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Minnesota medical marijuana companies lost a combined $2.4M in 2018. But they are optimistic about their future

Jody Testaberg, propagation manager at LeafLine Labs in Cottage Grove, examines marijuana plants that will be used in the state's medical cannibis programs. Hundreds of plants are carefully cultivated in the room lit with sodium vapor lamps so bright that the workers routinely use sunglasses. Bob King /
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ST. PAUL — Minnesota’s two medical marijuana companies lost a combined $2.4 million in 2018, adding to years of losses that have largely been driven by the state’s tightly regulated program.

Leafline Labs, which has never had a profitable year, reported a net income loss of $1.8 million in 2018, according to financial documents. Minnesota Medical Solutions, which turned its first profit in 2017, fell back into the red with a $610,000 loss last year.

The two manufacturers invested in expanding their operations last year to meet growing demand from the more than 16,000 patients enrolled in the state’s medical cannabis program. The debt the manufacturers took on contributed to their losses.

Despite their losses, the CEOs of the companies say they are hopeful for the future.

“To the public, it’s going to look extremely negative that we’re still posting (losses),” said Leafline Labs CEO Bill Parker. “I think what is a positive sign is how much we’ve decreased that loss compared to previous years. … We have righted that financial ship and we are heading in the correct direction.”


To be clear, Leafline Labs’ loss of $1.8 million pales in comparison with the $5.3 million it lost in 2017.

Plus, Parker said, the company posted a profit in the final quarter of 2018 and has $222,000 in net profits through April 2019.

New laws bring some relief

Parker and Minnesota Medical Solutions CEO Jay Westwater are optimistic that the financial outlook for their companies will keep improving. They pointed to changes made by lawmakers in this year’s legislative session that will make it easier for them to do business.

The manufacturers will now be able to write off their business expenses, buy hemp from local farmers and open twice as many dispensaries, among other changes.

Westwater said the tax write-offs will have a “significant impact on our bottom line,” and the hemp purchases will help the companies make medicine at a lower cost.

Leafline Labs and Minnesota Medical Solutions will take on debt to open four new dispensaries apiece, but the expansion should help them reach more patients across the state. There are currently eight dispensaries in the state, and four of them are in the Twin Cities metro area.

Drug prices will remain high

While these changes will aid the manufacturers, Parker and Westwater say they may have little effect on the price patients pay at dispensaries.

The processed marijuana pills and oils that are legal are costly and not insured. Only patients with one of 13 severe conditions can use the drugs, which can cost hundreds of dollars per month for regular treatment.


“Without any drastic change to the program by adding things that are at a much lower cost like raw flower … it’s hard to say what kind of material change we’re going to be able to provide to the pricing structure,” Parker said.

A proposal that would have legalized the raw marijuana plant for medicinal use was shot down at the state Capitol. In Pennsylvania, the average cost per patient on a trip to a dispensary was cut in half after the raw plant was legalized.

“We stand ready to provide that service. We know from our own internal deliberations and calculations it would have significant effect on reducing costs,” Westwater said. “We’re going to be advocates for our patients and make sure that if that’s the way the Legislature wants to go maybe in the next session, that we’ll make sure we can do it in as safe a way as possible.”

Related Topics: HEALTHCARE
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