As medical marijuana has exploded from a niche product to a multibillion-dollar market in Louisiana, a growing number of lawmakers and advocates are questioning the strict limits placed on licenses to grow and sell the drug.
The strongest effort to change the insular structure will soon unfold in the Legislature. Several prominent lawmakers have introduced bills, some in competition with each other, to reform the system. They all cite similar goals: expanding access for patients and lowering prices, which has drawn complaints from patients and advocates.
The route the Legislature takes will determine whether the current 11 licensees (two growers and nine drugstores) will keep their increasingly valuable exclusive rights, or whether other companies will be allowed into the club. There are also multiple proposals to drastically change the way medical marijuana is regulated, giving oversight power to the Louisiana Department of Health instead of the state agriculture agency.
As always, there are a host of political factors at play, including the market entry of Boysie Bollinger, one of the state’s wealthiest businessmen and one of the most generous political donors.
The two growers are companies contracted by the agricultural centers LSU and Southern University, respectively, which were granted exclusivity in an unusual arrangement as part of the initial medical marijuana legislation. Lawmakers involved in that effort said the college farm centers were chosen because they were struggling financially, and the move would appease certain marijuana opponents who supported the farm centers.
A host of lawmakers want schools to retain that right, generating millions in revenue. That’s especially important to supporters of Southern University, which has received nearly $4.2 million from the settlement, according to a spokesman.
LSU, a spokesman said, received $5.4 million from its growth partner for “investments in research, guaranteed minimum financial payments, reimbursement of annual license fees, and performance bonuses.” LSU’s campus generates approximately seven times more total revenue than Southern’s.
If lawmakers stick with the college model for growers, several colleges, including Nicholls State, McNeese and Grambling, have expressed interest in getting into the medical marijuana game, three sources with knowledge of the discussions said. No bills have been introduced to do that, but the amendments could accomplish that goal.
For the first three years, the sole lobbyist for LSU’s growing partner was John Davis, the firm’s president. Davis is the husband of state Rep. Paula Davis, R-Baton Rouge. But in the last year, Good Day has steadily built up a strong lobbying force, hiring 11 other lobbyists to represent its interests before the Legislature and the governor. Ilera Holistic Healthcare, Southern’s contract grower, has three lobbyists on staff.
Since Good Day took over as LSU’s growth partner in 2020, the group has invested tens of millions of dollars in a dramatic expansion of its Ruston operations, where the company says a sprawling new facility will be able to meet the market demand.
A sizable investment from Bollinger, a prominent GOP donor and shipbuilding magnate, helped the company pull it off.
Bollinger said in an interview that he made a “substantial commitment,” amounting to tens of millions of dollars, on Good Day. Regulators approved the new ownership stake, made through Riverbend Agriculture LLC, last year. Bollinger said the move was simply an investment opportunity: He liked that it was a company with operations in Louisiana, in a new market with just two licensees.
Bollinger said it is “premature” to expand the number of licensed producers. The two incumbents have argued in public hearings, backed by their regulator Mike Strain, the agriculture commissioner, that they have the ability to meet Louisiana demand.
“We try to educate legislators 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 licensing growth.”
Not everyone agrees.
Flurry of submitted invoices
While this year’s medical marijuana bills cover a wide range, legislation that would expand the number of growers and pharmacies will likely attract the most attention.
Rep. Larry Bagley, a Stonewall Republican once skeptical of medical marijuana, introduced legislation to increase the number of pharmacy licenses from 10 to 20, and another bill to remove the cap on growth. of licenses, while moving the program to LDH. State law currently allows 10 pharmacy permits, but the Louisiana Board of Pharmacy has only issued nine, each in a different region of the state.
Importantly, Bagley is the chairman of the House Health and Welfare Committee, which hears many of the medical marijuana bills. He said in an interview that he is willing to wait a few years before licensing new producers, to give current licensees time to capitalize on their investment. But he said there should be a freer market.
“I’m not sure why anyone would be against that,” he said. “We certainly don’t want a monopoly… No one else could afford to compete against them.”
Rep. Joe Marino, No Party-Gretna, introduced a bill last year to give the Jefferson Parish Economic Development District a third exclusive grower license, a bill that was defeated in committee by Bagley. Marino said he is no longer interested in licensing specific institutions or individuals. Instead, he introduced legislation to add six more grower licenses through a bidding process that would favor Louisianans over people from other states. He also proposes adding 15 more pharmacy licenses and repealing the ban on campaign donors obtaining a grow license, which he said would allow more Louisianans to compete for a license.
“The question is not whether we should expand,” Marino said. “The question is why should we maintain a monopoly on medicine?”
Both Bagley and Marino agree that proposals to add growing licenses will be more controversial than legislation to license more pharmacies.
Acting Speaker Tanner Magee, R-Houma, introduced a sweeping bill that would overhaul the show’s regulations, moving it from Strain’s office to LDH and streamlining testing, which has been a complaint by producers for years. The bill would also add more pharmacy permits as the market grows, but for now, they would go to owners of existing pharmacies. Magee said he is still working on that component and the bill will be changed to potentially open it up to others.
Magee said he is targeting two of the three parts of the show, the pharmacies and the regulator, while leaving the production licenses alone. If the price doesn’t go down after the bill is approved, then “we know whose fault it is. He is the producer,” she said.
“No one is trying to lock him up forever,” Magee said. “This is about making sure we grow at a rate that the market can sustain.
“I have told all the stakeholders, all 11 companies, that this is not going to be like games are,” he added. “I’ve told everyone that they have to accept that this is an expanding industry and at some point other players will enter this space… I don’t want the public to think we’re creating a good guy. network. At the same time, this is a highly regulated product. I don’t know if the public is comfortable with opening up to anyone who wants to (produce it).”
The time has changed
State Sen. Fred Mills, a Republican and longtime pharmacist from Parks, is widely seen as the father of Louisiana’s marijuana program, after skillfully guiding it through a skeptical legislature toward the end of Gov. Bobby Jindal’s term.
Mills said he initially wanted the producer space to be highly competitive. But he had to make concessions, so he settled on two licenses to be awarded to LSU and Southern, whose agricultural schools were struggling for money at the time. The limited number appeased law enforcement groups concerned with controlling the sources of legal production.
Now, with opponents’ concerns largely eased, Mills said “of course” the program should be expanded. But he also said that the decision should be made based on the data, that is, how much demand there is.
“Until these pharmacies are packed, having too many dispensaries in the same market could be extremely problematic,” Mills said. “Because it is expensive to make these pharmacies.”
He said that if legislation expanding the program comes to his committee, he will check with regulators to see if the numbers justify the expansion.
In the early years of the show, the two cultivators fell out with Strain over his regulatory power over them.
While that battle has simmered, Strain’s product trial has emerged as a sticking point as flower, the drug’s popular smokable form, finally hit shelves this year.
Strain’s office records show that Ilera Holistic Healthcare, Southern’s contracted company, failed 330 pounds of flower tests due to yeast and mold problems. The failures occurred between the end of November, when growers were preparing for the flower release, and the end of January. Since then, Ilera’s products have passed all the tests, and Tabitha Irvin, who oversees medical marijuana for Strain, said the products that failed were remedied and later approved.
Records also show lengthy testing delays, up to 17 business days, at the start of flower deployment. But that number has improved since January, with an average of six business days for results to come back. “It’s not the department that’s holding things up,” Irvin said.
While several pharmacies have run out of products early in the flower launch, growers have not blamed Strain, at least not publicly. But pharmacy owners have been told privately that the problems can be blamed on the Department of Agriculture’s slow testing process.
Jacob Irving, Ilera’s director of Compliance and Government Affairs, said in a statement that the company has fixed its mold problem, which he said can be caused by “long-term storage of unprocessed marijuana products in the possession of either party.”
David Kirsch, vice president of operations for Good Day, said in a statement that his company has a greater than 99% pass rate on tests. Kirsch added that the company has a good supply of flowers on hand and said Bollinger is one of “many investors” in the company, noting that he passed regulatory checks.
Neither Good Day nor Ilera responded on whether they support Magee’s bill or any other, but Kirsch said Good Day supports “responsible legislative and regulatory efforts to improve patient access to medical marijuana.”