High Hopes: Medical Marijuana Could Mean Big Business For South Carolina

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Photo Credit: Scott Suchy

Bill Nettles is in the creaky basement of Immaculate Consumption, a coffee shop near the State House, devouring a breakfast sandwich while he explains the origins of his new company, Palmetto Medical Cannabis.

As U.S. Attorney for the District of South Carolina, a post he held from 2010 to 2016, Nettles tended to focus more on white collar crime than drug war prosecutions, so his turn toward cannabis reform isn’t as dramatic as one might think.

But it’s still startling to hear a top federal prosecutor break down why South Carolina should legalize medical marijuana.

“You could just decide this purely on economics — take the moral issue out of it,” he says. “In the United States now, the number one cause of accidental death: opioids. Opioid overdoses are very expensive. People have to go to hospitals, people incur costs, not to mention the social costs. How does that happen? … There’s a lot of pain out there. When a doctor gives you a prescription [for opioids], they’re giving you a loaded gun. Literally, you could kill yourself with that. A family doctor is who you trust most. Your doctor gives you a prescription, he makes your pain go away. It’s not unheard of to get addicted.”

Medical marijuana advocates — and some research studies — say marijuana can be effective in treating chronic pain, as well as conditions like post-traumatic stress disorder, epilepsy and the side effects of chemotherapy. It’s less addictive than many pharmaceuticals, with no risk of death from overdose.

“You don’t want to sound like the guy at the booth at the folk festival, but you start stepping back and going, ‘This is more than just anecdotal,’” Nettles says. “It just makes sense. … You’ve got this thing that can be grown here, and it can help people.”

Opponents, meanwhile, say medicines should be handled by the FDA, not by state legislatures; some also doubt that marijuana is really the cure-all it’s sometimes portrayed to be. They note that marijuana is still outlawed by the federal government, and say legal medical use could lead to more recreational use.

“You can definitely see a pattern in all the other states that have legalized medicinal that soon after they want recreational,” Jarrod Bruder, executive director of the South Carolina Sheriffs’ Association, tells Free Times. “That’s certainly something we’re concerned about.”

Those are arguments South Carolinians can expect to hear more in the next few years.

The medical marijuana movement in South Carolina was built largely by activists with compelling personal stories. There’s Janel Ralph, who treats her daughter’s rare disease with CBD oil — a non-psychoactive form of cannabis — which she was instrumental in getting legalized in South Carolina; she now runs a business manufacturing and selling CBD oil. There’s Jill Swing, a parent whose child has epilepsy and cerebral palsy, also treated with CBD. They co-founded the activist group South Carolina Compassionate Care Alliance, which has been one of the key lobbying forces on medical marijuana. With Republican state Sen. Tom Davis as their State House champion, activists successfully pushed through laws legalizing CBD oil and industrial hemp in 2014, and then pushed through a federally authorized pilot program for industrial hemp farming in 2017.

But as a full-on medical marijuana program becomes more of a possibility, there are other forces lining up in the background.

Nettles thought it was time to expand the field of people pushing for medical marijuana.

“I just felt that the really untapped area was businesspeople,” he says.

So he set about raising money. He won’t say from who.

“I’ll tell you this, they’re all South Carolina citizens. All that money came from residents of South Carolina that are businesspeople.”

His company hired the high-profile McGuireWoods Consulting firm to push medical marijuana at the State House this year. Palmetto Medical Cannabis has four McGuireWoods lobbyists registered with the State Ethics Commission.

Nettles’ moves are just one sign of the business climate that’s likely to pop up around medical marijuana.

Medical marijuana is closer to being a reality in South Carolina than it’s ever been. But even supporters say it’s unlikely to become law this year. Committees in both the state Senate and House have now approved medical marijuana bills, which means the full House and Senate can now vote on those bills. But because the early April “crossover” deadline has come and gone without either the Senate or the House passing its version of the bill, there are some major procedural hurdles.

It’s also unclear whether the governor would sign a medical marijuana bill if it hits his desk this year.

“It’s a bad idea to legalize marijuana. …I don’t think it’s healthy,” Gov. Henry McMaster told ABC Columbia last year.

His office did not respond to Free Times’ requests for comment on whether he would view a medical marijuana bill differently from a recreational one.

But McMaster is trying to get re-elected in a state where, according to a Winthrop Poll in 2016, 78 percent of people said marijuana should be legalized for medical purposes.

Even if medical marijuana doesn’t pass this year, it’s gotten really far — and floor votes will show supporters exactly which lawmakers they need to target next time around.

So activists’ eyes are mostly on the horizon. And marijuana could mean big business for South Carolina.

The Business of Weed

Industry experts say legal medical marijuana in South Carolina is basically inevitable.

Twenty-nine states, plus the District of Columbia, Guam and Puerto Rico, now allow marijuana for medical purposes. As of the end of 2017, in a country of 325 million people, more than 200 million of those people lived in states with access to medical marijuana. Of course, only a small sliver of the population in those states actually uses medical marijuana — anywhere from 0.01 percent to 3.2 percent, according to the Marijuana Policy Project. The number of users depends on the restrictiveness of a state’s program.

We’re not just talking about California and Oregon. Even in the South, things are changing.

“This is no longer progressive or forward thinking,” Nettles notes. “We’re past a tipping point. We’re on the other side. We are in the minority. Arkansas’s passed it. West Virginia — the Republican governor of West Virginia signed a bill.”

There’ve been some mixed messages from the federal government: While the Obama administration said they wouldn’t prioritize marijuana prosecutions in states that have legalized it, President Trump’s attorney general, former Alabama Sen. Jeff Sessions, is a major marijuana foe — and his U.S. Department of Justice in January reversed the Obama-era policy. Still, Sessions’ new policy leaves it up to individual U.S. Attorneys what to prosecute.

Meanwhile, the marijuana industry is making money.

So much money that former U.S. Speaker of the House John Boehner, who as a lawmaker opposed legalization, recently joined the board of a cannabis corporation.

According to a summary of the 2017 Marijuana Business Factbook, legal U.S. cannabis sales topped between $4 billion and $4.5 billion in 2016 and were expected to hit between $5.1 billion and $6.1 billion in 2017. And the company ArcView has estimated the total North American legal marijuana market in 2017 at $9.7 billion, a 33 percent increase over 2016. (Apparently compiling and selling marijuana research is a major industry of its own — a copy of the full Marijuana Business Factbook report costs $249, while industry reports from ArcView cost up to $1,975.)

In March, the Canadian Cronos Group, which owns medical marijuana growing and distribution operations in Australia, Canada, Germany and Israel, became the first marijuana-associated company to be listed on any major U.S. stock exchange — NASDAQ, in this case. The company’s head told CNBC they’re ready to enter the U.S. market as soon as federal law changes.

In the meantime, each state that legalizes marijuana is making its own way, creating its own regulatory system — which dictates the kinds of investors and businesses that will spring up. Bills working their way through the South Carolina legislature would require the state Department of Health and Environmental Control to create a regulatory framework for medical marijuana — including cultivation centers, processing facilities, dispensaries, labs and a system of IDs for cannabis users — so it’s unclear at this point exactly how the system would be structured.

So what does that means for South Carolina business — and businesspeople?

“In this day and age, many people are lining up to enter the industry,” James Yagielo of HempStaff, a medical cannabis dispensary training and recruiting company, told Free Times in an email interview. “Ones that succeed are generally groups of professionals, like lawyers, doctors, pharmacists, etc., with a substantial amount of cash in reserves. The days of the average person putting together $5,000 to start a dispensary are over, unfortunately. Generally, we tell people you need to have a minimum $250,000 to start a dispensary and $2 million to start a cultivation center.”

Pressed on how exactly Palmetto Medical Cannabis’ backers stand to benefit from legal medical marijuana, Nettles declined to get specific.

“I don’t think there’s any doubt — I think it would be naïve not to suggest if this were to become law that they are clearly interested in the possibilities it may produce,” he said. “There’s people in real estate that are very interested in this. There’s a lot of collateral industries.”

In Colorado, for example, according to a report by the Center for Public Integrity, the recreational marijuana industry supports industries from insurance brokers to security guards.

“On the fringes, ancillary businesses also have found money-making niches to fulfill the needs of marijuana businesses,” the center reports. “Cultivators need high-wattage lights to grow cannabis indoors. States have contracted seed-to-sale tracking systems to try and stop cannabis from slipping to the black market.”

Medical marijuana’s economic impact is much more limited, but it’s still significant, Yagielo says.

“The impact is far reaching, from licensed cannabis businesses and doctors recommending marijuana, to those supplying supplies like lights and packaging, and even construction companies that have to build the cultivation centers,” Yagielo tells Free Times.

As for jobs created, he says, “Generally, a dispensary has five to 10 employees and a cultivation center has 30-50 employees. So, the number of jobs really depends on the state law and how many licenses it allows.”

Tom Adams is managing director of BDS Analytics’ Strategic Research Division; the company collects and analyzes data from marijuana companies.

He says some marijuana jobs — particularly in medical marijuana — are pretty high-paying.

“There’s a huge amount of technology on the vaporization front,” he says, referring to devices that allow users to inhale marijuana vapor without the harmful effects of smoking. “Lots of tech hardware jobs. Tech software jobs, too.”

“More on the medical side, there really is a lot of very interesting work going on from seed to consumption,” he goes on. “Lots of agriculture tech jobs being developed. This plant’s been a part of human agriculture for years now but completely missed the human agricultural revolution of the last 200 years, so it’s catching up now.”

But will this make the state some money? That’s less clear.

States vary so much in how they tax medical marijuana, and how available it is, that it’s hard to compare data.

“It’s really when adult [recreational] use kicks in that revenue grows most dramatically,” Adams says. In Colorado, for example, tourism is booming.

When it comes to medical marijuana, “The more limited it is in its program, the less tax revenue,” Adams notes. It matters whether a state allows for lots of dispensaries, or just a few. And it matters how limited the list of conditions is for which marijuana is allowed.

“If it’s just epilepsy and childhood seizures, you’ve got a handful of patients,” Adams says. “The big ones are PTSD — we have a huge contingent of veterans that suffer from that in other states. And the biggest is intractable pain.”

As South Carolina inches toward medical marijuana, those are the kinds of questions the legislature will have to puzzle over.

Forces of Change

The air was hot and dense in the room where the South Carolina House Committee on Medical, Military, Public and Municipal Affairs met April 19 to vote on a bill to legalize medical marijuana in the state. So it was appropriate that Rep. Bruce Bryant put on his best white-Southern-preacher-under-a-tent-in-midsummer tone as he stared down his GOP colleague Katie Arrington, who was pushing the bill.

Bryant’s voice quavered and boomed with righteous intensity.

“Each and every one of you, when you took this office, you raised your hand and swore to God that you would uphold the constitution of the state of South Carolina and the constitution of the United States,” said Bryant, a York County Republican and a former sheriff. “I will not violate an oath of office that I took. … I’m going to uphold the federal statute, too, as long as I’ve got a breath in me and I have swore to my maker.”

But Bryant wasn’t the only one on the committee to invoke God.

“God made weed, man made alcohol — who you gonna support?” said Rep. Michael Rivers, Sr. a minister and Lowcountry Democrat.

“Amen,” said a woman seated in the audience.

Rivers added, “I’m going to say something probably inflammatory: If we did a urine test for marijuana [in the General Assembly], I think some people might be nervous. So let’s stop grandstanding.”

In the end, the vote was 15-3 to advance the bill to the full House. All the committee’s Democrats backed the bill except one. And even on the Republican side, Bryant’s old-school take was trumped by his GOP colleagues — only one other Republican besides Bryant opposed the bill, while four supported it.

Medical marijuana has won some unlikely allies in South Carolina government. Republican Rep. Eric Bedingfield became a supporter after his son died of an opioid overdose; he’s said he hopes making marijuana more available may cut down on opioid addiction. Republican Rep. Mike Pitts, a retired cop, introduced a bill a few years ago to decriminalize marijuana altogether. The former longtime executive director of the South Carolina Sheriffs’ Association, Jeff Moore, has credited marijuana with saving the life of his son, who developed PTSD after two tours of duty in Iraq and was honorably discharged after two suicide attempts; Moore’s son lives in Michigan and treats his condition with a low-THC form of marijuana. (THC is responsible for many of the psychoactive effects of pot.)

Then there are the younger, limited government types and GOP reformers. Rep. Jonathon Hill, an Upstate representative and home-schooled, Tea Party-inspired survivalist, is pushing the current medical marijuana bill in the House. So is Rep. Katie Arrington, an outspoken young leader who’s challenging Mark Sanford in the primary for U.S. Congress; she told her House colleagues last week that she’d traveled to Arizona and Colorado on her own dime to speak with their law enforcement agencies about how South Carolina should set up its medical marijuana program. Add to that the many Democrats who support reform, and you’ve got a force for change.

As the medical cannabis debate has been slowly burning at the State House, there’ve also been a handful of prominent opponents, most of them in law enforcement.

SLED Chief Mark Keel is one. The South Carolina Sheriffs’ Association is another. Bruder, its current executive director, says the state can’t simply ignore the law.

“It’s kind of like that sanctuary city argument,” Bruder says, likening the marijuana battle to the face-off between some states and municipalities and the feds over immigration prosecution. “U.S. laws are the supreme law of the land — doesn’t matter what California says. Marijuana is still federally illegal. We have to maintain that position; we can’t turn a blind eye to that.”

“We absolutely have compassion,” he says. (The twin bills making their way through the legislature are called the SC Compassionate Care Act.) “We don’t want anybody to hurt.” But he says he doesn’t see marijuana activists holding the drug up to the same scrutiny as other medicines.

Responses to those arguments vary. House Minority Leader Todd Rutherford accuses sheriffs and other law enforcement officials of having other motives: namely, keeping up the flow of money they make off drug seizures.

“Any opportunity we get to help the children of South Carolina, to help those that are suffering from cancer, undergoing chemotherapy, to help those that have chronic pain that don’t want to take opioids, to stop the opioid deaths, we should take it,” Rutherford says. “I am embarrassed by the law enforcement community, that all they see is the revenue they’ll lose from stealing people’s money because they have marijuana on them. That’s Stealing with a capital S.”

Some lawmakers have tried to assuage law enforcement fears with proposals to redirect money raised from medical marijuana to sheriffs’ department and to SLED.

They’ve taken other steps. More recent amendments to the bills specify that smoking medical marijuana would be banned, for example.

But in the end, it seems likely that law enforcement will continue to oppose legalization — and that lawmakers, as they have in other states, may decide to go for it anyway.

Green Dawn

There are still plenty of people around the state urging caution on medical marijuana, saying South Carolina doesn’t need to get caught up in the rush to set up its own system. Dr. David Keely, a Rock Hill family physician, recently called the S.C. Senate medical marijuana bill “critically flawed” in a letter to The State, saying the state should leave medical marijuana up to the feds.

“The Federal Drug Administration is already working with the federal Drug Enforcement Authority to increase legitimate research on marijuana products for medical use, and the DEA has a well-established system to handle prescription narcotics,” Keely wrote.

But Nettles, for one, thinks change is coming soon.

“We live in a time of unprecedented partisanship,” he says. “This is one of the few issues that enjoys bipartisan support. … I’ll tell you why: because pain doesn’t know any color, any political affiliation. Epilepsy doesn’t care what party you belong to. Parkinson’s, PTSD — all these things are colorblind, immune to party affiliation. I believe we are at a point where the population has already been affected by one of these … somebody dying of cancer, wracked with pain, who got some relief from marijuana.

“It’s time for the legislators to listen to what the people are saying.”

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