Medical-marijuana firms may have been dissuaded by Iowa's fees and restrictions

Potential medical-marijuana production companies might have shied away from Iowa’s new program because of high fees and a relatively small number of patients who could qualify, a top state administrator said Friday.

Just one company, MedPharm Iowa, applied for a state license to grow marijuana plants and produce medications from them. The Iowa Department of Public Health announced this week that it intended to grant a license to the Des Moines company, which is owned by the president of the food supplement company Kemin Industries.

A new state law allows the Iowa Department of Public Health to license up to two medical-cannabis production companies. Deputy Department Director Sarah Reisetter said eight other companies showed interest in applying for production licenses, but none applied.

Reisetter said her department would like to see Iowa have two medical-marijuana production companies, but she recognizes the state law’s limits could dissuade some firms from applying.

“Our patient numbers to date are quite low, and our program is pretty restrictive,” she said in an interview Friday after a meeting of a medical-marijuana advisory council.

Iowa’s new medical-marijuana law strictly limits what kinds of marijuana-derived products may be made and sold. The law bars products that could be smoked or eaten. It also would not allow products with more than 3 percent of THC, the chemical that makes recreational marijuana users high.

Iowa’s previous medical-marijuana law only allowed possession of a marijuana-derived oil for use by people with severe forms of epilepsy. The new law also allows possession of approved marijuana products by patients diagnosed with Parkinson's disease, cancer, multiple sclerosis, seizures, AIDS or HIV, Crohn's disease, or Amyotrophic Lateral Sclerosis, as well as most terminal illnesses that involve untreatable pain and a life expectancy of less than one year.

Medical-marijuana advocates want Iowa to add more ailments to the list for which Iowans could use marijuana derivatives. They also want the state to increase the limit on THC, which they say can ease a range of symptoms.

Reisetter said the application fee for a state production license is $7,000, but companies that are awarded licenses can also expect to pay $150,000 to $200,000 per year in state fees for administration costs. The costs will include salaries for two Division of Criminal Investigation agents, who are to help ensure the integrity of Iowa’s fledgling medical-marijuana system, she said.

Iowa has only issued 218 new medical-marijuana possession cards for patients or caregivers since last May, when the additional ailments were added as reasons to gain one. The cards allow people with certified cases of those diseases to possess certain types of marijuana extracts, but the state won’t have a legal way to distribute those products until 2019.

Reisetter said she plans to talk to companies that decided against seeking production licenses, to confirm what dissuaded them from applying. She said her department might reopen applications for production licenses later.

Roxanne Cogil, representing the Epilepsy Foundation, told the Iowa Medical Cannabidiol Board Friday that patient advocates are concerned about having a single company be responsible for producing all medical-marijuana products for the state. “What if their whole crop were to die?” she asked. If that happened, she said, all patients could lose access to the medications.

Representatives of MedPharm Iowa expressed confidence Friday as they presented their plans to the advisory board, which is mainly composed of physicians.

The new company plans to use expertise from Kemin Industries, which is internationally known for extracting medically useful compounds from marigolds, oregano and other plants. MedPharm's leaders promised to make high-quality medical-marijuana products with carefully measured doses. Among the likely products are creams, oils, caplets and suppositories, the leaders said.

The company would like to see the state further expand Iowa's medical-marijuana program by allowing higher THC levels and treatment of more illnesses.

But MedPharm lawyer Lucas Nelson said after Friday's meeting that the new company can be successful even with Iowa's current limits. “MedPharm Iowa does feel like we can make it work. Otherwise, we wouldn’t have applied for a license,” he said.

MedPharm Iowa hasn’t decided whether to apply next year for one of five licenses to set up dispensaries, where the new products would be sold.