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Medical Marijuana in South Carolina
Read more about the politics, science and businesses surrounding a new push to legalize medical marijuana in South Carolina.
Alex English’s basketball skills made him a legend in the Palmetto State and the nation.
His No. 22 jersey was retired by the University of South Carolina Gamecocks. He went on to become the NBA’s most prolific scorer In the 1980s — better than Magic Johnson, Larry Bird and Kareem Abdul-Jabbar — and was inducted into its Hall of Fame.
Today English, 65, has a new passion — getting in on the ground floor of South Carolina’s budding cannabis industry.
“I want to sell a natural organic product that helps people,” he said, sitting in the den of his well-appointed home in Blythewood.
English is a partner in a new company called GreenSmart Botanicals, along with former U.S. Attorney Bill Nettles and long-time Sumter County farmer Edward Forte. They are just one of a growing number of entrepreneurs positioning themselves to cash in on the cannabis industry in South Carolina.
South Carolina has just begun allowing farmers to grow hemp, the cannabis cousin to marijuana that is used in a variety of products from biofuels to textiles. Unlike marijuana, hemp won’t get you high.
Last year, the state allowed 20 farmers to grow experimental hemp crops and was scheduled to double that number this year. But in December Congress passed a law that allowed anyone to grow hemp.
So now, South Carolina farmers can start their cannabis growing and processing operations. They may also expand or switch to marijuana if a bill called the Compassionate Care Act, which would legalize the use of marijuana for medical purposes, passes the S.C. General Assembly.
English and his partners want to secure one of the 15 licenses to grow weed that would be granted under the bill. They plan to invest $3 million to $5 million in the business, which would initially grow hemp and then marijuana, extract CBD oil and open dispensaries.
The Compassionate Care Act calls for opening at least one medical marijuana dispensary in each county.
The partners wouldn’t say what the estimated return on their investment might be; but, “we hope the profits will be high,” English said, “no pun intended.”
‘Not going to stop’
The S.C. General Assembly is debating the bill, which would allow doctors to authorize marijuana use for people suffering from a list of debilitating illnesses, from epilepsy to Post Traumatic Stress Disorder.
Patients could purchase up to 2 ounces of marijuana or an equivalent derivative — vape oil for example — every two weeks. It would be sold at one of 100-plus dispensaries around the state.
The bill is scheduled to be debated by the Senate Medical Affairs Committee next week.
See highlights of the legislation here.
Last year, the Compassionate Care Act advanced to both the full S.C. House and Senate; but the session ended before the bill could be debated by either chamber.
This year, Republican state Sen. Tom Davis of Beaufort resubmitted the bill with renewed vigor. As chair of a Senate Medical Affairs subcommittee, Davis met with the bill’s chief opponents and vetted amendments.
The State Law Enforcement Division, the S.C. Sheriffs’ Association and the S.C. Medical Association, among others, oppose the bill.
Davis’ bill faces a Wednesday deadline to pass from the Senate to the House. After that, the chances of passing both sessions this year are slim.
Legalization “is going to happen,” Davis said. “I’m not going to stop until it does.”
A multi-million dollar business
One of the bill’s chief proponents is Janel Ralph, chairwoman of the pro-cannabis Compassionate SC advocacy group.
She owns Palmetto Synergistic Research, a Conway-based company that produces Palmetto Harmony hemp oil. The company was one of the first cannabis start-ups in the state.
The business was born when Ralph couldn’t find in South Carolina the high quality cannabidiol products that alleviated her daughter Harmony’s epileptic seizures, she said. Cannabidiol, or CBD, is a compound found in both marijuana and its non-psychoactive cousin, hemp. It can be sold legally in South Carolina.
In 2015, before South Carolina legalized growing hemp, Ralph began searching for high quality hemp in Kentucky, where it was legal. She started extracting high quality CBD in large quantities for export to the Palmetto State, where it was converted into products like creams, patches, capsules, even CBD for pets called Palmetto Paws.
She imported the oil in 55 gallon drums and had a bottling and labeling facility in an industrial park near Coastal Carolina University — an industrial park she eventually outgrew. She sells her products both online and in her Palmetto Harmony shop in Conway, as well as selling wholesale to other distributors.
The company employs 26 full-time workers and three part-time workers. It plans to add another eight or nine workers by the end of the year.
Ralph’s gross sales?
“Let’s just say we’re a multi-million dollar business,” she said.
Vertically integrated operation
In 2017, Ralph, through her Compassionate S.C. group, became one of the leading voices behind the legalization of hemp in South Carolina.
In 2018, after landing the first of 20 permits to grow hemp from the S.C. Department of Agriculture’s hemp pilot program, Ralph grew 4,000 plants from seven species to find out which species was best suited for the Pee Dee’s soil and climate. For CBD oil, all of the plants must be grown organically, so the biggest concerns were pests, molds and mildews.
“We learned a lot,” she said at the time. “It’s a lot like organic tobacco.”
This year, Ralph plans to plant 25 to 30 acres of hemp in addition to plants grown in her 100,000-square-foot greenhouse.
And if the Compassionate Care Act becomes law, she plans to add a second 100,000-square-foot growing operation in an enclosed, secure warehouse and open a second extraction and bottling line. She also plans to be licensed for dispensaries.
Collectively, the operation — growing, processing and dispensing — would create an estimated 125 jobs three years after legalization, Ralph said. Medical marijuana operations require more people because of security concerns and a higher level of refinement during processing.
“We would go for all three licenses“ allowed under the law, for growing, processing and dispensing marijuana, she said. “We would be a completely vertically integrated operation.”
What the economic impact of South Carolina’s fledgling marijuana industry will be is a mystery.
Sen. Paul Campbell, R-Berkeley, a member of Davis’ subcommittee, was tasked with building an estimate.
Using figures provided by the Marijuana Policy Project, the nation’s leading marijuana legalization advocacy group, he posited that legalizing marijuana for medical purposes would generate $112 million in net revenue — from sales to licensing — and create 15,000 to 2,000 jobs.
(The Marijuana Policy Project also has had boots on the ground lobbying and tracking legislation throughout South Carolina’s cannabis debate. A spokeswoman said two staffers have visited the state about twice a year since 2016, and the organization hired two lobbying firms, Ed Givens and Denny Public Affairs. It also provides guidance to Ralph’s Compassionate SC.)
Campbell says he supports the bill because he believes it will lower opioid addictions and therefore Medicaid costs, although he couldn’t provide data showing that. Also, proponents have said that sales taxes and licensing fees would cover the state’s cost of implementing the program, although those costs have not been calculated.
“I would like to see, if nothing else, it break even” in terms of state revenue, Campbell said. “And if it could cut down on opioid deaths and lower Medicaid costs ... if we can reduce pain for these people, I’m all for it.”
The Golden Time
Despite a few pioneers like Ralph, the business community in South Carolina still doesn’t understand the potential of weed on the Palmetto State’s economy, said Nettles, the former U.S. Attorney and Alex English’s partner in GreenSmart.
“It hasn’t been fully mobilized” in the legalization debate, he said.
To get the ball rolling, Nettles formed the Palmetto Medical Cannabis organization, which last year paid $72,000 to four lobbyists —Amber Barnes, Brian Flynn, William Boan and the late Robert Adams — to build support for the Compassionate Care Act. The four are all on the staff of McQuireWoods Consulting, headed by former Gov. Jim Hodges.
Nettles is backing the bill because he said marijuana is a way out of the opioid crisis. And profit is a way to ensure that it is grown and gets into the hands of the people who need it.
“If we don’t have a way for people to make money, it’s going to be hard to get people to do it,” he said.
Nettles said “the golden time” for South Carolina businesses to reap the rewards of medical marijuana will be between the time South Carolina legalizes it and before the federal government does. When it becomes legal across the nation, large, well-established national and international global interests will flood produce across state lines.
“That’s when there will be the highest return on investment,” he said.
And like English and Ralph, others are starting to see the potential for profit and an opportunity to help others, Nettles said.
Billy Lynch of Hartsville, who owns AutoPlex, a wholesale and retail automobile dealership, said he is putting together a growing operation.
Lynch said he was motivated to join the cannabis movement when his brother and business partner, William James “Bucky” Lynch, died of cancer three years ago.
“It was horrible,” he said. “It was very painful. And there was nothing they could do to get him out of the pain.”
(There is plenty of anecdotal evidence that marijuana reduces pain by affecting the nerve receptors that cause it. It has also been shown to help a variety of maladies in mice. But because marijuana is listed as a Schedule I drug, there has been no formal FDA-approved human trials.)
Lynch and his partners plan to invest $8.5 million to $10 million in a 100,000-square-foot growing operation near the North Carolina border, perhaps in the Chesterfield County area. He plans to first grow hemp, then switch to marijuana if the Compassionate Care Act passes.
He plans to initially employ 30 people, but is holding off on pulling the trigger on his planting operation until he sees the direction the bill’s amendments will take as it moves through the process.
“We’ve been monitoring the bill and looking at properties to erect a greenhouse,” he said.
But Lynch noted that the industry is not for everyone. It is labor and knowledge intensive and fraught with risks.
“People think it’s something you can do in your back yard,” he said. “This is an industry. You could spend $15 million and end up with nothing to show for it.”
But Lynch has spent two years researching growing operations across the country, and is confident that he can make a go of it.
“I’m passionate about it,” he said. “It will bring a lot of revenue to the state of South Carolina. And It’s life changing.”