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State fines Iowa Cannabis Co. for delays in making medical marijuana products

Firm now expects to harvest its first crop from Iowa City plant in December

May. 12, 2023 6:00 am, Updated: May. 12, 2023 11:26 am


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IOWA CITY — Iowa regulators have fined the Iowa Cannabis Co. $1,000 for failing to meet a second deadline for producing and delivering medical marijuana products to dispensaries across the state.


A new timeline submitted by the company says it will harvest its first crop from an Iowa City production facility in December and have products ready to sell by January.


Background


Iowa Cannabis Co. is owned by Aaron Boshart and Tate Kapple, Iowa natives who started their business with recreational cannabis operations in Washington state and Oregon.


Cannabis and Glass, with stores in Spokane, Wash., and Ontario, Ore., sells vape pens, pre-rolled cigarettes, edibles and other products, according to its website.


Iowa Cannabis, one of two companies licensed to manufacture medical marijuana products in Iowa, was first approved to develop a facility in Cedar Rapids, but got state permission in 2021 to move to Iowa City.


The Iowa Department of Health and Human Services granted an extension to June, 1, 2022, for the firm to deliver its products to Iowa’s five dispensaries. Iowa Cannabis has dispensaries in Waterloo, Council Bluffs and Iowa City. Two other state-licensed dispensaries, in Sioux City and Windsor Heights, are owned by Bud & Mary’s Cannabis Co. of Des Moines.


Boshart told the Iowa Medical Cannabidiol Board in August the company would spend $10 million to adapt a 120,000-square-foot former ACT warehouse in Iowa City into a facility where employees would grow marijuana plants and process them into products for Iowa’s medical pot program. The company is leasing the warehouse at 2727 Scott Blvd. SE from Top Venture LLC.


Health and Human Services gave Iowa Cannabis a second extension on May 2, 2022, allowing Iowa Cannabis until April 3, 2023, to deliver products after the company said supply chain issues had delayed construction.


What’s happened since


Boshart said last year Iowa Cannabis Co. would have products ready to sell in the first quarter of 2023. But when Health and Human Services staff made a scheduled visit to the Iowa City plant Nov. 7, it was clear the company wasn’t going to make the deadline.


“On this visit, the Department discovered that none of the milestones contained in ICC’s May 2, 2022, request had been completed or delivered,” according to a May 3 letter Health and Human Services Deputy Director Sarah Reisetter sent Kapple. “ICC had knowledge that it was well behind schedule and confirmed it would not be able to meet its May 1, 2023, timeline, but did not disclose this to the Department until the November 7, 2022, site visit.”


The state required Iowa Cannabis to submit an updated timeline and hold weekly meetings. Here’s the company’s projected timeline through January:

  • May-June: Finish construction, HVAC and other work at the site

  • July 3: Start propagating seedlings

  • July-October: Grow plants and flowers

  • Dec. 2-Jan. 6: Complete first harvest

  • Dec. 3-Jan. 7: Complete first extraction

  • Dec. 20-Jan. 4: Have products tested by State Hygienic Laboratory, seek approval of Iowa Health and Human Services.

  • Jan. 12-13: Deliver cartridges to dispensaries

Iowa Cannabis asked the state for a third extension April 28, saying it needed until May 1, 2024, to deliver medical marijuana products to dispensaries. Health and Human Services approved the extension in the May 3 letter.


“The Department has acted in good faith in granting two timeline extensions to ICC, and disclosed possible actions against its license for delays beyond May 1, 2023,” Reisetter wrote. “Enclosed with the approval of this third timeline extension, is an assessed civil penalty in the amount of $1,000 for failing to meet the second extension deadline.”


Reisetter told Kapple that further “preventable” delays could result in civil fines of up to $1,000 per week after May 1, 2024.


The Gazette reached out to Boshart to explain why production has been delayed, but he did not respond to requests for an interview.


Bud & Mary’s — the state’s other licensed manufacturer — recently completed a $10 million expansion of its Des Moines manufacturing site, President Lucas Nelson told The Gazette. The expansion allows the company to increase production threefold and create at least 20 new jobs, he said.


The number of Iowans certified to be able to purchase medical marijuana products nearly doubled from 7,865 in December 2021 to 14,446 in November 2022, according to the 2022 annual report of the Iowa Medical Cannabidiol Board. Sales last year topped $10 million.


Although Iowa law allows only medical marijuana use, the number of patients has ballooned because patients now can get registration cards quickly through telehealth providers who certify patients have one of the allowed medical conditions, which include chronic pain.


When Iowa expanded the medical marijuana program in 2020, the state replaced a 3 percent cap on tetrahydrocannabinol, or THC, with a cap of 4.5 grams per patient every 90 days. This change made it legal for companies like Bud & Mary’s to sell 85 percent THC vapes, the company said.


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