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Government Pot Contract Open for Bids, but Nobody Wants It

Doblin disagrees saying, "It's old, dried, brittle and mixed with seeds and stems. This has not been quality. Their goal is to provide poor quality medical marijuana to researchers in order to get negative results. Some of the marijuana is over 10 years old."

The battle to break the NIDA monopoly has raged for years. As recently as 2013, Dr. Craker has been denied by the United States Court of Appeals the ability to grow cannabis for research, which is especially ironic because in Massachusetts medicinal marijuana is legal and 20 dispensaries have been approved. The Court also felt the monopoly concern wasn't an issue because anyone can bid on the contract when it comes up for renewal. The Court also stated that NIDA gives it test pot either free or at no cost.

However, Doblin said, "We've been working with Israel -- they are able to grow it for 50 cents a gram, Uruguay sets its price at $1 a gram, NIDA's price from years ago was $7. That's not a competitive price."

>> Read More: Medical Marijuana in Canada Set to Boom

NIDA's monopoly shuts out American producers and could end up opening up the market to foreign farmers. Canadian growers are trying to get a drug master file opened at the FDA, but it will take a year to get it accepted. Dobkin said, "The NIDA monopoly is doomed. It will be broken by foreign imports."

NIDA insists that it welcomes other bids but that it hasn't received any in the past.

"Besides the University of Mississippi, the only other proposal ever received was when this was re-competed in 1999," Grabus said. "A commercial organization submitted a proposal which was subsequently determined unacceptable by a peer review committee. Thus, to date, we have never contracted with any other organization to grow, analyze, store and distribute the marijuana."

Maybe when the word gets out that the contract is open for bidding American producers will apply. However, Doblin isn't optimistic. "You have to demonstrate you have an FDA license to apply, which only Ol' Miss has. It's fruitless for anyone else to apply. If you currently cultivate marijuana, then the DEA says you are violating Federal law and therefore you can't get an FDA license."

-- Written by Debra Borchardt in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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