Louisiana has taken the first steps to become the deep south’s first state with a comprehensive, working medical marijuana model.
Two local universities recently opted to become a cultivator of medical marijuana. A lengthy regulatory and legislative process will ensue, but if seen through to completion, Louisiana will become the nation’s 26th state to allow medical marijuana.
The potential for marijuana to have medical benefits was addressed in Louisiana laws as early as 1978, but university officials said it wasn’t until two laws passed this legislative session that the medical marijuana framework became feasible.
SB 271, signed by Gov. John Bel Edwards in May, changed legislation’s wording from doctors “prescribing” medical marijuana to “recommending” it instead. SB 180, which takes effect in August, adds protections for qualified patients in legal possession of medical marijuana.
“The legislation this year makes it possible. We know we can produce and there will be a market for it,” said Southern’s Interim Chancellor for the Agricultural Research and Extension Center’s Adell Brown.
Advocates believe medical marijuana will provide an alternate treatment option for qualified patients, as well as increasing revenue and job opportunities in the state. Those opposed to cultivation in the present moment cite concerns with the state’s existing legal framework and continued federal liabilities.
Finding a cultivator
Current legislation allows for a single cultivator of medical marijuana in the state and also allows for up to 10 medical marijuana pharmacies to dispense the product. Rules for growing and production, product distribution and doctor recommendation are being drafted by the Louisiana Department of Agriculture and Forestry, the Louisiana Board of Pharmacy and the Louisiana State Board of Medical Examiners, respectively.
But the state law was clear in granting first right of refusal to two universities— Southern University and Louisiana State University— which have both opted to go after the state’s single cultivation license.
“This will help with our enrollment, our finances and will allow us to provide a public service to the citizens of Louisiana,” said Brown. “We’re excited for this opportunity.”
LSU Vice President for Agriculture Bill Richardson said the university would receive no additional state funding for the initiative and that the university would seek a third party provider so as not to deplete the Agricultural Center’s internal resources.
“The funding needed is yet to be determined but, regardless of the amount, the LSU AgCenter does not have the resources to invest in this initiative,” Richardson said in a written statement, adding, “We do not anticipate there being an issue in finding third parties willing to provide funding and properly capitalize this endeavor.”
Communications spokeswoman Frankie Gould said the LSU AgCenter, and not the college itself, would be responsible for producing medical grade marijuana. Richardson said the project would most likely be self-supporting and also would generate income. But he was careful to keep the university’s focus on research and not revenue.
“This project is for medical benefit. We are producing a medical product, so pricing of the final product will have to be reasonable and affordable for the patients that need it,” Richardson wrote. “We do not wish to be involved in the distribution and retail sales of the product in any form nor in any marketing campaign.”
Department of Agriculture and Forestry Commissioner Mike Strain said the state is taking a similar view —despite the fact that the agriculture department could get up to 7 percent of revenue generated from medical marijuana sales.
“There is no goal to raise revenue for the state. The whole idea is to produce this product at as low a cost as possible for these patients who need it,” Strain said. “Their income is not going to cover this, and they are already sick. We are not looking at this as an income generator.”
The Louisiana Board of Pharmacy’s Executive Director Malcolm Broussard said economic benefits of a working medical marijuana program in the state would include additional revenue and increased employment opportunities.
In addition to receiving 7 percent of revenue from medical marijuana sales, the Louisiana Department of Agriculture and Forestry — under proposed legislation — would also be able to collect a $100,000 annual licensing fee from the state cultivator and a $100 annual permit fee.
Broussard said a third draft version of the marijuana-related rules, presented for approval to the Board’s Regulation Revision Committee on June 28, has elected to use the nine existing districts established by the health department for where the state’s 10 permitted pharmacies might open — meaning revenue would also be generated at the parish level.
“The sales at the pharmacy will be taxed, so there will be some modest tax revenue for the local, municipal, parish and state taxing authorities,” Broussard wrote in an email. “As to the pharmacies, the price they charge patients for marijuana products will depend on what the grower/producer charges the pharmacies.”
Broussard said the proposed regulations also require that medical marijuana be dispensed by a licensed pharmacist in a marijuana pharmacy— so each pharmacy would have to employ at least one person.
“This could grow over time if the number of eligible medical conditions is increased by the legislature,” Broussard said.
Louisiana’s market for marijuana
Current legislation recognizes three qualifying conditions: cancer, glaucoma and spastic quadriplegia—a form of cerebral palsy. A number of additional conditions — including HIV, AIDS, Crohn’s Disease, Hepatitis C and wasting syndrome — were added in SB 271.
The Marijuana Policy Project, a Denver-based policy and market analysis consultant group, commissioned a report about the likely market for medical marijuana in the state, as well as any liabilities inherent in the current regulatory structure. The report was commissioned through the Marijuana Policy Group (MPG) on behalf of the Louisiana Cannabis Association.
The report estimated between 3,900 and 4,700 patients in Louisiana would seek medical marijuana for the state’s currently recognized conditions, with up to 63,000 additional clients should additional conditions —excluding chronic pain — be approved in the future by the Louisiana Board of Medical Examiners.
Research from other states with medical marijuana programs showed conservative users consume 1 gram of medical marijuana per day— the equivalent of about two joints, according to a July 2015 High Times article, while heavy users use between 1.3 and 1.9 grams a day, creating a potential demand in Louisiana for between 1.4 and 1.7 metric tons of medical marijuana and a potential $13.5 million dollar market.
The MPG estimated that with a 4 percent excise tax, between $500,000 and $600,000 would be generated in tax revenue each year for the state with current qualifying conditions.
Adopting further proposed medical conditions could increase the demand to a $153 million market with between $4.7 and $8.6 million generated in tax revenue, according to the MPG projected data.
A comprehensive medical marijuana program could also prove an incentive for individuals with qualifying conditions to remain in the state.
“Some citizens have told us this may allow them to stay in Louisiana instead of having to move to some other state where these products are already available,” Broussard said.
Projecting future outcomes of research into marijuana’s potential therapeutic uses is equally difficult.
Dr. Jay Marion, LSU Health Interim Chair of Internal Medicine and a palliative care expert, said the Drug Enforcement Administration still classifies marijuana as a schedule I drug — a dangerous substance with a high likelihood for abuse and no accepted medical value.
“Even though the state said OK, the federal DEA doesn’t give permission,” Marion said. “There are several diseases that there is some evidence that it helps, but because it’s a schedule I drug, it’s very difficult to do research.”
Broussard said the DEA plans to decide whether marijuana should be reclassified under federal law in the first half of 2016.
Meanwhile, Louisiana laws do not specifically exempt growers, pharmacy or staff from facing felonies for growing and distributing marijuana.
“As to the liabilities…marijuana is still classified by the federal government as a schedule I controlled substance. As such, it is illegal to possess it or even prescribe it, much less grow it, process it, sell a product to a pharmacy, hold it in a pharmacy or dispense it,” Broussard said. “No state law can give them immunity from prosecution under federal law.”
David Brown, president of the Sensible Marijuana Policy for Louisiana organization, said the state’s single cultivator license was also problematic.
“It isn’t like this in any other state, and it doesn’t make good sense,” David Brown said.
The MPP said in its report that a single grower system and uncertain doctor and pharmacy adoption of the program could significantly impede patient access.
“The law only allows for one cultivator. We don’t think that is adequate access,” said Maggie Ellinger-Locke, a legislative analyst for MPP. “Allowing more than one cultivator would make us more competitive. We’re in favor of that.”
University officials also are still trying to figure the process out.
“A business plan is being developed. Investigation and review of other medical marijuana initiatives in other states are ongoing,” Richardson said. “Many critical issues will need to be resolved, such as product pricing and distribution.”
The universities’ agriculture centers are now tasked with developing a plan of operation that will address financing, facilities, equipment, personnel and security for a medical marijuana program. An LSU press release said the LSU AgCenter is looking at renovating an off-campus building for an indoor grow site.
Whether the universities will file for joint ownership of the state’s license or will go after it separately also remains under debate.
“Those discussions are yet to be had,” Southern’s Adell Brown said. “We have expressed interest.”
BY THE NUMBERS
233,677 qualifying patients with cancer, glaucoma or spastic quadriplegia
$500,000 projected tax revenue per year
$100,000 annual licensing fee
4,700 projected medical marijuana patients under current qualifying conditions
$100 annual permit fee
$13.5 million projected market under current qualifying conditions
10 dispensaries permitted under current Louisiana law
1.7 metric tons of medical marijuana projected to be consumed each year in Louisiana
1 cultivator of medical marijuana allowed under current Louisiana law
Source: Marijuana Policy Group report, SB 271