Medical marijuana in Louisiana could be ready by fall 2018_lowres

 

More than a year after Southern University selected Advanced Biomedics to run its medical marijuana program, the company has not acquired the land it targeted for growing operations or reached a point of paying Southern any of the $6 million that attracted the university to the company.

The Lafayette company appears to have made little progress, if any, toward beginning operations as one of two Louisiana growers.

And as recently as mid-October, Lafayette businessman Hunter Perret was negotiating to purchase a stake in Advanced Biomedics held by majority owner and Carencro businessman Carrol Castille, a spokeswoman for Perret confirmed.

“Hunter Perret tried everything to complete a deal with (Advanced Biomedics), but an agreement could not be reached,” Perret spokeswoman Amy Jones said.

Southern and LSU are the only two licensed growers of marijuana in Louisiana, as dictated by state law. Both institutions picked private companies to run their operations. LSU’s partner, GB Sciences, has plants growing in a temporary facility while it works to get regulatory approval for its permanent operations in a former Pepsi distribution center in south Baton Rouge. After regulatory delays, that company said it will have product available in early 2019.

Delays at Southern’s partner, which earlier this year was plagued with competing lawsuits over ownership of the company and contract negotiations with Southern, have taken on a greater importance since Louisiana’s marijuana laws were loosened this summer. The Legislature added chronic pain and other conditions to the list of qualifying conditions that can be treated with the drug. Those changes are expected to greatly expand Louisiana’s patient base, and have raised questions over whether enough product will be available to meet demand.

Southern has previously said it planned to send medical marijuana to pharmacies by early 2019, but it is not clear if the school is sticking to that projection. Though it has responded to some emails, Southern has declined repeated interview requests over the past five months, and did not answer a detailed list of questions about the partnership with Advanced Biomedics. Representatives of Advanced Biomedics have not responded to requests for comment. 

In an email on Oct. 9, Southern spokeswoman Janene Tate said that the university submitted its standard operating procedures for the facility to grow marijuana and make medical products to the Louisiana Department of Agriculture and Forestry, which regulates the state’s two marijuana growers. The school also said construction would begin immediately following the agency’s approval of facility plans and procedures, and that product would be available in early 2019.

The school also said “Southern has completed mandatory criminal background checks and the fingerprinting process” and that the “federal portion of the process” was still pending.

In addition, the agriculture department’s regulations on marijuana require an applicant to submit a long list of information as part of its application for a license. That information includes detailed plans of design of the facility, a construction timeline, sources of funding and a management plan.

The agriculture department said it has not received any of that information from Advanced Biomedics.

The company, owned primarily by Castille and Lafayette pharmacist Chad Bodin, never acquired the land in Baker cited in its plan for building a ground-up growing facility, the land owner confirmed.

“Advanced Biomedics was a VERY BRIEF conversation and they moved on in short order,” Sidney Bowden, who owns the 176-acre plot along La. 964, said in an email. “Where their focus is now is way in my rearview mirror.”

Bowden added the conversation with the company happened “over a year ago.”

While it is not clear whether the company has other land or an existing building in mind, Southern AgCenter officials were under the impression as recently as late August that the firm was moving forward with the property in Baker, emails show. Also, Southern AgCenter spokeswoman Lakeeshia Giddens Lusk had said in late August that Advanced Biomedics was “in the process of securing the land.”

Southern has not answered questions since then about the land. Randy Angelle, a Breaux Bridge attorney representing Advanced Biomedics and Castille, did not return several calls seeking comment nor did Bodin.

When asked last week if the university could point to any steps Advanced Biomedics has taken toward building a facility or growing plants, Tate said: “Southern University continues to make progress in the production of medical marijuana.”

“We remain committed to moving forward in making a positive impact on healthcare in this state.”

Earlier this month, Tate responded to one question about whether Southern had received any money from Advanced Biomedics and confirmed the university has not.

Over the life of the contract, the school is to receive more than $6 million from Advanced Biomedics, but it has not progressed to the point at which payments begin, Tate said. According to the agreement, Advanced Biomedics is obligated to pay Southern $2.15 million on the “effective date” of the contract, Tate said. That sum includes a $1 million signing bonus, $1 million annual service fee and a $150,000 contribution toward research at Southern into medicinal plants.

“The ‘effective date’ begins once LDAF (Louisiana Department of Agriculture) provides authorization for the vendor to proceed. The authorization has not been provided at this time, however, we anticipate this occurring in the coming weeks,” Tate said.

Southern was lured by Advanced Biomedics in part because of the firm's promise of more than $6 million in payments — exceeding any other applicant. Seven companies applied to be Southern's marijuana growing partner.

Advanced Biomedics beat out two other finalists for the marijuana contract last fall, despite a review committee recommending the board pick a different vendor.

Earlier this spring, at a Southern board meeting where members were deciding whether to sign a deal with Advanced Biomedics, Southern University President and Chancellor Ray Belton touted the “positive cash flow” that would come from the deal. 

“If we move away from Advanced Biomedics, where do we go? Who do we go to? Another vendor whom this board has already found does not provide the kind of subsidies which we are seeking right now?” Belton said at the meeting.

A battle over contract negotiations and ownership between Castille and Bodin had worried some of the Southern board members. That dispute had boiled over into competing lawsuits in the spring, before the board was set to approve the contract, with Castille accusing Bodin of “fraudulently” negotiating a contract with Southern. Bodin also sued Castille, alleging he never put up the $12 million in capital contributions he promised, and was therefore never even an owner of the company.

In the week leading up to the vote, Southern University issued an ultimatum to Advanced Biomedics, saying the university would look elsewhere for a marijuana grower unless the owners could resolve their dispute outside of court. The two sides said at the time they were working toward a resolution and got the judge to dismiss the court case.

At the time, the firm also was facing a lawsuit from a Baton Rouge investor who claimed Bodin broke his word on a $20 million deal that would have given an investment group a 14 percent stake in the company. That dispute was being worked on out of court.

Castille filled a crucial role for Advanced Biomedics when he came on board last year: Financing.

The Carencro native got involved with the company shortly before it went before the Southern University board to make its pitch. He promised a much-needed $12 million in capital, giving him a 65 percent stake at the time, according to court documents.

Bodin, the founder and CEO, was the other major owner of Advanced Biomedics, claiming 27 percent ownership in the application, which worked out to $2 million in capital contributions, documents said. Bodin brought on Castille and assembled Advanced Biomedics initially.

The latest documents submitted to Southern in late September show Castille and Bodin as owners in Advanced Biomedics.

Follow Sam Karlin on Twitter, @samkarlin.