Texas Compassionate Use Program: DPS Now Accepting Applications for Dispensing Organization Licenses

In 2015, the Texas Legislature enacted the Texas Compassionate Use Act, Senate Bill 339. Under TCUP’s regulatory regime, the Texas Department of Public Safety (“DPS”) would create a secure registry for licensed physicians to prescribe low tetrahydrocannabinol (“THC”) to patients suffering from a limited list of medical conditions, including ALS and intractable epilepsy.

Since establishing the Texas Compassionate Use Program (“TCUP”), DPS has issued licenses to only three dispensing organizations to dispense low-THC cannabis to registered TCUP patients. Currently, only two are operational in the state of Texas. Recently, DPS’  Regulatory Services Division announced that department officials are now accepting new applications for dispensing organization licenses. Read below to learn more about the TCUP and the licensing application process. 

What is the Texas Compassionate Use Program (TCUP)? 

The Texas Compassionate Use Program was created in response to the passage of the Texas Compassionate Use Act in 2015, which established requirements for the licensing and registration of dispensing organizations that provide low-THC cannabis for qualified physicians to prescribe to patients with qualifying medical conditions. Qualifying patients are registered in the Compassionate Use Registry of Texas (“CURT”), which licensed dispensing organizations may access to dispense low-THC prescriptions. 

Since its 2015 enactment, the TCUP has expanded on multiple accounts. In 2019, the Texas legislature broadened TCUP via H.B. 3703 to expand its pool of qualifying medical conditions to include incurable neurodegenerative diseases like Alzheimer’s Disease, Spinal Muscular Atrophy, Hungtiong’s Disease, and more. In addition, H.B. 3703 eradicated the requirement of consulting with a secondary physician before obtaining a prescription for low-THC cannabis, allowing physicians to proceed directly from their patient treatment plan to prescription entry. 

In September 2021, the 87th Session of the Texas Legislature further expanded TCUP’s list of qualifying medical conditions and established compassionate-use institutional review boards (“IRBs”) to review proposed research programs and study the medical use of low-THC cannabis. This 2021 expansion also increased the maximum prescription weight of low-THC cannabis to 1% by weight, up from the original 0.5% THC cap. 

How many Dispensing Organizations will be Licensed in Texas?

Under the Texas Health and Safety Code Ch 487, DPS is required to license at least three dispensing organizations, provided they meet statutory requirements. Currently, it has done so. However, DPS has a statutory directive to “ensure reasonable statewide access to, and the availability of, low-THC cannabis for patients registered in the compassionate-use registry.”  DPS has determined that additional dispensing organizations are necessary to ensure reasonable statewide access.

How Do I Apply for a Dispensing Organization License? 

We receive a myriad of calls from individuals and entities desiring to apply. As an initial matter, Texas is a vertically integrated state – meaning that the dispensing organization must cultivate, process, package, and dispense products. There is no way to open a stand alone dispensary in the state of Texas. Additionally, entry costs are exceedingly high here in the state. The application fee alone is $7,356.00 and, if awarded a license to operate as a dispensing organization, the fee for the first two years of operations is $488,520.00. These costs are for fees alone, not inclusive of the operational capital required for a vertical operation. One additional hurdle to keep in mind as you ascertain whether to apply is IRS 280(e).

If you decide to apply, below is an overview of the application process:

    1. Download, fill out, and submit the CUP Dispensing Organization Application Form CUP-101
    2. Pay the application fee of $7,356. Applicants will receive an invoice from the RSD via email within 3-5 business days of application submission. In addition, applicants will receive a separate email with login information for a secure electronic portal used to submit required supporting documentation, including the extensive documentation required for the Exhibits. The applicant must submit the remaining documentation to complete their application.
    3. RSD will evaluate the application and may contact applicants for additional information. 

The application window for dispensing organization licenses will close at 5 p.m. C.T. on April 28, 2023. Applicants who have previously applied for a license must reapply with an updated CUP-101 form. The RSD will waive application fees for those who are reapplying. DPS will detail the process for application acceptance and the subsequent approval process for additional licenses after the conclusion of the 88th Texas Legislative Session, which will likely be heavily influenced by DPS’ Compassionate Use Working Group’s conclusions

Given the growing use of THC products in the medical industry, including rising patient count trends, it is important to stay apprised of new developments in the Texas cannabis community. As an experienced cannabis attorney, Chelsie Spencer offers years of experience and unique insight into understanding cannabis, and hemp and CBD law. She and the rest of the team at Ritter Spencer Cheng are prepared to help your hemp or cannabis business navigate changes in the cannabis industry. Contact Ritter Spencer Cheng or give us a call at 214.295.5070 for more information.