Alaskan Seizures of CBD Products Leave Retailers in Limbo

By New Frontier Analysts

A case study in confusion came out of Alaska last week with news that officers of the state’s Alcohol and Marijuana Control Office raided several dispensaries of their cannabidiol (CBD) oil.

As reported by the Associated Press, the regulators received a tip from the U.S. Postal Service about leaking packages containing more than 1,000 vials of CBD oil destined for seven cannabis retail stores in Anchorage, Houston, Kenai, and Wasilla, respectively. Officers raided the stores and confiscated all their CBD extracts.

The confusion apparently stems from a December 2016 DEA ruling that any extract “from any plant of the genus Cannabis” is de facto a “marihuana (sic) extract,” and thus that the CBD extracts require lab testing before they can be sold in dispensaries.

Unfortunately for the retailers, what some of them had been selling without issue since last summer adds to the legal limbo they have been in while awaiting local government approval to sell THC-laden cannabis. CBD products were the only inventory items they could meanwhile sell, so the seized inventory represents a major sunk cost for the small business owners, especially where it constituted a dispensary’s sole revenue stream. While the dispensaries were reportedly the only businesses raided, CBD extract products can be commonly found in nearby health stores and other niche retail settings, as well as over the Internet. Owners of the raided businesses were further distraught since they had been given little information while the investigation was described indefinitely as “ongoing.”

For many, hemp and CBD products posed a promising bridge between cannabis industry insiders and outsiders. The combination of CBD extracts’ medicinal qualities with no psychoactive properties have helped win support for their widespread legalization. Unfortunately, with such products now targeted, Alaskan consumers may feel a renewed stigmatization toward CBD and hemp specifically, and the state’s cannabis industry generally, while their retailers can ill afford to idly await some clarity rather than continued confusion.

New Frontier Analysts

Our data scientists drill deep with rigorous analytics to provide insight into key trends and market opportunities. We track the state of cannabis and its regulation in all major legal markets.