In an overhaul of Louisiana’s still-evolving medical marijuana industry, a bill awaiting Gov. Jeff Landry’s signature is poised to transfer the state’s two exclusive medical weed-growing licenses from LSU and Southern University to a pair of private growers the colleges had partnered with.
State lawmakers originally conceived the legislation, Senate Bill 228, as a simple extension of the medical marijuana program’s sunset date. They added amendments later to strip the universities from the program. The bill passed the Legislature with little scrutiny, as proponents argued it would cut away a layer of government bureaucracy that has saddled patients with additional costs and stalled the growth of Louisiana’s medical marijuana patient pool.
“This will free up capital for both of those grower operations to make further investments in their facilities, which will lead to benefitting the patients for a program that’s proven to work,” said Sen. Patrick McMath, R-Covington, who carried the legislation.
If Landry signs it, McMath’s proposal will immediately hand the two sole growing licenses to Good Day Farm and Ilera Holistic Healthcare, which operate a duopoly as the only two growers in Louisiana’s medical marijuana industry. Good Day and Ilera would only relinquish the licenses if they don’t pay licensing fees, fail to periodically resubmit licensing applications or choose to give the licenses up voluntarily. Under the current structure, the two companies function as contracted growers for LSU and Southern, who hold the licenses.
The bill passed the state Senate on a 32-5 vote and cleared the House 89-15.
Despite that overwhelming support, the legislation has angered some critics of the medical marijuana market’s current tightly-regulated structure. Handing growing rights directly to the two farms, they say, will further strengthen those companies’ grip on the market — while relinquishing a measure of control over the program the taxpayer-funded universities have offered officials since its inception nine years ago.
“You’re literally just giving a monopoly to a private company," said former state Rep. Joe Marino, a political independent from Gretna who supported legislation to create the medical marijuana program.
John Davis, the Good Day Farm president, did not return a phone message. Davis' wife, state Rep. Paula Davis, represents a Republican-voting Baton Rouge district in the state House but recuses herself from votes related to medical marijuana. Ilera could not immediately be reached.
If Landry signs it, McMath’s bill will align Louisiana’s medical weed industry with 38 states who don’t feature the unusual university-middleman structure, said Kevin Caldwell of the Marijuana Policy Project, which supported McMath’s bill.
Market shifts
Supporters of the legislation argue that removing the universities from the market will translate to lower costs for patients seeking the drug for help with conditions such as anxiety, depression and brain injuries, among other conditions. That’s because the growers each pay the universities and the Louisiana Department of Health over $1 million annually in contracting and licensing fees, they say — costs they argue end up being passed on to patients. The universities also receive a share of tax revenue from medical marijuana sales.
Patients have long complained of high costs in the state’s tightly-controlled industry, and lawmakers have consistently turned back efforts to address that by inviting more competition to the marijuana-growing business.
Lawmakers have also expressed concern over whether the universities are using the money from the program as intended: for research into production and benefits of medical marijuana.
A report issued in April by the Louisiana Legislative Auditor found that LSU had spent $1.6 million of $3.7 million of total program expenditures on research grant funding, with the bulk of the rest going to research-related equipment and staffing costs, between 2019 and 2024. Southern’s AgCenter, meanwhile, spent $287,000 on research grants during that period out of a total $4.4 million in program spending. Much of the remaining money went to salary and travel related to the program. And $2.7 million went to transfers within the university system for “other expenditures,” the report reads.
Neither state law nor the AgCenter contract required the money to be spent “exclusively on marijuana research,” the Legislative Auditor’s report notes.
Spokespeople for the two university systems did not immediately return requests for comment Friday.
McMath argued that the colleges were never intended to be part of the medical marijuana program. “Removing them, letting them focus on higher ed, which is what they should be focusing on, and not the cultivation of medical marijuana, just makes sense,” he said.
Marino, however, argued the opposite: Giving just two private companies possession of the licenses will tighten their monopoly and risks increase costs, he warned.
THC crackdown
Another portion of the state’s market for legal, intoxicating cannabis products hangs in the balance of the legislative session’s final week. Negotiations are coming down to the wire over a pair of bills that pursue divergent paths towards regulation of the state’s $33 million consumable hemp-derived THC industry.
That market exploded beginning in 2022 after Republican lawmakers voted for legislation allowing the products. But a backlash ensued as some argued that the substance was much more potent than they’d known. Pressure from the medical marijuana industry — including from Boysie Bollinger, a major GOP donor and partial owner of Good Day Farm — has also fueled the regulatory push.
One bill, sponsored by state Sen. Thomas Pressly, R-Shreveport, seeks a total elimination of the nascent market, which opened after lawmakers legalized hemp-derived THC products beginning several years ago.
If approved in its current form, Pressly’s SB 237 would ban all consumable hemp-derived THC products from Louisiana shelves. Rep. Dustin Miller’s House Bill 952 pursues a gentler regulatory approach, seeking to place some of the products behind counters, toughen up on portion sizes and require more product testing by sellers, among other steps.
Miller, D-Opelousas, saw his bill advance from the Senate Agriculture Committee on Thursday. It awaits a vote in the full Senate, while Pressly’s is awaiting a vote in the House. Sen. Stewart Cathey, R-Monroe and the Agriculture Committee chair, said negotiations on a compromise between the two bills would continue before they receive floor votes.
Editor's note, 5/28/2024: This story has been updated to correct that John Davis is Good Day Farm's president and to add that Rep. Paula Davis recuses herself from votes related to the medical marijuana industry.