Iowa’s medical cannabis sales reach new high
Bud & Mary’s $10M expansion in Des Moines aims to supply growing demand
MedPharm Iowa — now operating under its new, state-agnostic name of Bud & Mary’s Cannabis Co. — is in expansion mode, but founder Chris Nelson didn’t need to search very far for more space to grow the Des Moines-based company.
The company, which has grown and processed medical cannabis products as a licensed producer for Iowa’s medical cannabidiol program since 2017, in mid-June announced plans for a threefold expansion of its indoor cannabis production facilities in Des Moines.
MedPharm Iowa, which changed its doing-business-as name to Bud & Mary’s with the Iowa secretary of state’s office in January, has been a primary producer of medical cannabis products in the state since the products became legally available with the passage of Iowa’s Medical Cannabidiol Act in May 2017. Sales began on Dec. 1, 2018, and there are now five dispensaries that distribute medical cannabis products to cardholders.
Bud & Mary’s current production location, which is within sight of Kemin’s headquarters on Des Moines’ east side, occupies about 15,000 square feet of a warehouse/office building that was constructed in 1952 by Yellow Freight. The vacant warehouse located at the rear of its existing space will allow the company to build out an additional 22,000 square feet for cannabis production, said Lucas Nelson, group president of Bud & Mary’s. The new space, designed by Vantage Architects LLC, will be built out by Estes Construction of Des Moines.
“Our owner, Chris Nelson, saw the vision for this back when it was not necessarily the easiest investment,” said Lucas Nelson, who is Chris’ nephew and the grandson of R.W. “Bud” and Mary Nelson, co-founders of Kemin. “But I think it’s paid off, and we’ve seen that time and time again. In any one of the five dispensaries when you talk to a patient, someone who receives the benefit from this, it was all worth it.”
MedPharm Iowa has been the predominant producer of medical cannabis products for the past four years, and its expansion in Iowa is a response to a takeoff in demand over the past year. A second authorized producer, Iowa Cannabis Co., which currently operates two of the dispensaries, has been working to establish its own manufacturing facility.
On May 19 that company, ICC MFG Holdings LLC, was granted a second one-year extension by the Iowa Department of Public Health on its deadline to begin operations and start delivering products to dispensaries, according to a letter provided by the department. The company had originally agreed to launch its medical cannabidiol manufacturing facility by July 2021, but last year was granted its first extension. The company cited supply chain shortages of equipment needed to operate the Iowa City facility as the current reason for the delay. ICC now has until May 1, 2023, to begin operations. Further delays “may result in action” related to its manufacturing license, the department wrote.
The number of medical cannabis cardholders in Iowa, as of May, now exceeds 10,000 individuals — a more than 50% increase in the past year. The increase is due in large part to a change in Iowa law that eliminated a cap on the THC content of medical cannabis. Products are distributed to cardholding patients at five state-authorized dispensaries across Iowa, which are located in Council Bluffs, Iowa City, Sioux City, Waterloo and Windsor Heights.
More than 500 additional patients in Iowa on average are being approved for cards each month, which requires a certifying practitioner to attest that the applicant has one of 14 authorized conditions, which range from autism and cancer to seizures, with “chronic pain” being the most frequently authorized condition, which can include back pain, neck pain, joint pain, sports injuries and migraines.
In June 2020, Gov. Kim Reynolds signed a law that revised the limits on the amount of THC, the delta-9-tetrahydrocannabinol molecule in marijuana, which is the main psychoactive ingredient that produces a high.
The new law replaced the previous 3% THC limit with a cap of 4.5 grams dispensed per patient every 90 days, a threshold that can be exceeded if a physician deems it necessary to effectively treat a condition, or for people who are terminally ill. It also increased the number of applicable conditions for which treatment could be sought.
The changes gave MedPharm the freedom to formulate the most therapeutically beneficial products for its customers, Lucas Nelson said last week during a ceremonial groundbreaking for the expansion.
“In 2021 is when we really noticed the difference” in sales, Nelson said. “We were able to lower our prices, in part because of that legislation. So it’s really had a [positive] impact on the patient — it’s tough enough as it is out there. So anything we can do that lowers that price for them is good. The law change helped, and more production space will help [lower prices] as well. So it’s a very exciting time for us.”
Bud & Mary’s also operates in Colorado, where it produces both medical cannabis and recreational marijuana products. It’s currently expanding its existing facility there, as well as entering the Michigan market this summer with the construction of a production operation and a retail store there.
“The market [in Colorado] is still very, very busy,” Nelson said. “Lots of people to serve, lots of opportunity for us — especially with that scientific nature that we’re bringing — not every company has that.
“In Michigan, we’re going to have a facility that’s comparable to this [Des Moines facility] by the time it’s all said and done. And that’s really our entry point into making sure we’re able to serve enough folks up there, but also not get too far out over the skis, at least as we’re getting our feet wet up there.”
The company’s $10 million investment in Des Moines will bring the space up to code and provide a state-of-the-art growing and production facility, Nelson said. Bud & Mary’s currently has 29 employees in total, including staff for the two Iowa dispensaries it operates. It will hire about 20 additional people at minimum with the expansion, he said.
“That’s even ahead of the building officially opening so that we can really get the space ramped up and ready to go,” he said. “It takes a lot to grow these plants; it takes a lot of time to process them. So whether its packaging, extraction, formulation or cultivation itself, we will be bringing a lot of additional staff in and I’m excited about that because I think it just continues to add to the local economy here.”
If Iowa’s program can grow to reach 30,000 cardholding patients, that would be a sustainable figure, he said.
Asked if the company is now operating in the black, Nelson replied, “It’s in a really good spot financially. We’ve still got some long-term debt that we’ve got to take care of.
“On a day-to-day basis, we’re able to keep the lights on. There isn’t that fear anymore of ‘Gosh, if we don’t have some changes, this isn’t going to last very long.’ What we’ve still got to do is to continue to build those patient numbers and offer more products to keep people in the program.”
By the Numbers – medical cannabis in Iowa
Number of certifying practitioners in Iowa: 1,738
Total monthly sales of medical cannabis products (May): $804,064
Increase in monthly sales from prior year: 58%
Total patient cardholders (including minors): 10,220 (as of May 31)
Increase in cardholders from prior year: 63%
Top 3 conditions treated, by cardholder numbers:
Chronic pain: 6,740
Post-Traumatic Stress Disorder: 1,575
Other qualifying conditions: AIDS/HIV, ALS, autism, Crohn’s disease, MS, Parkinson’s disease, seizures, terminal illness, ulcerative colitis.
Source: Iowa Department of Public Health