Texas Marijuana Cultivation License

Does Texas Require Marijuana Growers to Obtain Cultivation License?

Yes. State Bill 339 (Texas Compassionate Use Act) requires marijuana growers to obtain licenses to operate in Texas. Although restrictive, Governor Greg Abbott approved State Bill 339 in July 2015, legalizing medical marijuana. As stipulated in the bill, prospective medical marijuana cultivators must obtain dispensing organization licenses from the Texas Department of Public Safety. Chapter 487, Section 001 of the Health and Safety Code defines dispensing organizations as establishments licensed to grow, manufacture, and dispense medical cannabis to registered patients. In Texas, only holders of dispensing organization licenses are permitted to grow medical marijuana.

What Are the Different Types of Cultivation Licenses in Texas?

A dispensing organization license is the only license that allows Texas residents to cultivate medical marijuana. The Texas Compassionate Use Act does not specify the sizes of cannabis farms. However, the Texas Department of Public Safety inspects proposed locations for cannabis dispensing organizations, including their cultivation areas.

Who Can Grow Marijuana in Texas?

It is unlawful to grow cannabis in Texas without a license. As stipulated in State Bill 339, only persons with dispensing organization licenses can legally cultivate medical cannabis in the state. According to Chapter 487, Section 151 of the Health and Safety Code, all staff of dispensing organizations must be at least 18 years old and register with the Texas Department of Public Safety. Also, felons are prohibited from working in dispensing organizations.

How to Get a Marijuana Cultivation License in Texas

According to Chapter 487, Section 102 of the Health and Safety Code, the Texas Department of Public Safety considers applications for dispensing organization licenses based on the following criteria:

• The applicant's ability to secure the personnel, premises, and resources required to operate the facility. The facility's premises must allow registered medical marijuana patients to enter and purchase their drugs.
• The applicant's technical knowledge about medical marijuana cultivation and production
• Applicants' ability to account for the raw materials, final products, and wastes from the cultivation and manufacture of medical cannabis. The applicant must prevent diversion and illegal possession of cannabis wastes, finished products, and raw materials.
• The availability of financial resources to maintain the facility's operations for at least two years from the date of application
• The registration of the applicant and each employee, director, or manager of the proposed dispensing organization in line with Chapter 487, Section 151 of the Health and Safety Code

As provided in Chapter 487, Section 103 of the Health and Safety Code, when applying for licenses with the Department of Public Safety, prospective dispensing organization owners must do the following:

• Pay their application fees in line with Title 37 §12.14 of the Texas Administrative Code.

• Submit their application forms: Applicants must download and complete the Dispensing Organization Application Form. On the form, they must state:

  • The business entity type they intend to establish (such as sole proprietorship, corporation, partnership, limited liability company, and limited liability partnership). They must also state if the company is publicly traded or privately held.
  • The name of the corporation or full name of the sole proprietor and their assumed name (if any)
  • The personal information (full name, date of birth, and email address) of the president, vice president, secretary, treasurer, and other partners of the business entity. For sole proprietorships, the form must state the personal information of the individual owner.
  • The full name of the proposed establishment's manager
  • The physical address and mailing address of the proposed facility
  • The phone number, email address, and website of the proposed business

• Provide the following documents:

• Exhibit A - Proof of ownership documentation, as stated in Title 37 §12.11(b)(1) of the Texas Administrative Code. The required documents include a certificate of good standing from the Texas Comptroller of Public Accounts and a certificate of authority or certificate of existence from the Secretary of State.

• Exhibit B - Applications for managers, directors, and other employees of the proposed establishment, as provided in Title 37 §12.12 and §12.11(b) (3)-(5) of the Texas Administrative Code. Applicants must submit the following for each manager, employee, and director of the facility:

  • Documents necessary to verify their identities (names, addresses, and birth dates)
  • Criminal background disclosure, including any deferred adjudication and conviction
  • State-issued identification numbers or driver's licenses
  • Fingerprint scans \ Any license applicant who fails to meet these requirements will be issued a notification of deficiency. They will have 90 days from the notification date to respond to the deficiency and provide the essential information. However, on applicants' request, the Department can extend the period for addressing application deficiencies by an additional 90 days. The Department of Public Safety will terminate any application from applicants who fail to address deficiencies within the allowed period.

• Exhibit C - Proof of the company's liability insurance against third-party claims of property damage, product liability, and bodily injury, as provided in Title 37 §12.11(b)(6) of the Texas Administrative Code. The applicant must purchase insurance with at least $1 million coverage for each liability claim and: * $1 million product liability limit * $2 million general aggregate limit

• Exhibit D - Proof of application fee payment as stated in Title 37 §12.14 of the Texas Administrative Code

• Exhibit E - Proof that the applicant can secure the resources, employees, and premises for operating the facility, in line with the provisions of Title 37 §12.11(b)(7) (B) of the Texas Administrative Code. The applicant must:

  • Provide details of all the equipment that will be used for cultivating, processing, and dispensing medical marijuana in the proposed facility
  • Describe the methods they intend to use in growing, extracting, manufacturing, and selling medical cannabis and cannabis products to qualified patients.
  • Provide an organizational chart of the proposed facility, indicating its supervisory structure. The applicant must list all the existing and proposed staff of the establishment and state their responsibilities and positions.
  • Describe the dispensing organization's policies and procedures for ensuring employee safety in line with federal OSHA (Occupational Safety and Health Administration) provisions for workplace safety
  • Describe the dispensing organization's proposed testing laboratory, and its testing methods and protocols
  • Acknowledgment by the business's managers, directors, and employees, indicating that they are conversant with the federal laws regulating cannabis and its transportation across state borders (Controlled Substance Act)
  • Show proof that the premises of the proposed establishment's facility will allow access to medical cannabis patients

• Exhibit F - Proof that the proposed dispensing organization can account for and maintain records of all marijuana byproducts, raw materials, and finished products, in line with Title 37 §12.11(b)(7)(C) of the Texas Administrative Code, to prevent diversion.

  Applicants must provide the following concerning the facility:

  • Floor plan, indicating the names, functions, and layout of each section of the facility. It must also describe the locking options for all entrances and exits, alarm systems, storage safes and vaults, and video surveillance.
  • Emergency management plan
  • Procedures for preventing diversion of medical cannabis
  • Inventory control plan in line with the system provided in Title 37§12.8 of the Texas Administrative Code
  • System for tracking medical cannabis from cultivation to the point of dispensing to medical cannabis patients
  • Security and electronic tracking systems for the company's vehicles
  • Employee experience and qualification in product tracking
  • Employee screening and monitoring plans
  • Recordkeeping policies and procedures
  • Product recall policies and procedures in case of any patient reaction, test result, or other factor suggesting the possibility of harmful drug reactions
  • Waste disposal plan
  • Access to expert security, tracking, and data collection services

• Exhibit G - Proof that the applicant has sufficient financial resources to operate the proposed dispensing organization for at least two years from the application date as provided in Title 37 §12.11(b)(7) (E) of the Texas Administrative Code. The applicant must:

  • Show the business's financial budget for the first two years of operation.
  • Describe the business's available financial assets
  • List all the entities and individuals that control the applicant.
  • Describe the corporate structure (if applicable) and business organization of the proposed facility
  • List all the shareholders and owners of the proposed facility.

• Exhibit H - Proof of the applicant's technical knowledge in medical marijuana cultivation, processing, and dispensing, as provided in Title 37 §12.11(b)(7)(A) of the Texas Administrative Code. The applicant must provide documentation proving their experience in:

  • Marijuana cultivation, analytical laboratory methods, microbiology, and analytic organic chemistry
  • Handling patients' confidential information in line with HIPAA (Health Insurance Portability and Accountability Act of 1996) requirements and patient interaction and education

• Exhibit I - Proof that the facility's location can allow for the dispensing of medical marijuana to registered medical marijuana patients, in line with the provisions of Title 37 §12.11(b)(7)(D) of the Texas Administrative Code. The applicant must include:

• A site map that describes the proposed facility's location. The map must indicate the parking areas, buildings, outdoor areas, property lines, and streets within the facility's surroundings. It must also show fire hydrants, water accessibility, sanitation systems, and fences (if applicable).

• A description of the facility's communication systems

• Description of features the facility will use in identifying vehicles it intends to use for transporting medical marijuana products.

• The floor plan of the proposed facility's building, indicating the sections designed to protect patient privacy, such as dispensary areas, and stating its operation hours.

• The facility's HIPAA computer network

• Cover letter

Applicants should submit completed forms, Exhibits, and attachments electronically to the Texas Department of Public Safety. The Department reviews applications and scores them based on the scoring criteria. Applicants can review the Department's application checklist to ensure their applications are complete.

If an application is approved, the applicant must pay a license fee to obtain the dispensing organization license. However, if an application is denied, the applicant can file for a hearing, as stipulated in Chapter 487, Section 104(b) of the Health and Safety Code. The Department of Public Safety /must issue the applicant a written notice stating the grounds of denial, at least thirty days before the hearing date.

According to Title 37 §12.14 of the Texas Administrative Code, the Department will regard any application as incomplete if the applicable fees are unpaid. If the application fee or license fee payment is reversed or dishonored before the prospective dispensing organization owner is issued a license, the Department will reject the application. However, if the payment is reversed or dishonored after the applicant is issued a license, the Department will initiate a revocation as stipulated in Title 37 §12.23 of the Texas Administrative Code. Nevertheless, if the applicant eventually pays their complete fees, the Department will dismiss the revocation proceeding.

How Much Do Marijuana Cultivation Licenses Cost in Texas?

As stipulated in Title 37 §12.14 of the Texas Administrative Code, the costs of obtaining and maintaining dispensing organization licenses in Texas are:

• $7,356 for dispensing organization license application
• $488,520 for dispensing organization license (for two years)
• $318,511 for renewing dispensing organization (renewed every two years)
• $530 registration fee for initial dispensing organization registration and biennial renewal

Can Licensed Marijuana Cultivators Hold Other Cannabis Licenses in Texas?

Texas issues only one type of license for medical marijuana businesses; the dispensing organization license. Holders of dispensing organization licenses are authorized to cultivate, produce, dispense, and test low-THC medical marijuana.