Question As Louisiana Marijuana Pharmacies Move Forward: Can They Make Enough Money To Survive

Photo Credit: Shutterstock

After years of discussion about medical marijuana in Louisiana, production of the plant is approaching, pharmacies are angling for exclusive permits to sell the drug and doctors are slowly becoming licensed to prescribe it to patients.

Yet, a number of consultants, prospective pharmacy owners and advocates say the reams of regulations and narrowly-crafted laws enabling the medical marijuana program here will likely have to be loosened at some point if pharmacies are to survive financially.

To help bolster the program’s odds for success, efforts already have surfaced to expand the program beyond the current list of 10 serious diseases that qualify patients for the drug. Advocates primarily point to the medical benefits of including conditions like chronic pain in the program, but it also widens the potential for many more patients to make the business model more viable.

The program, enacted in 2016, faces additional hurdles over restrictions on doctors recommending the drug, and over whether patients will be priced out of treatments by the regulations and lack of insurance coverage for medical marijuana.

The program was carefully crafted to appease concerns among lawmakers and law enforcement and any changes face their scrutiny.

Some of the applicants poised to land 10 licenses — in nine regions and one high-demand area — from the state pharmacy board say they are well-capitalized in the short term to survive losses under the current iteration of state laws and regulations.

Sajal Roy, who runs a medical marijuana dispensary in Maryland and ranked first among pharmacy applicants for the New Orleans region, said it is not particularly unique for dispensaries to weather losses for the first couple of years of operation.

State Sen. Fred Mills, a Parks Republican who authored legislation to enact the medical marijuana program, said all the applicants for pharmacy licenses he’s spoken with have raised such concerns.

“They’ve said, ‘When I look at the numbers, when I look at the disease states, and the amount of recommendations it will generate, this business model is going to be tough to be profitable,’ ” Mills said.

State Rep. Ted James, D-Baton Rouge, proposed legislation that would add several more conditions to the list of diseases. Among them is intractable pain, which would widen the patient pool considerably. A group of advocates lobbied the Board of Medical Examiners last month to support expanding the number of conditions.

But the passage of Mills’ legislation took a delicate balancing act, and the senator, who is also a pharmacist, said he plans to honor an agreement struck with law enforcement to keep the program the way it is, at least for now.

And the Louisiana Board of Medical Examiners, in its yearly report on the debilitating conditions for therapeutic marijuana sent to lawmakers in January, said there is “insufficient evidence” to recommend expanding the list. Dr. Vincent Culotta, executive director of the board, said the request by advocates to recommend expanding the program came too late for this year’s session. Now, the volunteer group of experts that reviews the program for the board will consider whether to expand it ahead of next year’s regular legislative session.

If the medical marijuana program is a success, and patients get relief from the program in its current iteration, Mills said he hopes to open the program up to other conditions for which doctors are willing to recommend medical marijuana. And law enforcement and other opponents will have a tough time blocking an expansion of the program next year or the year after, he said.

On the other hand, if patients don’t get relief, the industry “craters.”

That means the program is entering a crucial do-or-die period as the production and dispensing of the drug moves forward. GB Sciences Louisiana, the company that won the LSU AgCenter’s state-approved license for a growing facility, is expected to be up and running sometime this year for the development of medical marijuana products; and a limited number of pharmacies could get licenses to dispense the drug by the end of March. The state Board of Medical Examiners has licensed seven doctors to recommend the drug to patients thus far.

Under current law, patients can qualify for medical marijuana if they have one of 10 serious conditions: cancer, HIV, AIDS, Cachexia or wasting syndrome, seizure disorders, epilepsy, spasticity, Crohn’s disease, muscular dystrophy or multiple sclerosis. James’ bill would add intractable pain, glaucoma, severe muscle spasms and PTSD, or post-traumatic stress disorder, to the list.

State law requires marijuana-based medicine be in a liquid, such as an oil or spray; capsules or pills; edible dosages; topical applications; transdermal patches; or suppositories.

While medical marijuana advocates cite the health benefits of adding conditions like PTSD and chronic pain to the disease list, the market and financial picture for the industry is in a precarious position.

“The challenge is you’ve got to have the capital to sustain the business if the demand and/or the supply is not sufficient to make it profitable,” said Brian Rudin, who is with Colorado-based marijuana pharmacy chain Starbuds. “But you have to also be ready to serve the customers and patients if the demand is surprisingly high. Nobody really knows what exactly to expect.”

Rudin is partnered with a Lafayette-area pharmacist as an applicant for the marijuana pharmacy license in the Lafayette region and also serves as a consultant for several other applicants throughout the state. He said the business is not a “get-rich-quick scheme,” and none of the pharmacy applicants he consults for think it will make money anytime in the near future.

His plans for the Lafayette-area pharmacy are aimed at reducing costs, he added, by using a piece of property his partner already owned and keeping build-out costs down. Other pharmacies could run into problems with larger, more expensive plans, he said.

“If our program stays the way it is, these companies are going to lose their shirts,” said Kevin Caldwell, founder and president of CommonSense NOLA, the marijuana reform advocacy group. “Our concern is that because of the cost associated with getting this program off the ground, the medicine they provide to patients is going to be so expensive, patients aren’t going to be able to afford it.”

Insurance typically doesn’t cover medical marijuana, and the market in Louisiana is expected to be relatively small.

Plus, doctors are only allowed to have 100 patients each who are recommended marijuana, though they can ask the Board of Medical Examiners to extend the cap. Patients must also visit their doctor each month to keep their recommendation for medical marijuana valid.

All that could add up to price people out of the program, depending on where the price point for the drug ends up. Roy, the New Orleans pharmacy applicant, is more worried about those regulations on physicians and patients than anything, noting that patients could have to pay upward of a thousand dollars each year simply in doctor visits.

“That’s not going to work,” he said. “Then the patients have to come into the medical marijuana pharmacy and pay out of pocket for it. From that perspective, I’m worried.”

Meanwhile, the District Attorneys Association remains in opposition to expanding the program, for the same reason it opposed the original bill. Pete Adams, executive director of the association, said the credible research and Federal Drug Administration do not support the medicinal claims of those in favor of medical marijuana.

“We predicted that the proponents would seek to expand the disease list and that the products would be too expensive,” Adams said.

The Louisiana Sheriffs’ Association, which compromised with Mills on his legislation, didn’t return messages seeking comment.

James, who previously brought a similar bill to expand the program as the one he is proposing this year, argued an expansion of the law to include intractable pain could help fight the opioid crisis. He characterized it as a “pro-law enforcement bill” and said his focus was entirely on the medical side.

“Once I filed the bill, I heard more concerns from the folks on the business side and advocates who say moneywise it might not be a huge return on investment,” James said.

It remains unclear exactly how many patients will use medical marijuana here. A project concept from the LSU AgCenter forecast 1,441 patients would use the drug, but noted New York and Minnesota have smaller patient counts and larger populations. Roy, in New Orleans, did a population analysis of Orleans, Jefferson, Plaquemines and St. Bernard parishes and expects 6,521 possible patients in that region.

The LSU study also said more patients would have access “once legislators expand the list of debilitating medical conditions,” and that chronic pain would greatly increase the number of potential patients.

“Thus, the market could increase to create an emerging industry,” the report said.

Rudin, the dispensary owner and consultant, said it is not necessarily a bad thing that Louisiana is starting with such a restrictive law.

While he thinks doctors should be able to recommend marijuana for any condition they believe would be helpful, Rudin said it would be premature to expand Louisiana’s program now.

“Louisiana is a conservative state. The best thing we can do is get these marijuana pharmacies open, get the products on the shelf and start helping patients,” he said. “I think this is a good first step.”