Texas may raise cap on medical pot stores
State regulators will be accepting applications throughout October
Sales of legal marijuana in Texas remain highly restricted, but the minuscule market is poised to garner national attention over the next few weeks.
State regulators are weighing an increase in the number of businesses — currently set at three — that are allowed to dispense a form of nonpsychoactive medical cannabis in Texas. They recently announced plans to accept applications for new licenses from Oct. 1 through Nov. 1.
The monthlong application window is expected to pique the interest of companies in the burgeoning legal marijuana industry, based on the possibility that Texas eventually might loosen its strict prohibitions, even though the state has been a notable holdout so far amid a broad legalization movement.
Texas lawmakers took a step toward expanding the state’s limited medical cannabis program this year by making more patients eligible, but they retained a tight cap on the psychoactive component at levels well below those that induce a high.
Still, “Texas is a big carrot” if it ever institutes a fully fledged medical cannabis program or otherwise expands availability of legal marijuana, said Morris Denton, who heads Austin-based Compassionate Cultivation, one of the three dispensaries currently licensed in the state. “A lot of the (national) players are going to want to make a run at Texas” based on its potential.
John Kagia, chief knowledge officer at New Frontier Data, a cannabis market research firm in Washington, D.C., said investors and entrepreneurs in the industry already “have been watching the Texas market quite closely” for signals as to how it might evolve.
Some are likely to apply for licenses now in hopes of getting in early and establishing brands and operations, Kagia said, although he said he doesn’t expect the clamor to be nearly what it would be if the market were fully formed.
“At the point where Texas does pass a more full and comprehensive medical (marijuana) program, the state is going to attract an intense amount of interest” from investors, he said.
A total of 43 business and investment groups applied for Texas licenses in 2017 when the state began rolling out its medical cannabis program under the 2015 Compassionate Use Act that established it. But the Texas Department of Public Safety, which regulates the program, only approved three — the minimum mandated by the law.
A DPS spokesperson didn’t respond to a request for comment Tuesday regarding the number of additional dispensary licenses that it might issue.
In a statement announcing the call for new applications, however, DPS officials said the move is the result of “anticipation of an increase in demand” for the nonpsychoactive cannabis allowed under the program now that state lawmakers have made more patients eligible.
“The number of applicants to be conditionally approved will be based on the department’s assessment of the top applicants’ production capabilities and resources, as well as any additional data that may become available on patient numbers and demand,” the statement said.
Under the Compassionate Use Act, only patients suffering from a single ailment — intractable epilepsy — were eligible to obtain medical cannabis from the state’s three dispensaries.
In addition, the medical cannabis they dispensed could contain no more than 0.5 percent tetrahydrocannabinol, or THC, the high-inducing component, which is barely more than the 0.3 percent THC contained in many hemp-derived cannabis products that are widely available throughout the state in retail shops and corner stores.
Fewer than 1,000 patients statewide had registered to participate in the Compassionate Use Program as of this summer.
During this year’s legislative session, however, state lawmakers added a number of ailments to the list of qualifying conditions — including all forms of epilepsy and seizure disorders, multiple sclerosis, terminal cancer and autism —which has substantially increased the number of Texans eligible.
Still, many cannabis proponents continue to view Texas as lacking a significant medical marijuana program, saying the state continues to leave out too many patients — including veterans suffering from post-traumatic stress disorder — and has retained its extremely low and arbitrary THC cap that doesn’t enable doctors to determine dosages.
Even with the increase in patient eligibility, “I don’t think the numbers that we are going to see (participate) will equal the numbers if this were a real medical marijuana program,” said Heather Fazio, director of Texans for Responsible Marijuana Policy, a pro-cannabis advocacy group. “One thing (patients still will) have to decide is if they want to go through the hoops (of registering for the program) to get 0.5 percent THC, or just go buy it over the counter and get 0.3 percent.”
She said her group plans to keep pushing to make the Texas program more comprehensive. In the interim, she said, it won’t be surprising to see companies apply for the new dispensing licenses even though the market remains severely constrained.
“One of the biggest thing these guys are investing in is their spot in the market,” in terms of branding and reputation, Fazio said. “They’re looking at it as a longterm investment.”