Pubdate: Mon, 06 Jun 2016
Source: Houston Chronicle (TX)
Copyright: 2016 Houston Chronicle Publishing Company Division, Hearst Newspaper
Contact:  http://www.chron.com/
Details: http://www.mapinc.org/media/198
Author: Peggy O'Hare

AN OLD COTTON GIN SOON COULD HELP PRODUCE LEGAL MARIJUANA

Ceo Expects Texas to Be Major Center for a Strain of Cannabis That 
Can Ease Epilepsy Without Getting Patients High

About 60 miles north of Dallas, amid green fields in the town of 
Gunter, population 1,486, Texas Cannabis CEO Patrick Moran has 
optioned to buy a former cotton gin, where he plans to grow the 
Cannabis sativa plant, known more commonly as marijuana.

The businessman and attorney is positioning himself at the forefront 
of what he estimates will be a $900 million a year industry in Texas 
- - the recently legalized market for treating intractable epilepsy 
with a strain of marijuana that eases seizures without getting patients high.

Texas, as it turns out, may be one of the best states in the nation 
to grow pot. While the state has one of the most stringent medical 
usage laws in the country, it is setting up some of the cheapest 
licensing fees and one of the least restrictive markets for pot 
growers in the U.S.

Gov. Greg Abbott signed legislation last year allowing the state to 
license businesses to grow, process or dispense nonintoxicating 
marijuana or cannabis for medical use beginning next year. Moran 
wants to do all three with Texas Cannabis, cultivating marijuana from 
seed to sale.

Moran is waiting on the state to set up its registry, slated to go 
live by June 2017, to put in his application. He plans to use that 
former cotton gin, which has sat dormant for 40 years, to cultivate, 
extract and dispense cannabidiol oil, or CBD oil, from low-THC 
cannabis plants - just around the corner from the city hall in 
Gunter. THC, or tetrahydrocannabinol, is the psychoactive component 
that gives users a high when they smoke traditional marijuana.

The new market is being called the green rush.

"There's a whole other industry that is being birthed in this 
country, just like what happened with the dot-com boom," Moran said. 
"I think it's once in a lifetime."

Texas is one of 18 states to approve laws since 2014 allowing some 
form of CBD for patients with certain medical conditions. Under the 
state's new Compassionate Use Program, epilepsy patients whose 
seizures can't be controlled by traditional medication will be 
allowed to take CBD-rich oil, which is believed to have therapeutic 
benefits for some medical conditions.

An estimated 149,000 to 160,000 Texans of all ages suffer from 
intractable epilepsy, a condition that can be fatal. About 40,000 of 
those patients are projected to benefit from the medication, 
according to the Texas Cannabis Industry Association.

The potential for rapid growth is tremendous, as more states lift 
restrictions on marijuana use and sales and as societal attitudes 
toward the drug relax. Legal cannabis markets nationwide are 
projected to yield $7.1 billion in sales in 2016, a 54 percent jump 
since 2014, according to a report released in February by ArcView 
Market Research and New Frontier Data.

By 2020, legal sales are projected to reach more than $22 billion nationally.

"No other industry in this country is making the kinds of gains 
year-overyear that the cannabis industry is making," said Dr. Scott 
Bier, an emergency room physician in Houston and CEO of Green Well 
Ventures, another private company aiming to be among the state's 
first licensed cannabis operations. "And it's just going to get 
bigger . ... Everybody wants to get a little piece of it."

Quiet passage

State officials have created favorable conditions for businesses 
seeking to enter the low-THC cannabis market, Texas Cannabis Industry 
Association executive director Kayla Brown said.

"I think the bill passed so quietly that a lot of people don't 
realize Texas actually has the most permissive licensing structure in 
the country," she said. "You could not choose a better market to get into."

The Texas law established narrow parameters on the type of cannabis 
that can be dispensed, who can take the medication and which 
physicians can prescribe, said Frank Snyder, a Texas A&M law 
professor who teaches the state's first course on marijuana law, 
policy and business. But it doesn't limit the number of competitors 
who can grow, extract or dispense.

"The process for getting a license and beginning to cultivate is 
probably the most liberal law of any of the medical marijuana states 
that I'm familiar with right now, in terms of putting up the fewest 
barriers to entry," Snyder said.

Applicants aren't required to have vast cannabis industry experience. 
They simply have to show they have the technological ability to grow, 
extract or dispense the product by having experience in related 
fields, such as cultivation, analytical laboratory methods and 
handling confidential patient information.

They also must show they can obtain the locations, resources and 
personnel necessary for operations, maintain accountability of all 
materials and have the financial ability to keep going for two years.

Regulations issued by the Texas Department of Public Safety in 
January also set fairly low licensing fees.

A cannabis operation seeking to become licensed in Texas must pay a 
$6,000 application fee to the state. Businesses will have to renew 
those licenses and pay another $6,000 application fee every two years.

That compares favorably with fees charged by some other states. 
Massachusetts, for instance, requires a medical marijuana dispensary 
to pay a $50,000 registration fee every year. Hawaii charges only a 
$5,000 application fee but requires a dispensary applicant to have at 
least $1 million in reserves, plus an additional $100,000 on hand for 
each retail site. Florida requires an applicant seeking a cultivation 
license to secure a $5 million performance bond.

Colorado, widely regarded as having some of the nation's most 
permissive marijuana laws, charges as much as $25,000 in upfront 
application and licensing fees, depending on the type and volume of 
pot sold, plus additional fees.

Moran hopes to sell Texas Cannabis products at his dispensary in 
Gunter, other dispensaries across the state and eventually nationwide, he said.

In the meantime, he's been busy running AcquiFlow, which sells LED 
lighting systems to industrial agricultural customers. AcquiFlow also 
established an industrial-scale "grow" in Virginia, where its 
subsidiary company, Living Farms, plants lettuce and basil and sells 
them to some Whole Foods Market and Wegmans grocery stores. Moran 
plans to replicate that growing operation in Texas but will plant 
low-THC cannabis here instead.

Texas is drawing interest from out-of-state players as well. CW 
Botanicals, a private company in Colorado that makes Charlotte's Web 
Hemp Extract products, is among those contemplating doing business here.

CEO Joel Stanley said "there's a good chance" his company may work 
with one of the licensed operations in Texas or perhaps jointly seek 
a license with another business here.

It will be some time before Texas becomes saturated like Colorado, 
Bier said. He predicts Texas' low-THC cannabis industry could yield 
$100 million to $300 million a year in revenue.

His Green Well Ventures, which also plans to apply for a license 
early on, is eyeing Houston as home base for its indoor growing 
facility and production. It plans to open dispensaries in Houston and 
Austin, employing up to 50 people once fully up and running.

Green Well's dispensaries won't just fill cannabis prescriptions, but 
also will serve as traditional wellness stores, stocking products 
like herbals, eastern medicine products and homeopathic products, and 
possibly offering acupuncture or massages.

"We may even open up before our first harvest comes through since we 
have other revenue streams," Bier said.

Soliciting proposals

DPS is required to license at least three dispensaries by Sept. 1, 
2017, providing applicants meet its requirements.

The agency is soliciting proposals from contractors to build a 
secure, online registry that physicians and licensed dispensaries can 
use to provide the substance to patients. Once that registry is ready 
- - by June 2017 at the latest - growers, extractors and dispensaries 
can begin applying for state licenses. DPS will conduct inspections 
to make sure applicants comply with all regulations.

The new state law forbids patients from smoking marijuana. They can 
use it as an oil, resin, preparation, mixture, derivative or some 
other compound derived from the Cannabis sativa plant. Patients with 
prescriptions will be able to take it orally or apply it to their skin.

Prescriptions in Texas will require the approval of two physicians. A 
"significant portion" of their clinical practices must be devoted to 
evaluating and treating epilepsy, the law states. They also must be 
board certified in epilepsy, neurology, neurophysiology, or neurology 
with a special qualification in child neurology. Few physicians in 
the state meet those requirements.

The Texas Medical Board could not provide any data showing how many 
physicians in the state meet those qualifications. Cursory research 
by the Texas Cannabis Industry Association indicates 45 physicians 
statewide might qualify to prescribe, Brown said. Sindi Rosales, 
founder and CEO of the Epilepsy Foundation of Central and South 
Texas, believes the number is even lower.

DPS regulations also set tight parameters for storing and 
transporting CBD oil, all raw materials and any byproducts.

"Even though this has zero street value - you could drink a gallon of 
this and never get high - I've got to have antidiversion protocols," 
Moran said. "I've got to have 24-hour security. If it's transported 
in a vehicle, the vehicle has to have a safe inside."

The rules assume a "worst-case scenario for those who oppose it or 
who have no faith in those who are in the industry," he said.

DPS has indicated it will soon propose revising those regulations to 
define more specific safety and security requirements, testing 
procedures and waste disposal measures.

At the University of Texas Health Science Center in Houston, Dr. 
Gretchen Von Allmen, a pediatric neurologist specializing in 
epilepsy, said patients' families ask her "every day" how soon 
low-THC cannabis will become available here.

"Most of them who are asking have already tried multiple 
anti-convulsant medications that are available, and their children 
are still having seizures," said Von Allmen, who sees 50 to 100 
epileptic children a week at her practice.

Some parents are giving their epileptic children CBD oil from 
companies in other states, Von Allmen said.

"We need to make sure that it's being used safely and that it's not 
affecting the child's health otherwise," said Von Allmen, chief of 
pediatric epilepsy at the health science center's McGovern Medical 
School and director of the epilepsy monitoring unit at Children's 
Memorial Hermann Hospital in Houston.

Parents ordering CBD oil from companies in other states report 
they're typically paying a few hundred dollars a month for such 
products, Von Allmen said.

Not a 'cure-all'

CW Botanicals sells a 1-ounce bottle of Charlotte's Web containing 
500 milligrams of CBD for $52.49 through its website, while a 
3.38-ounce bottle containing 5,000 milligrams costs $275. The larger 
bottle provides a six-week to two-month supply for a typical 
customer, Stanley said.

The low-THC cannabis authorized by Texas law won't be the answer for 
all patients, said Dr. Freedom Perkins, a pediatric neurologist and 
epileptologist at Dell Children's Medical Center in Austin.

"I think for some people this is going to turn out to be a wonderful 
thing," Perkins said. "... It will not be a cure-all for everybody."
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MAP posted-by: Jay Bergstrom