Orcein was long used as a food dye before it was banned in "Europe" in 1977, according to the Wikipedia. Of course, Europe is composed of many different countries, so the statement in the Wikipedia seems suspect. Also, no explanation for the alleged ban is provided either in the Wikipedia or any other readily available source that I can find. What was the rationale or specific study that led to its being "banned" and exactly how was it "banned" in Europe given that in 1977 Europe had something like 20 different countries with no central administration.
Searching for Orcein on the EU website:
returns this publication, amongst others:
REPORTS OF THE SCIENTIFIC COMMITTEE FOR FOOD. First series. (European Commission).
The article that discusses Orchil and Orcein (page 17)
REPORT OF THE SCIENTIFIC COMMITTEE FOR FOOD ON THE REVISION OF THE DIRECTIVE ON COLOURING MATTERS AUTHORIZED FOR USE IN FOODSTUFFS INTENDED FOR HUMAN CONSUMPTION (1975)
claims that an ADI (Acceptable Daily Intake) could not be found (bottom of page 18), and then proceeds to outline the case for banning it.
Because it may be toxic.
HEALTH HAZARD DATA
The toxicity of orcein has not been quantified but other dyes in this group are known to be highly toxic and mutagenic, eg. thionine. Because of its chemical composition it is assumed to be an eye and possible skin irritant. Can be absorbed through the skin.
As for how it was banned in Europe before the EU existed, I would imagine that's a bit of an overstatement. It was probably banned by one or more of the larger, more influential countries and others followed suit, but I would be very surprised to learn that all of Europe followed that lead, particularly the Soviet Union and Eastern Bloc. A detailed answer to that part of the question is better suited for History.SE.