons and the CBN chews sold in dispensaries (which contain THC and are intoxicating), make up 30% of Grön’s total annual revenue of $14 million.

“It’s causing us to question whether or not Oregon is a great place for us to base our headquarters out of,” says Smith, whose biggest buyer for CBN products is New Seasons. “On the open market, I am considering shuttering our CBD business, or just letting it sleep for a while, because of this ban.”

And Parton Lee says Wyld is exploring legal options “to see if there is a way to prevent the enforcement or the implementation of the rule in July.”

Sheehy thinks they’re bluffing. He says the industry threatened to leave the state before when the OLCC banned some additives after nearly 20 users fell ill, and two died, during a rash of vape-related illnesses in 2019.

“We had additives companies saying that if these rules were passed as written, ‘We wouldn’t be able to comply with them, we’ll move out of state,’” says Sheehy. “Even the people who said those comments are now complying with our rules, and those products are still on the market.”