Saturday, July 20, 2024

Legislators make big changes to Louisiana’s cannabis industries

by BIZ Magazine

BY: WESLEY MULLER – Louisiana Illuminator

Louisiana’s edible hemp industry survived a close call with state lawmakers who chose stricter regulations over a complete dismantling. Also, the state has forced the two public universities with exclusive rights to medical cannabis farming in Louisiana to transfer their duopoly to two private companies.

The revamped hemp products proposal, House Bill 952, sponsored by Rep. Dustin Miller, D-Opelousas, passed the House in a 72-30 vote and cleared the Senate 26-11 in the final hour of the legislative session Monday.

Miller’s legislation will, among other things, lower the potency of recreational hemp edibles from 8 milligrams to 5 milligrams of THC per serving and ban them from convenience stores that sell fuel. THC is an acronym for tetrahydrocannabinol, the psychoactive compound in cannabis.

Restaurants and bars that currently hold alcohol and hemp permits will be able to continue selling hemp products, but the bill will stop the state from issuing any new hemp permits for alcohol establishments.

Final passage came after a compromise that left both sides disappointed.

“No one likes it,” Miller told his colleagues as they peppered him questions and expressed frustration with the final version. He said he was backing the compromise proposal because that was the commitment he made with some lawmakers who supported a competing proposal that would have criminalized all recreational THC products and dismantled the entire hemp industry.

Rep. Jason DeWitt, R-Boyce, criticized the legislation for arbitrarily banning hemp only from convenience stores that sell fuel.

“We’re gonna discriminate against stores that sell fuel versus ones that do not?” DeWitt asked. “ … We gave them a permit, and we’re basically gonna put them out of business?”

Miller agreed the ban doesn’t make much sense but said it was a way to appease the bill’s opponents who wanted hemp banned from all convenience stores.

Potency changes
The proposal will lower the potency of liquid THC tinctures from 80 milligrams to 30 milligrams, and it will limit THC beverages to a single 5 milligram serving per can or bottle. It effectively outlaws one popular drink with 50 milligrams of THC packed into a single can with 10 servings. The manufacturer recommends buyers drink only one serving at a time.

Also, Miller’s bill will require manufacturers to conduct potency tests on every batch of hemp edibles to ensure uniform amounts of THC in their products.

Still in its infancy but growing rapidly, Louisiana’s hemp industry was on a recent collision course with competing legislation that would have crippled some 2,000 businesses that have taken root in Louisiana since 2022 when the Legislature unwittingly legalized recreational hemp edibles with limited amounts of THC for adults 21 and older.

Some lawmakers have said they only voted for the 2022 law based on then-House Speaker Clay Schexnayder’s claim that it would take “tractor-trailer loads” of the stuff to get high. At the time, the Republican speaker was repeating a misleading, though perhaps technically accurate, statement a hemp farmer had made during a committee hearing. Just like with Miller’s legislation this year, lawmakers passed the late-amended Schexnayder bill at the close of the 2022 session.

Although it is the same species of plant as marijuana, hemp is a strain of cannabis with very low levels of THC. Manufacturers of consumable hemp products can extract those small amounts of THC and concentrate them into levels that can produce an intoxicating effect. They can also convert cannabidiol (CBD), a separate chemical in hemp that doesn’t produce a high, into THC simply by cooking it in an acidic solution at a warm temperature.

This year’s legislative session saw Senate Bill 237 by Sen. Thomas Pressly, R-Shreveport, which would have made it illegal to manufacture or sell products that contain any amount of THC unless they are licensed medical marijuana products. Pressly’s bill picked up significant steam as it advanced through the Legislature, coming just shy of final passage last month, while Miller’s bill, which would keep the industry legal, appeared to be losing steam.

The divide was largely partisan as most Republicans had lined up in support of Pressly’s bill and against the recreational hemp industry while most Democrats had lined up in support of the industry.

The partisan lines began to crack as small business owners and residents began flooding legislators with emails, social media posts and phone calls, urging them to find less drastic measures.

On Friday, a bipartisan majority of House lawmakers sidelined Pressly’s bill, while the Senate approved Miller’s bill — with a catch. The Senate had added two amendments to Miller’s bill that would have banned the sale of THC edibles and drinks at all bars and convenience stores.

But House lawmakers rejected those Senate amendments on Sunday, sending the bill to a conference committee that would have less than 24 hours to work out a final compromise before the end of the session.

Working behind the scenes on the hemp issue were a contingent of beer and medical marijuana lobbyists pushing to restrict hemp products, particularly the THC seltzers they view as a competitive product.

Miller’s bill will head to Gov. Jeff Landry for executive approval. If signed into law, it will have a take-effect date of Jan. 1, 2025.

Farming rights
In a separate new law, the medical marijuana industry will see significant changes after legislators revoked the exclusive farming rights from two public universities and fully privatized marijuana growing in the state, giving a single company with close ties to lawmakers dominance over medical cannabis cultivation.

Senate Bill 228, sponsored by Sen. Patrick McMath, R-Covington, sailed through the Legislature with little opposition and was approved by the governor, taking immediate effect.

Since 2015, LSU and Southern University held the only two medical marijuana grower licenses issued in Louisiana. To get their cannabis farms up and running, the colleges partnered with private contractors Good Day Farm and Ilera Holistic Healthcare, respectively. McMath’s new law transferred the cultivator licenses to those companies and allows them to keep them as long as they file for renewal each year.

The law has created a 100% privately-owned duopoly, though the two companies hardly compare in size or market share. No other companies will get a chance to apply for a grower’s license unless either Good Day Farm or Ilera relinquishes theirs.

Good Day Farm has close ties to the lawmakers who have given it a near-exclusive grip on a lucrative niche market. The company’s primary shareholder is shipbuilding magnate Donald “Boysie” Bollinger, one of the wealthiest persons in Louisiana and a major Republican donor. The company’s president is John Davis, husband of state Rep. Paula Davis, R-Baton Rouge.

Good Day Farm did not respond to a request for comment Monday.

The law’s passage comes at an ideal time for the companies. Good Day Farm, which has produced far more product than Ilera, will be well-positioned to corner the market by the time the federal government loosens its restrictions on marijuana.

Following President Joe Biden’s move to reclassify marijuana from a Schedule I to a Schedule III drug, the U.S. Drug Enforcement Administration (DEA) recently published the rescheduling plan, which is currently pending public review under a 60-day commenting period.

Easing federal regulations could reduce the heavy federal tax burden that the industry currently faces and blunt many of the criminal laws surrounding weed. The Internal Revenue Code currently renders marijuana businesses ineligible for certain federal tax deductions, and some federal courts have refused to grant bankruptcy judgments for businesses with income from marijuana-related activity. Biden’s proposal could also make it easier to research cannabis and loosen workplace policies on recreational use and drug testing.

On the other hand, loosening the federal regulations could have some unintended consequences.

As a Schedule III drug, marijuana would remain regulated by the DEA. That means the roughly 15,000 cannabis dispensaries in the U.S. could be required to register with the DEA like regular pharmacies or fulfill strict reporting requirements.

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