Albany CBD Company Sparks Interstate Commerce Controversy

An Albany marijuana oil extraction company had most of their assets seized and is currently under investigation by Linn County officials. Police allege the company was illegally shipping marijuana across state lines, but the company says it was working within current law.   

The case is being watched by a still-new hemp industry, which was opened up by the federal government in late 2018, as to how local law enforcement will react to the change. So far, Linn County’s hostility is not a good sign for the hemp business.  

“Linn County has decided it doesn’t want any part of hemp,” said Bear Wilner-Nugent, an attorney for Key.  

Key Compounds LLC is an Albany-based company which processes hemp into cannabidiol (CBD) oil, a non-psychoactive compound produced by marijuana which has become popular in commercial products. Key, led by CEO Alex Reyter, had raised over $7 million and hoped to create, and their clients spanned from Walgreens to WalMart.  

In January 2019, a UPS worker reported to police that four packages addressed to Key Compounds LLC shipped from a Massachusetts company smelled like marijuana. According to the company, one container in a large shipment contained waste product from the extraction process, which raised the level of THC (the controlled substance commonly associated with marijuana) above 0.3 percent, the legal limit to be shipped across state lines.   

A field test, which cannot determine the precise level of THC in the product, came back positive. The resulting investigation ended with the seizure of most of Key Compounds’ assets. Police have even tried to obtain a search warrant for Key’s attorneys.  

“I still believe that what they had was marijuana and marijuana extract by definition,” wrote Linn County prosecutor Coleen Cerda in an email to Reyter’s attorneys obtained by reporters.  

Linn County’s aggressive stance in this case is precisely the kind of local enforcement issues many early hemp businesses feared getting in the way, despite the 2018 federal Farm Bill clearing the way for the interstate trade of low-THC hemp products.  

Gregory Newman, the narcotics deputy who inspected the packages described CBD products as “questionable medicines” in an official police report.  

Linn County District Attorney Doug Marteeny said he could not comment on the specifics of the case, but released a statement. He said he believed it was “pretty darn clear” that CBD oil is a “marijuana product” and that the law states you can’t ship “marijuana products” across state lines. Key CEO Alex Reyter put it a different way.  

“If you are in manufacturing and you have a choice of counties, you should never go to Linn County.” he told reporters. “They have declared a war on a federally legal industry.”  

By Ian MacRonald