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How to open a dispensary in Texas

Overview 

Are you wondering how to open a dispensary in Texas? On this page, you will find not only the most up-to-date information on cannabis dispensary business opportunities in Texas, but also insightful forecasts regarding what the future may hold for the state.

Any kind of recreational marijuana use, possession, distribution, production, cultivation, or sale is prohibited under Texas law. There is a medicinal marijuana program available to residents of the state. Low-THC cannabis oil is legal, but only for people with refractory forms of epilepsy.

Governor Greg Abbott has stated his openness to investigate the possibility of expanding the medicinal program and advocating for the decriminalization of marijuana. The state is focusing its attention on the 2023 legislature session since there was no session in 2022. 

In November 2022, five Texas communities decided to decriminalize possession of minor quantities of marijuana. Voters in Denton, Elgin, Harker Heights, Killeen, and San Marcos backed decriminalizing low-level possession in overwhelming numbers.

The 88th Texas Legislature is underway, commencing on January 10, 2023, and concluding with the final day of the 140th session, known as “Sine die,” on May 29, 2023. Within the 88th regular session, there are multiple marijuana-related measures, including legalization bills SB 209 introduced by Sen. Sarah Eckhardt, HB 1831 by Rep Talarico, and HB 1937 by Rep. Jessica Gonzalez.

On April 26th, 2023, the Texas House of Representatives gave preliminary approval to House Bill 218, a legislation that would decriminalize possession of small amounts of marijuana, reclassifying it as a Class C misdemeanor with a fine of up to $500. Additionally, the House considered a broader recreational marijuana legalization bill, House Bill 3652, which would allow possession and use of up to 2.5 ounces of cannabis by adults 21 and older, home cultivation of up to 12 cannabis plants, and commercial production and sale of marijuana products, taxed at 10%

How big is the opportunity? 

According to a special report, more than 1.5 million Texans over 21 partake in cannabis use monthly. Sales of cannabis in the state might reach $2.7 billion annually if it were legalized for adults. If Texas taxed cannabis sales at the same rate as Colorado, the state would generate more than $1.1 billion in additional state income every two years. Business licensing costs might bring in an extra $10 million annually. In addition, eliminating minor cannabis possession arrests and prosecutions in Texas may save the state an estimated $311 million annually.

Local Cannabis Restrictions & Laws

Section 487.201 of the Texas Health and Safety Code states that local governments in Texas may not impose limitations on the operations of medical dispensing organizations that have been granted a license by the state. Local governments cannot prohibit anyone from cultivating, producing, distributing, or even possessing cannabis with a low THC content.

Even though it is still against the law to consume marijuana for recreational purposes in the state of Texas, several counties within the state have moved to make the possession of small amounts of the substance less of a criminal offense. This may be accomplished by sending customers tickets or requesting them to take part in a marijuana-related “educational” session that lasts for four hours. Austin, Bexar County, Cedar Park, Dallas County, El Paso County, Harris County, Hays County, Nueces County, Plano County, Travis County, and Williamson County are among the local governments that have decriminalized marijuana.

Medical Marijuana

In June 2015, the Texas Legislature enacted Senate Bill 339, also known as the Texas Compassionate Use Act. This legislation gave organizations the authority to produce, process, and administer low-THC cannabis to patients who met the required criteria. Cannabis with a THC content of no more than 0.5% and a CBD to THC ratio of 20 to 1 was available for purchase by those diagnosed with intractable epilepsy and certified caregivers acting on their behalf.

Only permanent Texas residents may be registered in the Compassionate Use Registry of Texas. The Act assigned the Texas Department of Public Safety the duty of directing the statewide program for the supply of cannabis products to registered patients.

Texas governor Greg Abbott signed House Bill 3703, which expanded the list of conditions for which medical marijuana may be prescribed. In addition, the law eliminated the requirements of a second physician’s opinion and a 20-to-1 concentration ratio. However, the bill did not alter the phrases “prescribe” and “prescription,” which may only be used to describe FDA-approved pharmaceuticals.

Patients in Texas who suffer from amyotrophic lateral sclerosis, autism, cancer, epilepsy, or one of the other qualifying conditions are legally permitted to participate in the Compassionate Use Program.

There are 43,056 registered medicinal marijuana patients in Texas as of December 2022.

Medical Marijuana Program Opportunities

According to Chapter 487 of the Texas Health and Safety Code, the Department must provide at least three licenses and not exceed the number of licenses required to guarantee appropriate statewide access and availability of low-THC cannabis for patients.

UPDATE: The Regulatory Services Division of the Texas Department of Public Safety (DPS) is now accepting new applications for dispensing organization licenses. Before you send in your application, make sure you have thoroughly read the guidelines. On April 28, 2023, at 5:00 p.m. Central Time, the submission period for applications will end. 

Dispensing organization license application requirements

  • Evidence of ownership and verification of current status
  • Fees for applications
  • Names, birth dates, residences, and any other information requested by the department that is essential to verify the identification of all the applicant’s directors, managers, and employees
  • Disclosure of prior criminal background
  • Complete registration applications
  • Evidence that you have business general liability insurance
  • Evidence of qualifications

You can check the entire list of requirements here.

How much does it cost to open a dispensary in Texas?

The following is a breakdown of some expenses involved with opening a dispensary in Texas.

  • The cost to apply for a license to operate as a dispensing organization is $7,356. A dispensing organization must pay a licensing fee of $488,520 for two (2) years to operate legally.
  • The cost of registering for the first time, as well as registering for subsequent renewals, is $530.
  • The cost of the dispensing organization’s license to be renewed every two years is $318,511.

Recreational Use Legalization Efforts

Republicans and Democrats in the Texas House launched efforts during the legislative session of 2021 to reduce the criminal penalties associated with marijuana possession. Some of the proposed legislation would remove the possibility of receiving a prison sentence for the possession of a minor quantity of marijuana and would do away with the practice of automatically suspending drivers’ licenses. Although the House approved several, none of them were ultimately enacted into law.

Both the incumbent Republican governor of Texas, Greg Abbott, and his Democratic challenger, Beto O’Rourke, have stated their support for decriminalizing marijuana, with O’Rourke focusing his campaign on the issue of legalizing the substance.

The Texas Republican Party has stated in its official platform that it favors cannabis being reclassified by the federal government from a Schedule I drug to a Schedule II drug. Schedule I drugs are substances with a high potential for abuse but are not accepted for medical use. Schedule II drugs are substances that have acknowledged medical benefits but still have a significant risk of abuse. Although this modification would allow the use of cannabis as a treatment for medical conditions, cannabis for recreational purposes would still be illegal at the federal level.

The Dallas Morning News and UT Tyler conducted a study in September 2022. They discovered that 67% of Texans are in favor of medicinal cannabis, and 51% are in favor of complete legalization.

2023 Legalization Efforts

As mentioned above, the 88th Texas legislative session is currently in session. Legalization measures include:

On the initial day of early filing, State Senator Sarah Eckhardt filed Senate Bill 209 on November 14, 2022, which, if passed, would bring Texas into the group of states that permit and regulate the use of cannabis by adults. The bill would establish a system for granting licenses for the cultivation and sale of cannabis to individuals aged 21 and above. As of February 15th, the bill is referred to State Affairs.

The proposed bill, House Bill 1831 filed by Rep Talarico on February 3, 2023, aims to legalize the use, possession, cultivation, and sale of marijuana up to 2.5 oz, with a limit of 15 grams in the form of cannabis concentrate, for individuals who are 21 years or older. In addition, the proposed bill also deals with the local regulation of cannabis establishments. A tax of 10% on cannabis sales will be imposed and the revenue will be allocated towards cannabis research and regulation agencies. As of March 8th, the bill is referred to Licensing & Administrative Procedures.

Democratic state Rep. Jessica González of Dallas introduced House Bill 1937 on February 6, 2023, which would give Texas counties and municipalities the power to legalize recreational marijuana at the local level. The bill instructs the Texas Commission of Licensing and Regulation to create the necessary regulations for the administration and enforcement of the law, including licensing, regulation, testing standards, and transportation. As of March 8th, the bill is referred to Licensing & Administrative Procedures.

We anticipate many new events through 2024 will affect when and what recreational legalization will look like. If you add yourself to our Texas Cannabis Mailing List (below), we will keep you updated on all relevant news and the not-so-easy-to-find information and comments related to Texas Legalization. This includes but is not limited to the following:

  • How much will it cost to open a dispensary in Texas?
  • What are the requirements to get a marijuana business license and open marijuana dispensaries in Texas?
  • What special programs will be available?
  • And more…

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