By Eric Peterson | May 12, 2021
Desert Hot Springs / San Diego, California
A 40-year career in military law enforcement led Crozier, unexpectedly, to the cannabis industry. He saw the plant as superlative treatment for PTSD, pain, and opioid addiction -- without the side effects associated with the most commonly prescribed pharmaceuticals.
"Why has nobody come up with a non-addictive play on this?" says Crozier of his impetus to found Royal Emerald Pharmaceuticals in 2017. "Everybody was doing the retail end of this, and nobody was doing a serious deal on the medical side of this. They called it a medical marijuana license, but it was just a way to make recreational [cannabis] legal."
The key for true medical cannabis? "People have done a lot of studies, but nobody's done clinical trials," he says.
To do that, the cultivation facility needs to be FDA- and USDA-approved, with full GMP certification. It follows that's exactly what Royal Emerald is building in the Coachella Valley.
Regulated cannabis grown in various states is "not medicine, it's not grown FDA- and GMP-approved," says Crozier.
Executive VP of Operations Justin Abril joined the company in 2019. "He was one of my cops," says Crozier.
Unlike many operations with similar business plans, licensing has not been problematic. "With our backgrounds, it was the opposite," says Crozier. "Getting the license has not been the uphill battle it has been for the average person. We spent three years getting through the licensing process. We're just finishing that final phase now."
Construction on the company's GMP-certified grow operation is likewise nearly complete at a former Kmart on 10 acres in Desert Hot Springs.
"Our 100,000-square-foot building is a $30 million buildout," says Crozier, noting that the lighting budget was about $2 million alone. "It looks like a hospital inside." He offers another comparison from a security perspective: "Think of Fort Knox."
That level of sophistication extends to cultivation methods. "Each individual room is an isolated environment, with very complex systems of irrigation, HVAC, lighting to ensure a high-quality, consistent, and pure product," explains Abril. "We're looking at Class 7, Class 6, ISO-standardized cultivation manufacturing for pharmaceutical development."
Supplying the research community is the focus. "It's a different target market," says Crozier. "We're going to start supplying universities, pharmaceutical companies, medical facilities that are doing research and development currently with state product -- which is illegal. You can't make a medicine, you can't even get past Phase I clinicals on state."
That makes for a lot of white space for Royal Emerald. "We have a contract that we're going to be bidding for this summer with NIDA, which is under the NIH," says Abril. "That is to research and develop standardized cultivation methods to get the level that researchers are currently unable to obtain either through stature product or the current cultivator, which is the University of Mississippi."
As Ole Miss is the only federally approved cannabis cultivator, the market is not exactly crowded. "The director of NIDA clearly stated that the University of Mississippi is not at the capacity to commercially grow cannabis for drug research and discovery," says Abril. "That is why Royal Emerald is positioned to receive the license to do so."
"We'll start distributing through our DEA license to researchers across the United States," says Abril. "No one ever said, 'We're going to make this product so it can go through FDA approvals for drug development and discovery.'"
Royal Emerald Pharmaceuticals continues to maintain offices in San Diego, but Desert Hot Springs is the focal point now. After the anticipated grand opening of the first 50,000 square feet in the latter city in June, the facility's initial output will be 9,600 kilograms a year. "No one had ever built one of these before, so getting all these agencies to do their inspections and get us through it [was difficult]," says Crozier.
The company then will finish out the remaining 50,000 square feet and scale cultivation accordingly. And Crozier has some serious expansion plans that top out at 3 million square feet of cultivation in the longer term.
He commends local officials in Desert Hot Springs for supporting the company: "They've bent over backwards for us."
But the Royal Emerald vision extends beyond the California desert. "I think what we're building here will become the standard," says Crozier. "The FDA won't let you eat a Tootsie Roll unless they approve it. This has been the Wild West -- it's not going to stay that way."
Challenges: "Understanding our customer needs," says Abril. "There's been such a supply-chain issue when it came to high-quality product across the United States."
Once that dynamic changes, he says he thinks Royal Emerald will get a better feel for the true nature of the market.
Opportunities: "We think it's a $1 billion a year opportunity," says Crozier of the research market for cannabis, and there's no go-to supplier. "We'd be the first," he says, noting that Royal Emerald is at least a year ahead of any would-be competitor. "We think this is like being Google or Apple in the garage.
The research demand extends from the U.S. into more than 80 other countries that accept FDA approval. "We're going to look for opportunities around the world," says Crozier.
Beyond its uses treating addiction, PTSD, and pain, he says he also sees cannabis as a key to a "quality of end of life" that doesn't involve morphine. Crozier says he anticipates "a short run to success to get medicine," noting that existing Phase I data makes for a two-year timeline for cannabis-based treatments to hit the market.
Needs: Employees. The grow launch will require a crew of about 85 employees in summer 2021 and the 100,000-square-foot buildout will employ about 250 people in all.
The next 3 million square feet would bring that number close to 1,000, but that phase likely involves outside investors. "Capital's capital," says Crozier, who's self-funded the company's launch. "You always need capital to expand."