Expanded Louisiana Medical Pot Program Drawing Tens of Millions of Dollars in Investment

By Sam Karlin

The Advocate

When sales in Louisiana’s restrictive medical marijuana program began in 2019, advocates and prospective marijuana business owners worried it would be tough sledding to survive financially, given the reams of regulations attached to the program.

But the recent relaxation of many of those rules – including, crucially, the addition of more popular flower products – has rapidly drawn major investment in Louisiana’s pot industry. Now, for the few companies who have control over growing and selling the drug through exclusive state licenses, big profits seem possible.

Public records show the state’s two growers – private companies hired by LSU and Southern University, respectively – spent the most money yet on their production in 2021, with LSU’s partner shelling out tens of millions of dollars to boost its growing capabilities.

Tax data indicates sales are starting to pick up as well. The two growers pay a 7% fee on whatever they sell, and in the fiscal year that ended in July, they remitted more than $270,000, suggesting gross sales of nearly $4 million. In the first two quarters of the current fiscal year, the growers already exceeded that number. And that was before flower sales even began, meaning they will likely see huge year-over-year growth.

The private companies who grow the plant legally in Louisiana don’t comment on their finances, but it appears they’re not yet raking in profits, based on publicly available spending and revenue data. But that will likely soon change as the market hits a ramp-up phase that is expected to last two years before plateauing. By 2024, LSU’s growing partner, an Arkansas-based firm called Good Day Farm, expects Louisiana’s medical marijuana market to top 110,000 patients. That’s more than seven times the current number.

In the Post Harvest Room, Diana Concha, right, and Adnita Outley, second from right, process the harvest along with other workers during a tour of the new, bigger, LSU medical marijuana facility run by Good Day Farm Wednesday Jan. 19, 2022, in Ruston, La.

Patients have already started flocking to the program en masse since January, when flower, the smokable form of the plant that is most popular nationally, became legal with a “recommendation” from a doctor. From December 2021 to January 2022, prescriptions shot up by 77%, and the patient count rose by 45%, according to data from the Louisiana Board of Pharmacy, huge increases compared to previous months. That brought the number of patients from under 11,000 to nearly 16,000.

Good Day Farm spent north of $37 million in 2021, according to a report it filed with the Louisiana Department of Agriculture and Forestry. That’s up tenfold from the $3.6 million it spent the year before.

The big money Good Day spent last year is largely because of its new growing facility, a mammoth 225,000-square-foot former sink manufacturing warehouse in Ruston. Company officials say they’ve committed to spending at least $45 million thanks to the law allowing flower sales.

Tucked away in the small, piney north Louisiana town that is home to Louisiana Tech University, the nondescript blue building contains immense growing space that Good Day Farm plans to eventually build out as the market grows.

In one of the grow rooms, long rows of plants with names like “Lilac Diesel” and “Lumpy Space Princess” grow for several weeks. Dozens of fans bolted on the wall circulate air, and CO2 is pumped into the rooms to make sure the plants have enough to breathe.

In the Vegetative Room, Kevin Schneider, General Manager, background, clones plants, essentially "making babies" according to Schneider, during a tour of the new, bigger, LSU medical marijuana facility run by Good Day Farm Wednesday Jan. 19, 2022, in Ruston, La.

Once they get old enough, the plants graduate to another room to bloom, where they grow the dense buds that are eventually harvested and sold to patients to smoke or otherwise consume. The 340 or so plants in the room on a recent weekday bathed in a fluorescent orange light to replicate the fall, when plants are harvested. The orange light replicates shorter days of daylight, compared to the “spring/summer” light in the previous room, said Beau Druilhet, Good Day Farm’s director of cultivation.

Workers dry the buds and clean them up before putting them into huge barrels with air vents to wick out moisture. The company had hundreds of pounds sitting in the barrels that would soon hit the market.

In the Cure Room, which has 400-800 pounds at any given time, Beau Deuilhet, Dir. of Cultivation; talks about the process during a tour of the new, bigger, LSU medical marijuana facility run by Good Day Farm Wednesday Jan. 19, 2022, in Ruston, La.

When Louisiana’s medical marijuana program began, pharmacy owners were concerned they might not be able to make any money because of the stringent rules. But as the rules have been slackened, business has boomed.

Ruston Henry, owner of the only licensed medical marijuana pharmacy in the New Orleans region, H&W Drug Store, said sales tripled or quadrupled in the first couple weeks of flower becoming available, compared to the year before. Those sales have now leveled off to about double what he was doing a year ago.

Henry said there have been some supply disruptions. He said his pharmacy was out of flower for a day or two last week but is putting more on the shelves this week.

“There are some hiccups here and there,” he said. “It’s still growing.”

Growers have told pharmacy owners to expect supply to be more steady by mid- to late March.

Darren Martin, co-owner of Willow Pharmacy in Madisonville, said the pharmacy was making about 100 marijuana sales a day this time last year. That has increased to about 300 a day now, which he attributes both to an increase in patients and to patients buying more items, now that flower and vapes are on the shelves.

“We’re doing much better than we were back then, just barely paying the bills,” Martin said. “Now we can take care of the overhead and have some additional profit. I wouldn’t say it’s something to retire on, but we’ve been able to put some in the bank.”

Area slated for future expansion during a tour of the new, bigger, LSU medical marijuana facility run by Good Day Farm Wednesday Jan. 19, 2022, in Ruston, La.

Randy Mire, co-owner of Baton Rouge’s Capitol Wellness Solutions, downplayed shortages of flower and said business has been good. He said he’s had to hire more people to package flower and handle the increased demand.

In the legislative session that begins March 14, some lawmakers say they’ll file bills to expand the exclusive licenses to let more people get in on the rapidly growing market. It’s not clear which, if any, ideas will gain traction.

State Rep. Larry Bagley, a Republican who chairs the Health and Welfare Committee, which handles most medical marijuana legislation, said it takes more than an hour to get from his house in Stonewall to the nearest marijuana pharmacy. He said a close family member has seen great benefits since getting a prescription.

Bagley said he intends to file legislation to expand the number of pharmacies that dole out marijuana. He also wants to hand out more growing licenses, but said his legislation will authorize new growers only in 2025, when the current LSU and Southern contracts expire.

Southern’s growing partner, Ilera Holistic Healthcare, reported nearly $9 million in expenses in 2021. That’s up from less than $6 million in spending in 2020.