Why Texas Won't Offer New Cannabis Business Licenses Anytime Soon

On Oct. 1, 2019, the Texas Department of Public Safety opened its medical cannabis dispensary application window for one month. The process was halted one week later.

The state has no intention of reopening the application window at this time, the DPS told Benzinga. 

The department has "continued to assess dispensing capacity requirements, along with the need for any additional licenses."

So why open the window in the first place?

An Already Capable Marketplace

Texas does not make patient enrollment figures readily available, as some state marketplaces do.

Known for having one of the strictest marketplaces in the country, Texas' compassionate use program enrolls just a choice few.

Figures from October 2019 indicate that roughly 1,700 patients enrolled after a 65% increase in prescriptions spurred by the expansion of the state's qualifying conditions.

Per the Texas Health and Safety Code Chapter 487, DPS must enroll three or more dispensary organizations to work across the state. The DPS said an analysis of the patient pool revealed no need to expand at that time.

The state said the analysis of other state markets; patients with intractable epilepsy; and statutory requirements shaped its decision. At this time, the three licensed operators in Texas are Fluent, Compassionate Cultivation and Surterra Wellness.

"The companies that are licensed to do business under the compassionate use program are capable of fulfilling the need for statewide access for those who qualify," said Heather Fazio, director for Texans for Responsible Marijuana Policy.

Texas NORML Executive Director Jax Finkel told Benzinga that the order of activity in the state raises questions. 

"One would imagine that whenever DPS opened up the licensure that they would have already evaluated the market that existed and would have already determined that additional licenses would be beneficial," he said.

Stunted Enrollment In Texas Halts Market Progress

Finkel said he believes licensing applications won't reopen until a robust marketplace is achieved. The NORML statewide director said this won't happen until Texas expands its qualifying conditions list and removes a THC cap that bans products from containing more than .5% THC.

Texans for Responsible Marijuana Policy's Fazio elaborated on the effect of the THC cap.

"If a patient wants to access two-tenths of a percentage point more THC, they'd have to qualify for the program," she said. 

"Most people who want to use cannabis in the way that the state allows it can do so over the counter."

Despite the progress in qualifying conditions, Fazio said the state's restrictive market continues to hold back growth.

"Our program is still one of the most restrictive in the nation, and a very small fraction of those who benefit from cannabis are able to do so legally." 

Next Steps In Texas 

With a program limiting access, Texas NORML's Finkel sees a missed opportunity to curtail illicit activity and provide safe medical options to Texans.

"The more barriers to access, the less likely people are going to use the safe alternative as a first line of defense." 

In addition to the patients, Fazio believes that the state needs to protect medical specialists from possible conflicts with federal officials.

"It is difficult to say whether or not we can trust the Department of Justice to not go after doctors who are prescribing a Schedule I drug."

Until such issues are addressed, it appears that the one-week window of opportunity is all that aspiring dispensary operators can expect for the time being.

Related Links:

A Snapshot Of America's Medical Marijuana Markets: Texas

Texas (Yes, Texas!) Will Have A Medical Marijuana Program — Sort Of