Programmatically apply sensitivity labels to file - Can fetch labels but not apply them

I am trying to apply Office sensitivity labels to a file in a .NET web application. I based myself mainly on this demo project: https://github.com/Azure-Samples/MipSDK-File-Razor-Sample

My application registration has the correct permissions as specified in that project. I can fetch the active labels, but when I try to apply the label to a filestream, I get the following error:

Microsoft.InformationProtection.Exceptions.ServiceDisabledException: 'Calling principal is forbidden to perform the operation, CorrelationId=616b22f2-cbf0-4636-b959-a90adc68456f, CorrelationId.Description=FileHandler, HttpRequest.Id=d8d6666c-4b94-4ee1-8b4b-d7b1645acadf, ServiceDisabledError.Extent=User'

I can't figure out what the root cause of this error is, if it's something I can change in my code or if there are still permissions missing from my app registration.

This is the relevant function:

public MemoryStream ApplyMipLabel(Stream inputStream, string labelId)
{
    IFileEngine engine = GetEngine(_defaultEngineId);

    // Create a handler with a hardcoded file name, using the input stream.
    IFileHandler handler = engine.CreateFileHandlerAsync(inputStream, "HrData.xlsx", false).GetAwaiter().GetResult();

    LabelingOptions options = new()
    {
        AssignmentMethod = AssignmentMethod.Standard
    };

    // Set the label on the handler.
    var label = engine.GetLabelById(labelId);
    handler.SetLabel(label, options, new ProtectionSettings());

    MemoryStream outputStream = new MemoryStream();

    // Commit the change and write to the outputStream.
    handler.CommitAsync(outputStream).GetAwaiter().GetResult(); // ERROR HAPPENS HERE
    return outputStream;
}