Texas' Marijuana Policy May Be Progressing Quicker Than Expected

As a nationwide trend of ballot initiatives calling for an end to marijuana prohibition for both recreational and medical users took hold in 2015, the Texas Legislature began work on Senate Bill 339, which would eventually become the Texas Com­pas­sionate Use Act. The state law, effective June 2015, allows for the use of cannabidiol (CBD) only by intractable epileptics who've had the drug prescribed by their own doctors. Texas' "low THC, high CBD" legislation was a version of one getting adopted elsewhere, by other state legislatures not wanting to deny patients access to medicine that works for them but also not ready to go full Colorado, either. The law is particularly narrow: It opened use to sufferers of only one cannabis-treated condition, and mandated that CBD be "prescribed" instead of the much less legally problematic "recommended." But however restrictive, the CUA's passage gave medical marijuana its start in Texas.

Ongoing federal prohibition of cannabis means that state rules exist within their own ecosystems. Controlled substances can't cross state lines, so any state providing for legal use has to somehow provide for legal production and distribution. An early revision of SB 339 dropped a requirement that the cannabis from which legal CBD oils is derived be cultivated only by nonprofit entities. That type of supply model is commonly found in the marijuana policies of early adopter "medical use only" states such as New Mexico and Arizona. States in which all adults are allowed to use pot have all developed (or are in the late stages of developing) rules that allow cultivation, processing, and distribution by commercial entities. Texas' Compassionate Use Act planned a CBD market that was to be supplied by for-profit businesses. To that end, 43 organizations applied to the Department of Public Safety for cannabis production and distribution license consideration ("Want to Sell Cannabidiol in Texas?," March 24). The CUA required many of the same conditions of their applicants as more liberal states require of commercial entities applying to grow traditional marijuana: strict on-site security, product tracking through RFID chips, plans for recalls when necessary, and production limits, among other restrictions.

Last September, as DPS bureaucrats prepared to license three of the 43 applicants, DPS field teams executed raids at the four People's Pharmacy locations in Austin, seizing cannabis oil – high in CBD but low in THC – being sold to intractable epilepsy sufferers and anyone else who wanted to buy it over the counter. Presumably, DPS reasoned that since it had yet to grant any licenses for CBD production, processing or distribution, the oil was being illegally trafficked. The Texas Hemp Industries Assoc­i­a­tion replied with a press release explaining that the 2014 Farm Act (federal legislation allowing for the production and sale of industrial grade hemp) was written to exclude cannabis matter containing psychoactive THC, which could be interpreted as a de facto legalization of all other parts of the plant; including CBD-rich, THC-free oils. DPS returned the seized oil to the pharmacies in October.

Once California awards its first commercial licenses in January, Texas will be the largest state in the union without a policy providing for safe, regulated commercial production of the kind of weed that's sold in dime bags. Meanwhile, however, the state has created a regulatory process that is materially the same as the ones in states where weed is legal for all adults. That process exists to give a very narrow set of medical cannabis users (about 1% of the total population suffers from epilepsy) access to nonpsychotropic CBD oils that may not require regulation at all.

Could this bizarre set of circumstances actually bring Texas closer to legalized pot? The three companies awarded cultivation licenses on Tuesday – Surterra Texas, Com­passionate Cultivation, and Cansort­i­um Texas – will be asked to each pay a license fee of $488,520 to operate facilities with Fort Knox-level security, staffed by highly bondable talent and insured by ironclad policies, all for the "exclusive" right to produce and dispense a product widely available wherever fine essential oils are sold, and over the internet. In that context, an expansion of the Compassionate Use Act to include THC-rich cannabis for use by other types of patients would certainly be appreciated, and may in fact be needed to make those licenses commercially viable.

Last Tuesday, as DPS awarded its licenses to produce, process, and dispense CBD oil to three companies under a medical use act that appears to be unnecessary because of a federal law, members of the Arcview Investment Group packed a ballroom at UT's AT&T Conference Center for a convention featuring smaller start-ups hoping to take a toehold in the burgeoning American cannabis sector. Only two of the exhibiting companies were actual cultivation, processing, and dispensing organizations. The opportunities being offered to institutions and accredited individuals right now are mostly in ancillary marijuana businesses like lighting and fertilizer, in-dispensary ad networks, and industry-specific data analytics. Investors in attendance carried a rosy outlook for the young sector. Cannabis cultivators and processors are known for very strong top-line revenue, and early adopter states are showing strong year-over-year growth.

A spokesperson for Surterra – the only Texas licensee with a listed website, phone number, and public-facing profile (both CC and CT are incorporated behind registered agents) – told the Chronicle that the widespread availability of CBD oil hasn't changed their plans to operate in Texas. Its primary operations are in Florida (as is Cansortium's), whose "low THC, high CBD" medical marijuana law was the template upon which Texas' law was written. The 2014 Florida law opening up medical cannabis was amended by voters in 2016 to make full-THC forms of cannabis available to Floridians suffering from an expanded list of medical conditions, including HIV, PTSD, cancer, and MS.

The newly licensed growers and dispensaries would have been able to sell medicine containing THC in Texas if the numerous, vocal supporters of this session's HB 2107 had gotten their way. The bill, written to remove THC restrictions, turn "low THC" marijuana into "medicinal marijuana," and expand the list of conditions for which cannabis can be used legally with a doctor's recommendation, removing language requiring it to be "prescribed," gained unprecedented bipartisan support, with 77 sponsors and co-sponsors, including 29 Republicans, before dying this week, just before it could hit the full House floor.