Though some board members wanted more answers, the LSU Board of Supervisors gave President F. King Alexander authority Thursday to work out the details of a $3.4 million contract with a Las Vegas company to grow marijuana for medical purposes in Louisiana.
But the Board of Supervisors, which sets policy at LSU, still will have an opportunity to question GB Sciences Inc. before the final deal is penned. The board's target date to do so is August.
The LSU AgCenter is betting the future of its medical marijuana business on a small Las Vega…
Under the general outline of the contract, GB Sciences would pay the LSU AgCenter $3.4 million or, if greater, a commission of 10 percent of gross receipts for an initial five-year term. The contract could be renewed for additional terms.
The state named the agriculture centers at LSU and Southern University as the only legal growers of marijuana plants, from which medicines can be extracted.
Louisiana recently approved a law allowing the use of medicines produced from a plant that is otherwise illegal to possess in this state. The university ag centers were tapped because law enforcement did not want the weed to be grown privately.
The board approved the resolution Thursday afternoon after a stormy committee hearing earlier in the day. Some of the board members wanted answers to questions before they said they would be willing to sign off on the deal.
“This is a very sensitive matter,” said Board member Glenn J. Armentor, a lawyer from Lafayette. Though not a member of the committee, he asked for an opportunity to get questions asked and answered before moving forward with the contract.
Stanley J. Jacobs, of New Orleans, said he had some questions about the company’s financials.
Jacobs apparently was referring to concerns about the finances raised by losers in the competitive bid process. Two of the company's past managing partners filed for bankruptcy and the company posted $28 million in losses, according to critics citing public documents. The company has gone through four different names and business models since 2004.
But John Poss, chief executive officer of GS Sciences, based in Las Vegas, argued that the public filings don’t reflect the true nature of the company’s finances. Private documents were made available to the LSU team vetting the contract proposal. For instance, the company has attracted investors specifically to help fund the LSU project, he said.
The cost of submitting a bid on the LSU project was $1 million. “Do you think I would have put up hundreds of thousands of dollars to put this bid together, then pay $1 million (to make the bid) if we didn’t have the financing in order?” Poss said after the meeting.
Board Member Ann Duplessis, of New Orleans, suggested the requests by her colleagues were aimed at stalling the process and scolded them for not reading the materials in advance. “So we don’t get to a board meeting and have this charade happen,” she said.
Finance Committee Chair Ronald R. Anderson, who also heads the Louisiana Farm Bureau Federation in Baton Rouge, pointed out that the resolution was only to allow Alexander to hammer out the details of the overall deal. Those members with questions about the deal would have plenty of opportunity to ask before the contract is up for a final vote.
“I have questions, but I chose to take the road of we still have the ability to not do this,” said Board Chair Scott Ballard, of Covington.
“We are not a pot company,” Poss said.
The company has been researching cannabis properties and has filed patents on three different compounds that address aspects of neurological conditions, inflammatory disorders and heart disease, he said.
“I don’t want to be just another weed grower,” LSU Vice President of Agriculture Bill Richardson told the board. For him, the research component is important and he pointed to the company’s willingness to contribute $500,000 for research.
The proposed contract would allow the LSU AgCenter to conduct research on plant varieties, compounds, extraction techniques and delivery methods, which may generate additional revenue through discoveries subject to intellectual property rights, Richardson said.
Richardson added that no LSU students would be employed at the indoor growing facility and that it won’t be adjacent to campuses.