Marijuana plants grow in the Outliers Collective's indoor cultivation facility in San Diego County, California in October 2016. (Vince Chandler, The Denver Post)

Key first step for Louisiana medical marijuana: Grower approved for LSU

Las Vegas-based GB Sciences Inc. submitted winning bid to grow medical marijuana at Louisiana's flagship university; LSU and Southern University are the only institutions allowed to grow cannabis in the state.

BATON ROUGE, La. — The first medical marijuana production deal struck in Louisiana is expected to bring the state’s flagship university at least $3.4 million over five years, under terms discussed Thursday.

In its bid offer, the contractor agreed to pay that amount or 10 percent of gross receipts, whichever is higher, to the LSU Ag Center for permission to grow medical marijuana. Las Vegas-based GB Sciences Inc. also has agreed to a $500,000 annual contribution for research.

The LSU Board of Supervisors gave its blessing to the arrangement Thursday, authorizing System President F. King Alexander to work out details of a final contract with GB Sciences. The board chairman also will have to sign off on the deal before it can take effect.

The AgCenter selected GB Sciences from seven potential vendors.

Louisiana lawmakers agreed to a framework for dispensing medical marijuana in 2015, but only allowed the agricultural centers at LSU and Southern University to grow the product. The law will eventually get medicinal-grade marijuana to people with cancer, a severe form of cerebral palsy, seizure disorders, epilepsy, muscular dystrophy and other diseases. Eligible patients are expected to have access to the drug next year, under the LSU plans.

Bill Richardson, leader of the LSU AgCenter, said the biggest attraction for growing medical marijuana is the scientific research that can be conducted on its use for disease treatment.

“I don’t want to be just another weed grower,” Richardson said. “The research, that’s why a university could justify being involved in this.”

GB Sciences CEO John Poss said his company’s interest also rests in research.

“Cannabis is a plant whose mysteries are just now being unlocked,” Poss told the board. “We’re as excited by the research as we are by the financial opportunity.”

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Cannabist Show interview with a Louisiana-focused marijuana consultant from Colorado:

At least one other competitor for the contract questioned if GB Sciences, which is a penny-stock firm with millions in losses, could meet the payments promised to LSU. Several board members said Thursday they want follow-up information on the financial arrangements of the LSU AgCenter deal and about the company’s financial background before Alexander signs the contract, which could be extended up to 15 years.

“I would like to get comfortable on a contract this controversial,” said board member Glenn Armentor of Lafayette.

Board member Ann Duplessis of New Orleans chastised other panel members for not asking their questions ahead of the board meeting, when they received the proposal information a week ago.

“We all have a fiduciary responsibility to read the stuff we get,” Duplessis said, “so we don’t get to a board meeting and have this charade happen.”

Richardson expects the contract to be complete by August.

No state tax dollars are involved in producing medical marijuana. LSU chose a contractor to cover start-up costs estimated to be as much as $11 million. Richardson said the medicinal-grade pot won’t be grown on campus and the operation won’t involve students. He said security will be high, and scrutiny intense.

“We’re not just turning this over to a vendor and saying, ‘Send us a check,'” he said.

Southern University also remains in the planning stages for growing medical marijuana. The university is expected to choose a vendor to run its program later this year.

Under the law, marijuana will be available in medicinal oil and other forms, but not in a form that can be smoked.