The Oregon Health Authority on Tuesday warned Oregon's medical marijuana dispensaries not to accept cannabis extracts, like butane hash oil, from unlicensed processors.

The health authority won't launch its licensing process for extract makers until next month, a delay likely to disrupt the marijuana processing industry, which churns out popular butane hash oil, or BHO, and CO2 oil for the medical market.

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Already, Bend-based Lunchbox Alchemy, which makes BHO, has halted production. The company's products are sold in 220 dispensaries statewide.

For now, extracts may be sold only to medical marijuana patients and their caregivers. A bill awaiting the governor's signature would allow anyone 21 and older to buy extracts under Oregon's so-called early sales program.

The early sales program allows recreational consumers to purchase cannabis from dispensaries, which are regulated by the health authority. Starting later this year, the Oregon Liquor Control Commission will oversee recreational sales.

Cameron Yee, Lunchbox's owner, said he will shift production to marijuana concentrates, which are less popular but do not involve high heat or high pressure, elements used in extract manufacturing.

Concentrates are made using mechanical techniques, such as sifting, and solvents like water or vegetable glycerin instead of heat and pressure.

"I have to do whatever I need to do to keep my doors open," said Yee, who employs about 20 people. "It's really burdensome. It's causing a lot of hardship on me, lots of sleepless nights."

Under a bill signed this month by Gov. Kate Brown, unlicensed production of marijuana extracts is considered a felony. The provision is intended to target homemade butane hash oil operations.

Just last week a butane-fueled explosion rocked a Parkrose home. Portland fire officials said three children, including an infant, were in the home at the time. No one was injured.

The health authority plans to roll out a licensing process for commercial extract companies, but Andre Ourso, manager of the state's medical marijuana program, said Tuesday that the application won't be online until April 1.

Applying, he said, is just the beginning of a "long process" for getting registered. In all, he said the process could take "a few months."

"The application has to be reviewed," he said, adding that companies will need to ensure they meet local rules and fire safety requirements. "They still have to get their product tested for pesticides through an accredited laboratory."

For now, he said, dispensaries may continue to sell products currently on their shelves to medical marijuana patients.

"We just don't want new products coming in from an unregistered processor," said Ourso, who spoke at an Oregon Cannabis Association forum Tuesday evening on the state's rules.

Oregon medical marijuana patients and anyone 21 and older may legally possess BHO and other extracts and concentrates, which are readily available in dispensaries -- and on the illicit market.

Processors who want to sell their products on the medical market fall under the health authority's rules. The state's liquor commission has a separate application track for processors who want to sell products on the recreational side.

Amy Margolis, a Portland lawyer with the Oregon Cannabis Association, said Wednesday that the medical market and the early sales program are essential to extraction companies' ability to survive.

"People who run processing businesses have an enormous financial output," she said. "They employ a lot of people."

Word of the rule spread through Oregon's marijuana industry Wednesday. At Foster Buds in Portland, extracts make up about one-third of sales. Manager Ken Martin said he'll sell what's in stock and wait until the industry is licensed.

"Our hands are tied," he said.

-- Noelle Crombie

503-276-7184; @noellecrombie