Generated by SassMeister.com.

input.scss

$something: #900;

.foo {
    background: var(--bg, $something);
}

.interpolated {
    --bg: #{$something};
}

.noInterpolated {
    --bg: $something;
}

output.css

.foo {
  background: var(--bg, #900);
}

.interpolated {
  --bg: #900;
}

.noInterpolated {
  --bg: $something;
}

settings.json

{
  "sass": {
    "compiler": "dart-sass/1.32.12",
    "extensions": {},
    "syntax": "SCSS",
    "outputStyle": "expanded"
  },
  "autoprefixer": false
}