Behind the Scenes with a Medical Marijuana Tycoon

Credit: Courtesy Dean Petkanas

Dean Petkanas was once the VP of Corporate Finance for Jordan Belfort's Stratton Oakmont, a house of fraud and debauchery in the 1990s made famous in Martin Scorsese's The Wolf of Wall Street. But now he's trying to find a connection between the chemicals in cannabis and the treatment of serious brain diseases found in athletes and combat veterans as CEO of KannaLife Sciences. 

Chronic Traumatic Encephalopathy (CTE) is a degenerative brain disease connected to the prolonged head banging of some pro sports, the result of concussion trauma. NHL player Derek Boogaard suffered from it before he died in 2011 of a drug and alcohol overdose, and last year 18 former NFL players were diagnosed with CTE, including Junior Seau, who killed himself in 2012. Petkanas steers a startup that's developing cannabis-based drugs to reduce the effects of these diseases by protecting sensors in the brain.  

Here's how he's gone from Wall Street to Weed Street.

Of all the many yet-undiscovered uses for medical marijuana, why did you chose to focus your efforts, time, and money on head injuries?
We looked for ways to get into the market where we would have some level of intellectual property and a barrier of protection, because you don’t want to go out there, start doing things, and have other people take from you. There was some IP that was held by the National Institute of Health, and we applied for licensing on certain IP that was in the hands of the federal government. That was quite an experience because you have a tremendous amount of ideas in the marketplace that suggest the government is conspiratorial. We've always maintained that we don't care about the recreational side of the marketplace. Cannabis and the government had never really been on the same page, so all the activists on the cannabis side of the market, whether it was medical or recreational, were originally against us. 

Despite the law opening up to usage around the country, it is still difficult to win approval to conduct marijuana research. For one, the only place to legally purchase research marijuana is from the government stockpile at the University of Mississippi.

KannaLife's biggest asset is a patent that essentially lets you corner the market on marijuana and concussion related research. How did you win the patent?
We knew we had to get a license. So we specified the disease pathology that we wanted to focus on as the brain-liver connection, and the toxicity brought on through the liver through either cirrhosis, alcohol, portal hypertension, and hepatitis C. We posed that Hepatic Encephalopathy (HE) falls in the range underneath the patent and we wanted exclusive use of the patent. They gave it to us. We found out that cannabinoids are a neuroprotectant and when we got to that stage last year, I turned my attention to concussion injuries. We're just now entering into our next round of financing, looking to raise $30 million for medical research, and hopefully sometime later this year we’ll be able to file an investigation on a drug application with the FDA for the first indication that we went after, which is HE.

How difficult is it to operate legally in this developing industry?
This is a complex subject because it’s kind of like an onion. If you peel back the skin of an onion, you get another layer, and another layer. The marketplace is now opening up to the delivery of high-quality controlled products. You need a controlled substance license and our scientific officer has one in hand. 

Technically, you cannot buy a controlled substance from a producer unless you have a Schedule I controlled substance license. You see that being violated all day now in Colorado and states where medical marijuana — if you even want to call it that; it’s just a joke to even say that because Colorado's is a recreational market and so is Washington for that matter. But they are mailing the materials left and right to testing labs that don't have Schedule I … so everyone is really kind of violating the law out there, to be honest with you. We operate within the law. We're not doing anything to get around the issues to try to participate in the marketplace. We're following the rules we're supposed to be following and complying.

How little do we know about the medicinal qualities of cannabis right now?
The guys in Colorado say take two pills and call me in the morning. Smoke half a gram a day. There's a tremendous paucity of knowledge. It's going to take, I think, 10-15 years to really get through the process. 


The great marijuana rush has become a frontier for new businesses and entrepreneurs. How has that surge shaped this emerging industry?
You have low barrier of entry to position in a market that investors think they’re going to get rich on overnight. The real play in this market is the long range, where billions of dollars should and will go is going to be in pharmaceutical research and development. We know the plant produces medicine. We know that a small percentage of the population has been cured; some in response to cancer, some in response to epilepsy. 

Will KannaLife wind up on that list of success stories, too?
Hopefully we'll be around for years to come. Hopefully we'll be providing information that’s critical and invaluable to the marketplace when it comes to delivering the cannabinoid-based therapeutics to the market because at this point it’s not going to turn back on itself. It's only going to continue to move forward.

We think we have something unique, but we haven't even begun the type of clinical feedback that's necessary in the cannabinoid therapeutics market. its all land-based right now.