Items appear grayscale while being held or dropped on the ground.

Items are not rendering correctly while held by an entity or dropped on the ground, happens both with and without experimental toggle. Instead of being fully colored they are grayscale colored. ** 
Steps to reproduce:

1. Hold any item or throw it on ground.

Expected result:

• Items have color and are visually correct.

Actual result:

• Items are rendered grayscale without colors.

Screenshots:



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