San Antonio Express-News (Sunday)
Texas cannabis industry bets on big growth
SAN MARCOS — The appearance of a humdrum, sunken field of grass across the street from an Army Reserve center here belies the site’s importance to an industry being primed for swift growth in Texas: the cannabis business.
Right now, the most visible sign of activity is a mound of dirt used for a mid-April groundbreaking ceremony by the multistate company that’s investing $25 million to build a cannabis cultivation and retail facility here.
It’s a bold move that may say a lot about the state of the industry in Texas — and what such a company sees coming down the pike.
“I suspect if you grabbed a random person on the street and asked them if cannabis was legal in Texas, they would probably look at you like you’re crazy and say ‘no,’” said Marcus Ruark, president of goodblend Texas, which is preparing the site for its 63,000-square-foot marijuana growing facility.
The notion that it’s “crazy” is because cannabis is still illegal in Texas, which is home to some of the strictest anti-marijuana laws in the nation. But a gradual expansion of the state’s limited medical marijuana program in recent years could soon give way to an industry that’s acces
sible to a broader swath of Texans.
While still relatively low, the number of Texans utilizing the state’s medicinal marijuana Compassionate Use Program has grown by 180 percent over the past year. Some estimate there are about 2 million Texas patients eligible to use cannabis, but many just don’t know about the program.
“So we’ve started making an investment in that and getting the word out and increasing awareness, and I think that’s definitely helping,” Ruark said.
For now, goodblend Texas is one of only three companies licensed to cultivate and sell marijuana in the state. The others are Texas Original Compassionate Cultivation and Fluent, which is a subsidiary of Cansortium, a publicly traded marijuana holdings company.
Statewide, just over 300 physicians are licensed to prescribe medical marijuana. And as of March, there were only 4,919 patients registered with the Compassionate Use Program, according to the Department of Public Safety. A year earlier, just 1,757 people were registered to use medical marijuana in Texas.
The number of medical marijuana patients in the state is “growing about 10 percent month over month every month, so it’s actually pretty robust growth for the patients who are accessing the program,” Ruark said.
While steadily increasing, the number of Texas patients pales in comparison to what’s seen in nearby states such as Oklahoma, where roughly 8 percent of the state’s population — over 300,000 people — are medical marijuana patients, according to the Washington, D.C.-based Marijuana Policy Project. In Louisiana, which has a population less than one-fifth of that of Texas, there were 4,350 medical marijuana users at the end of 2019.
Still, the growth in numbers of Texas patients utilizing medical marijuana is prompting the $25 million investment by Parallel, the parent company of goodblend Texas, to build in San Marcos.
Parallel, which is led by chewing gum magnate William “Beau” Wrigley as CEO, reached a deal to enter the public markets later this year through a special purpose acquisition corporation, or SPAC.
Texas isn’t the company’s first rodeo. It owns medical marijuana dispensaries in Florida, Massachusetts and Nevada and recently acquired retail shops in Chicago, bringing to about 50 its number of locations nationwide. That includes 42 retail stores, along with cultivation and manufacturing sites. When Parallel announced in February that it is going public, the company said it expected to generate $447 million in revenue this year.
The initial public offering gives Atlanta-based Parallel a $1.88 billion valuation.
The company’s incoming San Marcos facility will service medical marijuana patients in the area while providing supply to meet the state’s growing demand, Ruark said.
And it will create hundreds of jobs in the area, the company has said. It already delivers its products to San Antonio, Austin, Dallas and Houston.
Even with the medical marijuana patient count already growing, a bill passed last month by the Texas House would massively expand the pool of patients eligible to use cannabis.
The measure, House Bill 1535, would allow patients suffering from chronic pain, post-traumatic stress disorder, cancer or other conditions approved by the state health department to be treated with medical cannabis. The bill was sponsored by Rep. Stephanie Klick, R-Fort Worth.
To become law, it still must clear the Senate and be signed by Gov. Greg Abbott.
It would be a small step toward changing Texas’ status as one of the most restrictive among the 47 states that allow medical marijuana programs. When the Compassionate Use Program was created by the Legislature in 2015, it initially allowed only patients with intractable epilepsy to be treated with marijuana.
In 2019, another bill allowed those with particular diseases, such as autism and incurable neurodegenerative disorders, or people with terminal cancer, to be eligible.
The growth in medical cannabis, both in Texas and across the nation, made it a nearly $6 billion industry in 2019, according to New Frontier Data, an analytics company that tracks the industry. By 2025, New Frontier said, it expects medicinal sales nationally to top $16.3 billion.
Passage of HB 1535 would be a logical step forward in Texas’ methodical adoption and expansion of medical marijuana, Ruark said.
“Texas has had an incremental approach to building this Compassionate Use Program, and I think that’s one of the reasons it’s been so successful,” he said. “We’ve continued to prove that the (CUP) works, that patients are benefiting from this, that prescribers are comfortable prescribing this medicine.”
The bill would also increase the cap on the amount of the chemical that gets users high — THC. Currently, medical cannabis in Texas can contain just 0.5 percent THC, which is slightly more than the amount found in over-the-counter CBD products.
Klick’s bill would raise the THC cap to 5 percent. While Ruark and other marijuana advocates in Texas applauded the proposed increase, others say the cap is still too low.
After the House passed HB 1535, the advocacy group Texans for Responsible Marijuana Policy released a list of recommendations for lawmakers on the bill moving forward.
One is to allow doctors “to determine the optimal strength and dosage for each individual patient’s medical needs,” the group said. “This means there should be no list of qualifying conditions/ symptoms nor any THC cap, both of which restrict a doctor’s ability to properly treat their patients.”
In House testimony on the bill last month, David Bass, a retired Army major and director of the advocacy group Texas NORML, said he still would not enter the Compassionate Use Program while the THC limit remains at 5 percent.
“I use cannabis as medicine now, illegally … instead of taking opioids and psychotropic medication,” Bass told the Public Health Committee in April. “I want to try the (Compassionate Use Program) medicine, but my experience is 20 percent THC flower is what I need, and what has worked for me since 2012.”
Ruark didn’t comment on other changes he’d like to see the Legislature make to the Compassionate Use Program. But he suggested lawmakers in two years could again change rules to the current bill if it passes — such as raising the THC cap further — like they did in 2019 to expand the number of eligible conditions.
“Another two years go by, I think everyone will have learned even more, and we’ll see what happens,” he said.
Texans for Responsible Marijuana Policy is also calling on legislators to protect doctors and patients from any federal penalty for marijuana use, as well as allowing third-party testing of cannabis for consumer protection.
Other bills under consideration in the current session would reduce penalties for marijuana-related offenses and expand marijuana research.
Despite any misgivings about HB 1535, Ruark said it could increase access for cannabis statewide and potentially be a primer for greater change down the road.
“We have huge opportunities now to help more Texans,” Ruark said, “and that 2 million number will be even higher if this bill is successful.”