How To Open A Dispensary in Texas In 2023

how to open a dispensary in texas

The Compassionate Use Act, Senate Bill 339, was passed in Texas in 2015, allowing patients with severe epilepsy to use cannabis oils made from low-THC cultivars of the plant. The cannabis market in Texas is quite small due to the law’s specificity. The Department of Public Safety began accepting applications for vertically integrated medical marijuana enterprises in early 2017. By the end of 2017, three dispensing organizations had obtained operating licenses that allowed them to cultivate, process, and dispense.

Although, medical marijuana is legal in Texas, albeit under extremely specific conditions. According to research, the cannabis market could be $3 billion if Texas legalizes marijuana for adult use.

The Compassionate Use Program’s application process to add more dispensaries in Texas began on January 16 and will last until April 28 of 2023.

In this blog, we are going to dive deep into the cannabis dispensary scene in Texas, and understand how you can apply for a license, how big is the opportunity, and most importantly how to open a dispensary in Texas.  

Texas Law on Marijuana and Other Cannabis-Derived Products

Cannabis prosecution cases across the state have been in chaos since Texas lawmakers legalized some varieties of the cannabis plant in 2019 but not others and enforcement varies widely depending on where you live.

An updated Texas law aimed to align the state with a 2018 federal rule that legalized hemp but kept marijuana illegal.

What is Legal In Texas?

  • Since both marijuana and hemp are products of the cannabis plant, it is often impossible to distinguish them apart by look or smell. The difference is the amount of THC, also known as tetrahydrocannabinol, which is a psychotropic substance.
  • Cannabis plants or their derivatives with a THC content of greater than 0.3% are categorized as marijuana. The substance is referred to as hemp if it has less THC.
  • CBD, often known as cannabidiol, is a non-psychoactive component of cannabis. Businesses may sell it anywhere in Texas as long as the THC content is under 0.3%.
  • Cannabis plants naturally produce small levels of delta-8, a psychoactive chemical. Delta-8 has gained popularity as a result of the fact that it may provide a similar “high” to marijuana when concentrated in a lab.

Can I Open a Dispensary in Texas Right Now?

Yes, you can open a dispensary in Texas right now. The application process to add more dispensaries under the Compassionate Use Program will be open until April 28, 2023. You can access the application form here.

How Much Can You Buy?

There are no limits to cannabis purchase in Texas, however, products must contain less than 0.5% THC and at least 10% CBD.

Cannabis in Texas is illegal for recreational use.

Current Cannabis Laws in Texas

  • Growing cannabis in Texas is illegal.
  • Texas does not accept medical marijuana cards or certificates from other states.
  • Texas does not have any rules governing the testing of cannabis oils, tinctures, or edibles that are available to patients.
  • The following medical conditions are listed as qualifying under Texas law for a medical cannabis card:
  • A seizure disorder
  • Amyotrophic Lateral Sclerosis
  • An incurable neurodegenerative disease
  • Autism
  • Cancer
  • Multiple Sclerosis (MS)
  • Post-Traumatic Stress Disorder (PTSD)
  • Spasticity, such as that caused by conditions like Parkinson’s Disease

How Much Cannabis Can an Adult in Texas Possess?

Texas has no restrictions on the purchase of cannabis products, but they must have a minimum THC content of 0.5% and at least 10% of CBD.

Tax Rates in Texas

Texas has legalized medical marijuana, but there is no sales tax on it. Texas has no taxes on recreational marijuana because it is still illegal.

Current Cannabis Market in Texas

According to a recent economic analysis, legalizing marijuana in Texas could bring in billions of dollars in tax revenue and tens of thousands of new jobs.

According to market estimates for adult-use marijuana, Texas might see yearly cannabis sales of $2.7 billion. Additionally, the state could earn more than $1.1 billion in marijuana taxes every two years if it adopted Colorado’s tax structure.

Types of Cannabis Licenses in Texas

Only three “Dispensing Organizations” have been given licenses by the Texas Department of Safety (“DPS”) to cultivate, process, and dispense low-THC cannabis in Texas to prescribed patients.

Applications are being accepted for the Compassionate Use Program to add additional dispensing organizations. The last day to submit your applications is April 28, 2023.

Application And Fee Requirements

Applicants must complete and electronically submit the Dispensing Organization Application, all attachments, and the accompanying Exhibits listed below in order to be considered for a Dispensing Organization license in Texas:

  • Exhibit A – Proof of ownership documentation: Included in this documentation are a Certificate of Existence or Certificate of Authority from the Texas Office of the Secretary of State and a Certificate of Good Standing from the Texas Comptroller of Public Accounts, as well as any additional records proving ownership of a legitimate Texas business.
  • Exhibit B – Directors, managers, and employees must file DPS Form RSD-303, which includes registration applications and criminal background disclosures. 
  • Exhibit C – Proof of required liability insurance: In order to complete this section, the potential dispensing organization must provide proof that it carries commercial general liability insurance with the following policy limits: (A) $1,000,000 per occurrence; (B) $2,000,000 general aggregate limit; and (C) $1,000,000 product liability.
  • Exhibit D – Proof of application payment in accordance: If the application is approved, a $7,356 initial application fee and a $488,520 license fee for a two-year period are required.

How to Get a License

Submit applications for dispensing organization licenses through the RSD Contact Us portal. The deadline for submissions is April 28, 2023, at 5 p.m. CT.

In order to reapply for a CUP dispensing organization license, applicants must submit an updated application form. For applicants who are reapplying, application fees will be waived.

Texas Dispensary Fees

Type of FeeAmount
Non-refundable Application Fee$7,356
License Fee for 2 years$488,520
License Renewal Fee$318,511

What Else Do You Need to Open a Dispensary in Texas?

Step 1

Understand Cannabis Laws In Texas

You ought to be aware that each state has its own cannabis laws before submitting an application for a license. To manage your cannabis business legally and profitably, make sure you are familiar with the regulations and legislation.

Step 2

Create A Solid and Scalable Business Plan

You want to write a great business plan that would draw investors, but you’re not sure where to begin. Fortunately, we can provide you with some great suggestions! Check out this comprehensive, step-by-step guide for creating a successful business plan:

Market Research

Include sales predictions, deadlines and milestones, PR, and a description of your market research and marketing approach, as well as how you plan to compete with your competitors. If you don’t have much data analysis, you can rely on client testimonials instead.

Competitive Analysis 

Analyze the strengths and weaknesses of your direct and indirect competitors in the cannabis industry. Determine how you’ll gain a competitive advantage over other cannabis businesses.

Sales & Marketing Plan

Your pricing strategy, anticipated advertising and promotion campaigns, sales strategy, and all of the advantages of your products and services are thoroughly explained in the sales and marketing section. Here you’ll write out the USP (unique selling proposition) of your dispensary, describe how you’ll market your cannabis products and services, and entice customers to buy them.

Financial Plan

It’s vital to show that you understand your current financial situation, capital requirements, and projected income because starting a business is mostly about making a profit. In the financial section, give a brief overview of your funding needs, complete financial statements, and a financial statement analysis. The balance sheet, income statement, and cash flow statement are the three most crucial financial documents for every organization to display in this portion of the business plan.

Step 3

Choose Your Location With Care

For optimum results, you should choose the right location for your dispensary.  It must be strategically situated, capable of safely dispensing cannabis, and at least 1,000 feet away from any other dispensaries, places of worship, neighborhoods, or schools. Obviously, you must select a recognized location for your business, where potential customers are close by and where your consumers can find you. 

Step 4

Tech Integration with Leading Technology Partner 

A successful marijuana dispensary must have a strong IT architecture and security system. Therefore, after your license has been approved and you are ready to open your dispensary, you must get in touch with Cure8 IT specialists. We are experts in designing and developing your cannabis store from the ground up. Wi-Fi, IT network, scanners, printers, security cameras, and everything else you need to complete your store’s IT infrastructure we can procure it for you.

How Can Cure8 Help?

Cure8 is a one-stop shop for technology solutions that can boost company performance. We work closely with your team to determine which IT services are best for your cannabis business. Our services include managed IT services, IT consultancy, and customized hardware and software solutions.

Check out more about our solutions here.

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