Texas Cannabis Software

Texas Cannabis License Types

Texas operates a limited medical cannabis program known as the Texas Compassionate Use Program (TCUP), established in 2015 by Senate Bill 339 and codified under Texas Health and Safety Code Chapter 487 and Texas Occupations Code Chapter 169. The program is administered by the Texas Department of Public Safety (DPS) Regulatory Services Division, which handles all dispensing organization licensing, facility inspections, and ongoing compliance oversight. Detailed operating requirements for licensees are established in Texas Administrative Code (TAC) Title 37, Chapter 12.

Recreational cannabis remains illegal in Texas. TCUP is a strictly medical program that authorizes licensed dispensing organizations to cultivate, process, and dispense low-THC cannabis products to patients who have received a prescription from a qualified, DPS-registered physician. Texas does not issue medical cannabis cards; instead, all patient prescriptions are entered directly into the Compassionate Use Registry of Texas (CURT), the state's secure online registry system, which dispensing organizations must verify against before filling any prescription.

The most significant recent development in the program is the passage of House Bill 46, signed by Governor Greg Abbott on June 21, 2025, and effective September 1, 2025. HB 46 substantially expanded TCUP by broadening qualifying conditions, changing THC dosage limits from a percentage-by-weight cap to a milligram-per-dose standard, adding new product delivery formats, and raising the statewide cap on dispensing organization licenses from three to fifteen. As of early 2026, DPS is actively issuing new licenses under this expansion.

Dispensing Organization License

Texas issues a single type of cannabis business license: the Dispensing Organization license. This is a vertically integrated license, meaning a single organization is authorized and required to handle all phases of cannabis operations under one license. A dispensing organization must cultivate, process, package, test, and dispense low-THC cannabis entirely within its own licensed structure. Texas does not authorize independent cultivation-only, manufacturing-only, or testing-only cannabis licenses. There is no separate wholesale or distribution tier. Every licensed entity in TCUP operates as a fully integrated business from seed to patient.

This structure is unlike most state cannabis programs and has direct operational implications. A dispensing organization cannot purchase cannabis or cannabis products from another licensee for resale. All plant material must originate from the organization's own cultivation operations, all products must be processed by that same organization, and all dispensing must occur through its own licensed dispensary locations. Operators entering the Texas market must be prepared to build and operate the full supply chain internally from the outset.

Under Texas Health and Safety Code §487.102, an applicant for a dispensing organization license must demonstrate, at the time of application:

• The technical and technological ability to cultivate and produce low-THC cannabis
• Premises reasonably located to provide registered patients access to cannabis through existing infrastructure
• The ability to maintain accountability for raw materials, finished products, and all by-products to prevent unlawful diversion or access
• The financial ability to maintain operations for not less than two years from the date of application

All directors, managers, and employees of a dispensing organization must be individually registered with DPS under Subchapter D of Chapter 487 before the organization may operate. Registration applicants are subject to background checks, and any individual found to have violated applicable state or federal controlled substance laws may be disqualified. Registrants are required to carry or display their DPS-issued registration cards at all times while performing any regulated activity.

Under TAC §12.2, all licensees must establish and implement a drug-free workplace policy consistent with Texas Workforce Commission requirements, conspicuously display their DPS-issued license at each location, and cooperate fully with any DPS or state fire marshal inspection. Licensees must notify DPS within five business days of any registrant's termination and must retain employment records for terminated registrants for at least two years from the date of termination.

Dispensing organizations may only conduct regulated activities cultivation, processing, storage, transportation, and dispensing at locations that have been approved by DPS. Any change in location requires advance DPS approval before operations begin at the new site.

Satellite Dispensing Locations

Prior to HB 46, each dispensing organization was limited to its primary licensed location. HB 46 added explicit authorization for satellite dispensing locations, which allow a single dispensing organization to serve patients across a broader geographic footprint without requiring a separate full dispensing organization license for each site.

Satellite locations must be approved by DPS before they may operate. Under HB 46, each dispensing organization is limited to one satellite location per public health region before any further expansion is permitted within a given region. Texas is divided into eleven public health regions, and the satellite location framework is designed to ensure that the license expansion authorized under HB 46 translates into genuinely distributed patient access across the state rather than concentrated urban density.

Satellite locations are extensions of the parent dispensing organization's license and are subject to the same security, recordkeeping, employee registration, and CURT verification requirements as the primary location. A satellite location is not a separate licensed entity and does not require a separate dispensing organization license fee.

Application Process and Fees

All dispensing organization license applications are submitted to the DPS Regulatory Services Division using the official CUP-101 application form. Application windows are not perpetually open DPS announces specific application periods when new licenses are being awarded. Under the HB 46 expansion process, DPS conducted a two-phase selection process. First-time applicants competed for three licenses in Phase II, with a September 15, 2025 application deadline. Incomplete applications resulted in automatic disqualification.

The non-refundable application fee is $7,356, payable via wire transfer to the Texas Comptroller following DPS's invoice. The application fee must be paid within the window specified in the invoice; late payment disqualifies the application from consideration. Application fees are not refunded if an application is denied, withdrawn, or if the applicant is not selected through the competitive process.

If selected, a dispensing organization is first issued a conditional license, which does not authorize cultivation, manufacture, distribution, or sale of any cannabis products. The conditional license status requires the applicant to pass additional due diligence review including evaluation of financial suitability, litigation history, and disciplinary actions before DPS issues a final license.

Upon final license approval, the license fee is $488,520 for a two-year period, per TAC §12.14. The biennial renewal license fee is $318,511. In addition, an individual registration fee of $530 applies for both original and renewal registrations. License fees are not invoiced until the applicant has passed all due diligence evaluations. These fee levels reflect the high barrier to entry in TCUP and have historically limited participation to well-capitalized operators.

The complete application requires the following core documentation under TAC §12.11:

• Proof of business entity ownership and current status, including a Certificate of Existence or Certificate of Authority from the Texas Secretary of State and a Certificate of Good Standing from the Texas Comptroller
• Certificate of insurance evidencing commercial general liability coverage for property damage, personal injury, and product liability
• Descriptions of all properties proposed for cultivation, processing, and dispensing, including ownership documentation
• Descriptions of cultivation, processing, and dispensing methods
• A description of the applicant's proposed testing protocols and laboratory methods
• Security plans covering access controls, alarm systems, surveillance, storage, and transportation
• An inventory control system plan consistent with TAC §12.8
• A staffing plan, organizational chart, and identifying information for all directors, owners, managers, members, and employees
• An emergency management plan
• Diversion prevention procedures
• Vehicle descriptions and electronic vehicle tracking systems for any transportation operations

There is no Texas residency requirement for applicants. Out-of-state businesses and multi-state operators may apply.

Product Standards and THC Limits

TCUP authorizes only low-THC cannabis products. Under HB 46, effective September 1, 2025, the previous 1% THC-by-weight cap was replaced with a dosage-based standard: no more than 10 milligrams of THC per dosage unit, and no more than 1 gram of THC per package. Only naturally occurring phytocannabinoids are permitted synthetic cannabinoids are prohibited under HB 46.

Approved product forms include edibles, topical balms, tinctures, liquid preparations, lotions, transdermal patches, and suppositories. HB 46 also added non-smoked pulmonary inhalation products, including nebulizers, vaporizers, and inhalers but these must be approved by the Texas Department of State Health Services and directed by the patient's prescribing physician. Smoking cannabis remains prohibited under Texas law regardless of a patient's registration status.

Dispensing organizations are responsible for conducting all required product testing. Unlike most state programs, Texas does not authorize or license independent cannabis testing facilities under TCUP. Operators must build testing capability into their own operations and document testing protocols as part of both the license application and ongoing compliance. Licensees are required to use applicable best practices to limit product contamination and must maintain a written recall plan for any potentially defective product, per TAC §12.2.

Prescriptions in CURT are valid for one year and may include up to four 90-day refill cycles. Dispensing organizations must verify every prescription against CURT before dispensing confirming that the patient is listed in the registry, that the prescription matches the registry entry in quantity, and that the prescription has not already been filled by another dispensing organization. After dispensing, the organization must immediately record the form and quantity of cannabis dispensed and the date and time of the transaction in CURT.

Compliance Requirements

Inventory Tracking: Under TAC §12.8, all dispensing organizations must use a perpetual inventory control system that tracks cannabis from propagation from seed or cutting through final delivery to a patient or legal guardian. Texas does not operate a state-mandated seed-to-sale platform like METRC; however, the inventory system must integrate with CURT to enable real-time prescription verification and dispensing recordkeeping. All inventory records must be maintained for a minimum of two years.

Security: Under TAC §12.32 and related rules, dispensing organizations must maintain comprehensive physical security at all licensed locations. Required security measures include controlled-access areas, alarm systems, and surveillance coverage of all areas where cannabis is cultivated, stored, processed, or dispensed. Facilities must allow emergency access for fire departments and emergency medical services. All transportation of cannabis products must use locked containers, authorized registered personnel, and documented trip plans. Delivery vehicles must meet the specific security requirements of TAC §12.32, and identifying descriptions of all vehicles, along with electronic vehicle tracking systems, must be disclosed in the license application and kept current with DPS.

Recordkeeping: Licensees must retain all required records for at least two years, including application materials, inventory and sales records, transportation logs, security footage, employee records, inspection reports, and all testing documentation. The department and state fire marshals have authority to inspect all records, facilities, and vehicles at any time during an inspection or investigation.

Insurance: Commercial general liability insurance must be maintained continuously and current proof of coverage must be kept on file with DPS. Lapses in required insurance coverage are a compliance violation.

Operational Timeline: Under HB 46, all dispensing organizations issued licenses through the expansion process must become fully operational within 24 months of licensure. A licensee that fails to meet this deadline may have its license referred to the TCUP eligibility list and awarded to an alternate applicant. This timeline applies from the date of final license issuance, not from the date of conditional license award.

Local Government Restrictions: Under HB 46, local governments in Texas may not prohibit licensed dispensing organization operations within their jurisdictions. This is a meaningful distinction from many states where municipal bans on cannabis businesses are permitted TCUP licensees in Texas have a statutory right to operate regardless of local opposition, provided all state licensing conditions are met.