Cannabis Business in Texas

The Texas cannabis market is currently limited to cannabis and hemp-derived products, which may not contain more than 0.3% concentration of THC.

• Low-THC cannabis products are available for medical patients with approved, medically certified conditions at various dispensary locations across Texas.
• Hemp industry is represented by over 50 processors and more than 9,000 licensed consumable hemp retailers and online platforms.
• CBD products in Texas are available in both open retail and medical formulations, with medical CBD requiring a prescription.

Types of Cannabis Industry Businesses in Texas

Most cannabis and hemp businesses that require licensing in Texas fall into five primary categories:

1. Cannabis Dispensing Organizations (Medical Dispensaries)
2. Medical Cannabis Processors
3. Industrial Hemp Processors
4. THC-Testing Laboratories
5. Hemp Dispensaries

The rest of the industry comprises various ancillary products and B2B service providers that support these core businesses.

Cannabis-Touching Businesses in TX

Cannabis-touching businesses are directly involved in the cultivation, processing, distribution, and retail sale of cannabis products. In Texas, these businesses manage the entire production cycle, from cultivation to final sales. Licensed businesses, referred to as "Medical Cannabis Dispensing Organizations," are vertically integrated, overseeing all aspects of the process under strict state regulations to ensure compliance and maintain product quality.

Examples of Cannabis-Touching Businesses:

• Cultivators: Cultivators grow cannabis plants either indoors or outdoors, following state-mandated procedures to guarantee quality and regulatory compliance. They may focus on breeding new strains or growing established ones.
• Processors: These businesses convert raw cannabis into various consumable forms, such as oils, edibles, and concentrates, adhering to rigorous safety and consistency standards set by the state.
• Dispensaries and Retailers: Licensed dispensaries provide patients with cannabis products through in-store purchases or delivery. As of 2024, only three dispensaries have been licensed under the Department of Public Safety (DPS), as per Texas Health and Safety Code Chapter 487. These organizations ensure access to low-THC cannabis by offering delivery services and limited in-store purchases.
• Testing Facilities: Although Texas does not require separate licensing for testing labs, only licensed dispensing organizations are permitted to conduct testing on low-THC products. This ensures that the products meet safety standards and are free from harmful contaminants.

Distributors: Distributors transport cannabis products from producers to retailers, ensuring secure movement within the state in compliance with Texas's tracking and security regulations.

Ancillary Cannabis Businesses in TX

Ancillary cannabis businesses support plant-touching businesses by providing essential services without directly handling the cannabis plant. In Texas, these businesses include a range of B2B service providers and consultants.

Examples of Ancillary Cannabis Businesses:

• Cannabis Attorneys: Legal professionals specializing in cannabis laws assist businesses in navigating the evolving regulatory landscape in Texas. They help companies start and operate while complying with both state and federal laws, reducing the risk of legal issues.
• Banking and Payment Processing: Due to federal restrictions, access to traditional financial services remains limited for cannabis businesses. Many rely on specialized banking solutions, including payment processing, loans, and other financial services, to operate within the legal framework. Several banks in Texas offer cannabis-friendly banking options.
• Accounting Services and Fractional CFOs: Cannabis businesses face unique financial and regulatory challenges, requiring CPAs familiar with Texas cannabis accounting. Hiring a CPA as a part-time Chief Financial Officer is a common way for cannabis businesses to save money and maintain financial compliance.
• Insurance Providers: Comprehensive insurance is critical for cannabis businesses, covering operations, staff, and product liability. Working with insurance agents knowledgeable about the cannabis industry ensures adequate coverage at every stage of the business.
• Consulting and Management: Consulting firms assist start-up and existing cannabis companies with compliance, licensing, and operational strategies. These services help streamline business processes and ensure long-term competitiveness in the market.

Other notable examples of ancillary services are:

• Marketing and Branding
• Technology Solutions
• Security
• Data Analytics
• Packaging and Labeling Solutions, and other suppliers.