The packages smelled strongly of marijuana.
That's what a UPS employee told the Albany police and a Linn County Sheriff's January 18, when four packages addressed to Key Compounds, a CBD processing company in Albany, arrived from Massachusetts.
This call derives a month-long criminal investigation of the company treating hemp to create cannabidiol oil, leading to the search and seizure of most of the company's assets. Investigators even tried to obtain a search warrant for the law firm representing Key Compounds, a very unusual move.
"I still believe that what they had was marijuana and marijuana extract by definition," wrote Linn County prosecutor Coleen Cerda in a May 30 email received by WW at one of Reyters lawyers.
The Linn County Sheriff's Office refused to comment because the investigation is still open, but the case highlights another aspect of the confusing nature of running a business where state and federal laws are not aligned.
The Congress opened the industrial hemp industry as it passed the Agricultural Law of 2018, allowing farmers to send hemp products across state lines as long as they do not contain more than 0.3 percent THC, but put the burden on local law enforcement that may not have expertise in for hemp, to recognize the difference between what is legal and what is not. Hemp is different from cannabis because it does not contain enough THC to give users a high.
The problem is important beyond the Willamette Valley. Hemp manufacturers and processors across Oregon see a promising future for the industry in value-added products extracted from the underlying agricultural product, as Oregon winemakers make common grapes for highly sought after wines.
But as the Linn County case shows, there is still confusion and sometimes hostility around Oregon's latest agricultural industry.
Key Compounds is an Oregon processor of CBD, one of the chemical compounds found in cannabis and industrial ham plants, and has been in business for two years. The 10-person company treats hemp in CBD oil, removes the trace amount of THC found in hemp, and sells the oil to everyone from Walgreens to Walmart. Run by Reyter, his company had earned $ 7 million and was aiming to establish an industrial hub for hemp production in Albany for two short years.
"Industrial hemp is the first growing industry in Oregon. It generates significant jobs," reyter says. "[CBD oil] goes to shelves of CVS and Walgreens and other national chains."
Reyter got into trouble because he sends his CBD oil to Phasex Corp., a North Andover, Mass., Company that filters the oil, removes impurities and most THC before returning it to Key Compounds in Oregon.
On January 18, Phasex returned nearly 63 pounds of oil to Key Compounds after removing THC. However, a container in the stack contained the waste product generated by the process. And this waste product had a THC level that was illegal to send across state lines.
Reyters Portland lawyer, Bear Wilner-Nugent, says the waste was sent in error and should have been destroyed in Massachusetts. Otherwise, Wilner-Nugent says his client followed federal and state rules around producing CBD.
The CBD processor and his lawyer see the investigation as the start of a fight against the hemp industry.
"Linn County has decided it doesn't want any part of the hemp," says Wilner-Nugent. "This is the launch of their attacks."
Reyter says he has been open with the police authority for his intention to destroy any THC extracted from his CBD oil. Nevertheless, he may be subject to prosecution, and most of his business assets were seized as evidence in a March 15 drug raid.
"This will have a significant chilling effect on the industrial hemp industry, possibly not only in Linn County, but in Oregon," reyter says. "Basically, law enforcement in Linn County says we manufacture THC simply by separating molecules. If you are in production and you have a choice of counties, never go to Linn County. They have declared a war on a federally legal industry. "
Gregory Newman, a linn county sheriff's drug pharmacist who examined the scent of cannabis wafting from Reyter's packages showed some skepticism of hemp that goes as far as calling CBD products" dubious drugs "In a police report. 19659002] Newman tested the products in the packages with a field drug test that changed the color to indicate the presence of marijuana.
Wilner-Nugent says it doesn't matter if the field sample was correct – CBD- oil is legally allowed to contain up to 0.3 percent THC, and the test cannot determine how much of the psychoactive chemical is present in the oil.
Linn County District Attorney Doug Marteeny tells WW that he cannot comment Specifically, about the study ion because the case is in progress, Marteeny discussed his views on the charging of cannabis and hemp businesses running out of Oregon's laws, either intentionally or accidentally.
"We are a nation of laws, "says Marteeny. "If some do not like these laws, they have to submit the legislative department to change them. Companies that are careful to follow all criminal laws and local rules do not want to compete against non-cautious companies."
Robert Bovett, who helped draft the draft bill for the Agricultural Government in 2018 as legal adviser to the Oregon Counties Association, says that Reyter & # 39; s company took a risk by sending some of its product across state lines.
"Technically, you can't be shipping marijuana items out of state," he says. "And the definition of" marijuana articles "actually covers industrial hemp and hemp raw materials that exceed 0.3 percent of THC. It's pretty darn clear."
Hannah Chinn helped report to this story.