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Iowa picks its first medical marijuana manufacturer

A Des Moines-based company will be the first and only in Iowa licensed by the state to grow marijuana and make medical products from it.

The Iowa Department of Public Health intends to give a cannabidiol manufacturing license to MedPharm Iowa, the company announced Tuesday. MedPharm Iowa is a newly formed company owned by Chris Nelson, president and chief executive officer of ingredient company Kemin Industries.

The Health Department has until Friday to formally issue a license, but the company announced its selection in advance of the deadline.

The manufacturing license comes out of an agreement earlier this year to vastly expand Iowa’s limited medical cannabis program.

In May, then-Gov. Terry Branstad signed a law calling for up to two state-licensed medical cannabis manufacturers.

The new law also expanded beyond chronic epilepsy the illnesses patients with a doctor’s prescription could treat with medical cannabis to include cancer, multiple sclerosis, AIDS or HIV and others.

In a news release, Nelson said “botanicals, including the cannabis plant, offer endless possibilities.”

“With the creation of MedPharm Iowa, we will use our innovative expertise and experience with scientifically sound research to assist those dealing with chronic pain, cancer, debilitating diseases and possibly help alleviate the opioid epidemic in Iowa,” Nelson said.

MedPharm Iowa will grow cannabis and manufacture medical cannabidiol in a facility located on Kemin’s Des Moines campus. Kemin uses rosemary and other plants to make ingredients for animal feed and the food industry.

MedPharm “will be investing millions of dollars” in Iowa and use intellectual property from Denver, Colo.-based MedPharm Colorado, it said in the release. Nelson is listed as one of that firm’s managing partners on its website.

It was not clear how much MedPharm Iowa plans to produce or in what forms.

Kemin spokeswoman Lauren Burt said the company “will serve the unmet needs in the marketplace for Iowans, and will produce the adequate amount to meet those needs.”

Cannabidiol is a chemical found in cannabis plants that can be used to make products, such as oils, to treat medical conditions.

“Oil is only one form of the product that can be made. The manufacturer, in their application, has described many different forms of the product that they anticipate making,” said Randy Mayer, director of the Office of Medical Cannabidiol with the Iowa Department of Public Health.

Under the licensing terms. MedPharm needs to supply medical cannabidiol by Dec. 1, 2018.

Licensed cannabidiol manufacturers, like MedPharm, must have their licenses renewed each year. Products cannot have a tetrahydrocannabinol, or THC, content of more than 3 percent.

The manufacturers face a number of other restrictions, including inspections by the state, annual fees expected to be at least $150,000 and background checks for the company’s owner and employees. Manufacturers also will have to enter data into a state-run inventory system.

Earlier this year, the Health Department received nine letters from those interested in manufacturing. Ultimately, though, only one business submitted an application for a license.

Mayer said barriers such as the annual fee and a small patient base may have kept some from applying.

“That first payment is going to be due before you’ve even sold a product, so you have to have substantial collateral,” he said.

Barring any changes during the upcoming legislative session, Mayer said the department could issue a new request for a second manufacturer next year.

The Health Department still needs to issue up to five licenses for medical cannabidiol dispensaries. Mayer said the department hopes to have those licenses approved by April.

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