Joseph Baldwin

Associate Editor

Loyola University Chicago School of Law, JD 2021

Lucas Nelson is the General Manager at Medpharm. Medpharm is a vertically integrated cannabis operator based out of Des Moines, Iowa. Medpharm holds two of Iowa’s five dispensary licenses and is the only licensed cultivator. They are one of only two dispensaries currently operating in the state. Mr. Nelson holds a Juris Doctor from Indiana University Maurer School of Law and a Bachelor of Business Administration in Accounting from James Madison University. 

Can you tell me about your background before you entered the cannabis industry?

Before getting into cannabis in Iowa, I practiced law at a commercial real estate law firm. I moved to an in-house position at Kemin Industries, a food and feed manufacturing company. I worked on a variety of different issues there that impacted Kemin, everything from compliance to intellectual property. It was in that role where we decided to apply for manufacturing and dispensary licenses and dive into the cannabis space. I helped draft the application and assisted a team in putting together the package of items required for submission to the State.

So, you decide to apply for a manufacturing license, what role did you play in that and can you tell me a little about how Medpharm got started?

After we were fortunate enough to be awarded both cultivation and dispensary licenses, I was in charge of the overall day-to-day operations. To this end, I ensured we were on schedule to launch, starting the company, and helping the program get up and running both at the cultivation and dispensary level. Medpharm was up and running by June of 2017. When Iowa created its medical program, we began prepping after we knew what the regulatory landscape would look like. We started prepping everything from how we were going to schedule construction to how we were going to let everyone in the state know we existed.

What is the structure of the compliance program at Medpharm? How does your role fit into that program?

Compliance is at the forefront of Medpharm. Every action we take here has to have a bend toward thinking, “are we compliant with what we need to do?” Whether it’s as simple as the nutrients that a cultivator is providing and ensuring that it’s logged and tracked, properly weighing materials after an extraction, paying attention to the formula so we are not introducing contaminants, delivery, to every transaction we complete, there is almost nothing that does not have a compliance aspect to our work. We have tried to instill that as an everyday part of our employee’s jobs and that it needs to be at the top of everybody’s list because in Iowa, and across this industry generally, everything is tracked. You cannot have an error or it’s difficult to come back from that at any step along the way.

I’m in charge of architecting what we are going to do and how we are going to address doing it. For example, ensuring that we have duplicity in what we’re doing. Sure, it takes extra time, but it is important for a cultivator to be writing down on paper and recording electronically what actions the cultivator took, because, as we have found out in difficult ways, those electronic systems are not perfect. They will often have issues, something will not be saved correctly, or communicated correctly. Moreover, as humans, we make errors; so that duplicity policy, and ensuring everyone understands the importance and consequences of not complying, is critical for our operations.

Additionally, and this might sound cliché, but it is essential to hold everyone accountable. If there is an issue, we address the problem, but also, we address the source of the problem, and ensure we actually correct the problem and adjust our processes or procedures. You do not get a lot of leeway in this industry if you continue to do the same things without addressing the root cause of whatever the issue may have been. 

Given cannabis is one of the most regulated industries in the country, what are some of the most difficult compliance related issues Medpharm experiences?

The overall challenge is it is not always the case that a state’s regulatory framework of rules aligns with the way a business is conducted. Sometimes this is a good thing, because you could have unscrupulous operators who take advantage of things. At the same time, it can present issues. For example, our scientific procedure for our extraction and processing purification procedures are not static, nor do I think they should be, because we should always be seeking to improve what we are doing in our facility. Making our processes run smoother, more efficiently, making the less susceptible to errors or issues that would ultimately manifest in problems for our patients. At Medpharm, one of our goals is to continuously improve upon what we are doing. The problem is, unsurprisingly, a lot of regulators want to put in place a structure and assume it never changes.

I think one way to potentially solve this is to ensure that the rules created under the regulatory scheme contemplate changes that people may make, especially changes for the better, and add flexibility in there. For example, recognizing that a scientific company is going to always be interested – and you should want your licensees continually improving and offering better products and procedures – in making things as safe and as effective as possible.

What regulatory changes would have the greatest impact on Medpharm?

One of the things I would advocate for changing is stepping back from the deep weeds we are in in Iowa – excuse the terrible pun – and focus on identifying the most important data points the state wants us to track that tells us something that could alert us if something is being diverted or something is otherwise a problem to regulators. In a complex manufacturing process like ours, it can become quite cumbersome both for us and on the electronic side of things. The deeper you go, the more likely it is your vendors will have a tough time doing much, but moreover, if you lock yourself into a rigid system, the regulators may not be getting the data they think they are. It is just not always the case a manufacturing process is 100% linear. For example, we have two separate extraction systems and each one has various processes that are needed. However, overall our regulatory scheme is not as well set up for those big differences. So again, I think it comes down to looking at what are the most important data points; what do we want to make sure we know that an operator is recording.

Our legitimacy as a company in the eyes of our patients is of the upmost importance to us. I want to make sure we are hitting every data point that we are supposed to and ensure there are no questions as to what’s happening within our walls both from the public and regulator perspective. At the same time, we need to recognize the inherent limitations in what an electronic system can do, how that data can be communicated. So maybe having a more holistic thought process about that and more importantly, being able to change as we move forward – which has certainly happened in our program and is a good thing.

Is there anything you believe Iowa’s program does particularly well when looking at other medical programs across the United States?

I have been impressed by the speed with which the department processes and issues medical cards to patients. Approving and then allowing patients to purchase products while waiting for their more “permanent” card to come later has been great – especially when there are only 5 operating dispensaries scattered throughout the state. Perhaps this is because of the size of our program, but in our dispensary, we have been able to adjust to situations quickly. For example, say someone mistyped a patient’s number. There are other back stops we can ensure we are certain, and the department can ensure is certain, that this person is registered in the program. So, while a patient is standing in line in front of us, nobody might know there is an issue with their card until they present it to us, but at that point, that patient is expecting to buy something. So long as they have taken the steps they need to, we are usually able to do our best to service them.

Additionally, I think the fact that Iowa keeps some of its data with regard to what patients have purchased and doesn’t require anonymity, like some of these other state programs, helps with the medical side of things; it helps providers understand what a patient has been taking, what has and hasn’t been working, whereas otherwise, we would be completely reliant on someone’s memory.

I think Iowa has done these things well and that it has enabled us to ultimately reach our main goal which is to effectively treat some of these symptoms for patients.

Finally, any advice for those interested in pursuing a career in cannabis?

You need to be able to read and comprehend rules that can be difficult to get through. You need to be able to focus in on details and you must be able to persevere through issues you know you will inevitably face in this industry. You need to have great attention to detail. The intricacies of what you are doing in a facility, and how that translates into an electronic system, and how that data is communicated to a state system, it can wear you down. Again, being able to step back and look at things holistically as to what a compliance system looks like, what it is tracking, and then staying on top of all of it. The last big thing, if possible, you have to have an open process within your facility and really make sure the folks you are hiring can be trusted and are held accountable. You don’t want something happening under your nose and you miss it – which is another thing Medpharm has done well.