Texas Legislature Poised to Expand Access to Medical Patients as Texas Dispensing Organization License Round Closes

Texas may soon dramatically expand its medical cannabis market and increase access to medical cannabis products to thousands of additional patients across the state. Currently, there are only three licensed “Dispensing Organizations” (i.e., vertically-integrated medical cannabis companies engaging in cultivation, manufacturing, and retailing activities) in Texas. But that will soon change.

Earlier this year, the Texas Department of Public Safety (“DPS”) signaled its intention to issue additional Dispensing Organization Licenses and just last month accepted dozens of applications for those additional licenses. Specific details regarding the application review process and subsequent approval procedures are still in the works, but DPS has announced that further guidance will be provided after the conclusion of the current Texas legislative session on May 29th. Although DPS has not yet declared how many additional licenses it will issue (or even when it will issue them), a bill moving through the Texas Legislature will likely bear on its determination.

HB1805, which has passed the Texas House of Representatives and is currently under review by the Senate Committee on Water, Agriculture, and Rural Affairs, would amend the Texas Compassionate Use Act by expanding the list of “qualifying conditions” – i.e., medical conditions that would qualify a patient for a medical cannabis card –  to include any condition “that causes chronic pain, for which a physician would otherwise prescribe an opioid,” as well as debilitating medical conditions identified by the Department of State Health Services. These amendments would open the door for a wider patient population to benefit from medical cannabis treatments. To be sure, if HB1805 were to become law, there would greater patient demand for medical cannabis products across Texas.

Critically, the Texas Compassionate Use Act does not include a numerical cap on the number of Dispensing Organization Licenses that DPS may issue, instead granting DPS flexibility to issue the number of licenses necessary to meet the needs of qualifying patients in the state. Specifically, DPS has discretion to issue the number of licenses “necessary to ensure reasonable statewide access to, and the availability of, low-THC cannabis.” If HB1805 were to become law and expand access to medical cannabis products to patients suffering from chronic pain, one would expect DPS to issue more Dispensing Organization Licenses than the three licenses it issued following the previous license application round in 2017.

Finally, it is worth noting that the Texas Compassionate Use Act includes strict rules for the manufacturing of medical cannabis products, including limiting THC content in medical cannabis products to not more than 1% by volume. HB1805 proposes to modify the current THC limit to 10mg per serving, allowing for more standardization and, potentially, expanding the range of medical cannabis products available to patients.

Stay tuned for additional updates following the end of the current session of the Texas Legislature on May 29th and also for any new information from the DPS on its timeline for issuing new Dispensing Organization Licenses.

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