Private sector, not state, pays for university farming
Confused over how medical marijuana is funded at Louisiana universities that grow the plant, lawmakers grilled administrators Wednesday because they mistakenly believed the state was paying millions for research that private sector investors actually finance.
Committee Chairman Rep. Larry Bagley, R-Stonewall, opened the meeting by asking the university administrators why they have not been submitting reports about their cannabis research to the Legislature. He called on Dr. Janana Snowden, director of the medical marijuana program at the Southern University Agricultural Center, and Hampton Grunewald, vice president of the LSU Agricultural Center, to testify at the meeting.
While referring to a state statute that requires the universities to submit those reports annually, Bagley and other lawmakers mistakenly thought the state might be funding the research.
“The first question I’d like to know is where is your report,” Bagley said. “We’ve been going on for four years, and I think you get a check every year for the money that you’re supposed to use for research. We’ve not gotten anything from you.”
Snowden tried to clarify, saying the money the program receives comes from the private cultivator that has a contract with the school, but the lawmakers continued referring to a figure of $1 million that they thought the universities were receiving through state tax dollars.
“I’m not sure if a million dollars is going to give us what we need,” Rep. Kenny Cox, D-Nachitoches, said. “A million dollars is not a lot of money to do research, not the kind of research that they need to do.”
The confusion was finally cleared up when the lawmakers directly asked about the funding.
“The deal is, if I’m not mistaken, you both receive at least $1 million for this, correct?” Bagley said.
Both Snowden and Grunewald said Bagley was not correct.
“The state does not put any money in?” Rep. Thomas Pressly, R-Shreveport, asked. “So, the million dollars is not accurate?”
Grunewald again clarified that funding for medical marijuana at Southern and LSU comes from the private contractors that cultivate and produce the cannabis products.
The state does not directly fund the medical marijuana program at either university. Both programs are self-funded through a public-private partnership in which private companies pay the universities a yearly fee to assist them in researching, cultivating, producing and distributing medical marijuana products. The products are then sold to pharmacies.
A 2019 report the LSU Ag Center and its private cultivator submitted to the state Department of Agriculture and Forestry stated that “No taxpayer dollars will be spent on this project.”
In 2021, Ilera Holistic Healthcare paid a $1 million fee to Southern University as part of its contract to produce cannabis products with the college, according to the most recent report submitted to the state. Their production costs for that year exceeded $1.8 million.
The state makes money off of the products through a 7% tax on gross sales.
In accordance with state law, both universities submit an annual report to the state agriculture department, which is then passed to the Legislature. The report is an overall summary of the program and does not detail any marijuana research findings. A subsection of the statute requires the schools to submit a separate annual report on the research data and findings directly to the Health and Welfare Committee, which neither university has done since it took effect in 2020.
However, in the preceding sentence of that subsection, the statute merely allows — but does not require — the universities to conduct any research on “marijuana for therapeutic use.”
Snowden said she interpreted the term “therapeutic” to mean clinical marijuana research, which Southern has not done. The university has only conducted social sciences research on policy implications of medical marijuana, as well as studies on education and outreach.
Grunewald said LSU is currently conducting eight different research projects with three additional projects waiting on approval. Some of these include genomics research and studies on cloning techniques for propagation. However, none of the studies have concluded and once complete, some details cannot be released to the public because of contract agreements that keep proprietary information private, Grunewald said.
Rep. Jason Hughes, D-New Orleans, pointed out the medical marijuana statute’s ambiguity on requiring an annual report. The law says the schools “may” conduct research, which he said calls for more clarity.
“It doesn’t say they ‘shall’ conduct research, but we’re requiring them to submit a report on something that is clearly permissive in law,” Hughes said.
Bagley said the law “should be changed” to reflect what the universities need it to do.
Grunewald pointed out that one of the original goals of the medical marijuana legislation was to give universities an additional stream of revenue.
“The original intent of this legislation when passed was not intended at LSU and Southern,” Grunewald said. “The Legislature, in your infinite wisdom, saw that it provided an opportunity in a time of declining revenues to provide a revenue stream for institutions of higher education.”
The 7% tax that the state collects goes into the Louisiana Children and Family Support System Fund, which provides money for people with disabilities. Rep. Joe Marino, I-Gretna, said the Legislature could consider returning some of that money to universities for research.
Both university administrators said they intend to submit the research reports to the Health and Welfare Committee.
Louisiana Illuminator is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Louisiana Illuminator maintains editorial independence. Contact Editor Jarvis DeBerry for questions: [email protected] Follow Louisiana Illuminator on Facebook and Twitter.
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