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The medical marijuana industry is exclusive to Louisiana. Will legislators open the market?

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As medical marijuana moves from a niche product to a multi-million dollar market in Louisiana, an increasing number of lawmakers and advocates are questioning the strict limits on licenses to grow and sell the drug.

The most powerful effort will soon be made to change the isolated structure of the legislature. Several prominent lawmakers have introduced bills, some in competition with one another, to reform the system. They all cite similar goals: expanding access to patients and lowering prices, which have drawn complaints from patients and advocates.

The path the legislature takes will determine whether the eleven current licensees – two farmers and nine pharmacies – will retain their increasingly valuable exclusive rights, or whether other companies will be allowed into the club. There are also several proposals to dramatically change the way medical marijuana is regulated, giving the Louisiana Department of Health oversight authority over the state’s agriculture agency.

As always, a host of political factors come into play – including the entry into the market by Boise Bollinger, one of the state’s richest businessmen and most generous political donors.

The two growers are two companies leased to the agricultural centers LSU and Southern University, respectively, that were granted exclusivity in an unusual arrangement as part of primary medical marijuana legislation. Lawmakers involved in the effort said the university’s agricultural centers were chosen because they were struggling financially, and the move would appease some of the opponents who backed the farming centers.

Many lawmakers would like to see schools retain this right, which brings with it millions of income. This is especially important for supporters of Southern University, which received nearly $4.2 million from the arrangement, according to a spokesperson.

A spokesperson for LSU said it has received $5.4 million from its growing partner for “research investments, minimum financial payments, annual license fee reimbursement and performance bonds.” LSU’s campus brings in nearly seven times the total revenue generated by the south campus.

Three informed sources said that if lawmakers stick to the farmer’s college model, several universities including Nichols State, McNeese and Grambling have expressed interest in getting into the medical marijuana game. No bills have been introduced to do this, but amendments could achieve this goal.

For the first three years, the only lobbying member for LSU’s growing partner was John Davis, the company’s president. Davis is the husband of Representative Paula Davis, a Baton Rouge Republican. But in the past year, Good Day has steadily assembled a powerful lobbying corps, hiring 11 other lobbyists to represent its interests before the legislature and governor. Ilera Holistic Healthcare, the farmer that Southern leases, has three members of the lobbying team.

Since Good Day took over as LSU’s growing partner, in 2020, the group has invested tens of millions of dollars in the massive expansion of its Ruston operations, where the company says a new, cavernous facility will be able to meet market demand.

A significant investment from Bollinger, a prominent GOP donor and shipbuilder, helped the company do just that.

Bollinger said in an interview that he made a “substantial commitment” of tens of millions of dollars to Good Day. Organizers approved the new ownership stake, made through Riverbend Agriculture LLC, last year. Bollinger said the move was just an investment opportunity: He loved being a Louisiana business, in a new market with only two licensees.

Bollinger said it was “too early” to increase the number of licensed farmers. The two occupants argued in public hearings—with the support of their organizer Mike Strain, Commissioner of Agriculture—that they had the ability to fulfill Louisiana’s demand.

“We try to educate lawmakers on anything they want to know,” Bollinger said. “I think there’s a pretty good consensus based on what we’ve heard that it’s too early to expand the incremental licenses.”

Not everyone agrees.

A wave of bills has been raised

While this year’s medical marijuana bills have a wide gamut, legislation that would increase the number of growers and pharmacies will likely attract the most attention.

Representative Larry Bagley, a Stonewall Republican who has been suspicious of medical marijuana, introduced legislation to increase the number of pharmacy licenses from 10 to 20, and another bill to remove the cap on increased licenses, while moving the program to LDH. State law currently allows 10 permits for pharmacies, but the Louisiana Board of Pharmacy has only granted nine permits, each in a different area of ​​the state.

Most importantly, Bagley is the chair of the House Health and Welfare Committee, which listens to many medical marijuana bills. He said in an interview that he was willing to wait a few years before licensing new growers, to give existing licensees time to cash in on their investment. But he said there should be a freer market.

“I’m not sure why anyone would be against it,” he said. “We definitely don’t want a monopoly… no one else will be able to compete against them.”

Representative Joe Marino of Gretna introduced a bill last year to give Jefferson Parish County Economic Development a third exclusive farm license, a kill bill in the Bagley Commission. Marino said he is no longer interested in granting licenses to specific organizations or people. Instead, he introduced legislation to add six more grower licenses through a bidding process that would favor Louisiana rather than out-of-state people. He also proposes adding 15 more drugstore licenses, and removing a ban on campaign donors from obtaining a farmer’s license, which he said would allow more Louisiana residents to compete for a license.

“The question is not whether we should expand,” Marino said. “The question is why do we have a monopoly on medicine?”

Bagley and Marino agree that proposals to add growing licenses would be more controversial than legislation to license more pharmacies.

Speaker Pro Tem Tanner Magee, of R-Houma, introduced a sweeping bill that would reform regulations for the program, move it from Strain’s office to LDH and simplify testing, which has been a complaint of farmers for years. The bill will also add more pharmacy permits as the market grows, but for now, they’ll go to existing pharmacy owners. Maggie said he is still working through this component and the code will be amended to likely open it to others.

Maggie said he’s targeting two of the three parts of the program — pharmacies and the regulator — while leaving production licenses alone. If the price does not go down after the bill is passed, we “know who is at fault,” he said.

“No one’s trying to lock him up forever,” Maggie said. “It’s making sure that we’re growing at a pace that the market can sustain.

“I’ve told every stakeholder, all 11 companies, that this is not going to be like gaming,” he added. “I’ve told them all that they have to accept this expansive industry and at some point other players will come into this space… I don’t want the public to think we’re creating a good network boy. At the same time, this is a very regulated product. I don’t know if it’s The public is comfortable opening up to anyone who wants to (produce) it.”

Times have changed

State Senator Fred Mills, a Republican and longtime Parks pharmacist, is widely seen as the father of Louisiana’s marijuana program, after deftly guiding it through a skeptical legislature at the end of Governor Bobby Jindal’s tenure.

Mills said he initially wanted the product space to be very competitive. But he had to compromise, so he settled on two licenses that would be given to LSU and Southern, whose schools were struggling with money at the time. The limited number placated law enforcement groups who were concerned about monitoring the sources of legal production.

Now, with opponents’ concerns greatly eased, Mills said that “of course” the program should be expanded. But he also said the decision should be made based on the data – the amount of demand.

“Until these pharmacies explode at the seams, having too many dispensaries in the same market can be a huge problem,” Mills said. “Because the work of these pharmacies is expensive.”

He said that if legislation expanding the program reaches his committee, he will consult with regulators to see if the numbers justify the expansion.

The test of woes

In the early years of the program, the two farmers fought with Strain over his regulatory power over them.

While that battle raged, Strain’s product testing emerged as a sticking point as the flower — the popular smokeable form of the drug — finally hit shelves this year.

Records from Strain’s office show Ilera Holistic Healthcare, the company Southern leased, had 330 pounds of flower failure tests due to yeast and mold problems. The failures occurred between late November, when farmers were preparing to put out flowers, and late January. Since then, Elera products have passed all the tests, and Tabitha Irvine, who oversees medical marijuana for Strain, said the products that failed have been processed and subsequently approved.

Records also show long delays in testing, up to 17 working days, at the start of flower releasing. But that number has improved since January, with an average of six working days until results come back. “It’s not the department that gets in the way,” Irvine said.

While a number of drugstores ran out of the product early in the flower offering, growers didn’t blame Strain—at least not publicly. But they privately told drugstore owners that the problems can be traced back to the USDA’s slow testing process.

Jacob Irving, Elira’s director of compliance and government affairs, said in a statement that the company fixed the mold problem, which he said could be caused by “extended storage of raw marijuana product in the possession of any party.”

David Kirsch, Good Day’s vice president of operations, said in a statement that his company has a pass rate of over 99% in the test. Kirsch added that the company has a healthy stock of flowers on hand, and said Bollinger is one of the “many investors” in the company, noting that he has passed regulatory tests.

Neither Good Day nor Ilera responded if they supported the Magee bill or any other law, but Kirsch said Good Day supports “responsible legislative and regulatory efforts to improve patient access to medical marijuana.”

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