Off the Kuff Rotating Header Image

Here come the cannabis growers

For medicinal purposes only.

About 60 miles north of Dallas, amid green fields in the town of Gunter, population 1,486, Texas Cannabis CEO Patrick Moran has optioned to buy a former cotton gin, where he plans to grow the Cannabis sativa plant, known more commonly as marijuana.

The businessman and attorney is positioning himself at the forefront of what he estimates will be a $900 million a year industry in Texas – the recently legalized market for treating intractable epilepsy with a strain of marijuana that eases seizures without getting patients high.

Texas, as it turns out, may be one of the best states in the nation to grow pot. While the state has one of the most stringent medical usage laws in the country, it is setting up some of the cheapest licensing fees and one of the least restrictive markets for pot growers in the U.S.

Gov. Greg Abbott signed legislation last year allowing the state to license businesses to grow, process or dispense nonintoxicating marijuana or cannabis for medical use beginning next year. Moran wants to do all three with Texas Cannabis, cultivating marijuana from seed to sale.

Moran is waiting on the state to set up its registry, slated to go live by June 2017, to put in his application. He plans to use that former cotton gin, which has sat dormant for 40 years, to cultivate, extract and dispense cannabidiol oil, or CBD oil, from low-THC cannabis plants – just around the corner from the city hall in Gunter. THC, or tetrahydrocannabinol, is the psychoactive component that gives users a high when they smoke traditional marijuana.

The new market is being called the green rush.

“There’s a whole other industry that is being birthed in this country, just like what happened with the dot-com boom,” Moran said. “I think it’s once in a lifetime.”

[…]

The Texas law established narrow parameters on the type of cannabis that can be dispensed, who can take the medication and which physicians can prescribe, said Frank Snyder, a Texas A&M law professor who teaches the state’s first course on marijuana law, policy and business. But it doesn’t limit the number of competitors who can grow, extract or dispense.

“The process for getting a license and beginning to cultivate is probably the most liberal law of any of the medical marijuana states that I’m familiar with right now, in terms of putting up the fewest barriers to entry,” Snyder said.

Applicants aren’t required to have vast cannabis industry experience. They simply have to show they have the technological ability to grow, extract or dispense the product by having experience in related fields, such as cultivation, analytical laboratory methods and handling confidential patient information.

They also must show they can obtain the locations, resources and personnel necessary for operations, maintain accountability of all materials and have the financial ability to keep going for two years.

Regulations issued by the Texas Department of Public Safety in January also set fairly low licensing fees.

A cannabis operation seeking to become licensed in Texas must pay a $6,000 application fee to the state. Businesses will have to renew those licenses and pay another $6,000 application fee every two years.

That compares favorably with fees charged by some other states. Massachusetts, for instance, requires a medical marijuana dispensary to pay a $50,000 registration fee every year. Hawaii charges only a $5,000 application fee but requires a dispensary applicant to have at least $1 million in reserves, plus an additional $100,000 on hand for each retail site. Florida requires an applicant seeking a cultivation license to secure a $5 million performance bond.

Colorado, widely regarded as having some of the nation’s most permissive marijuana laws, charges as much as $25,000 in upfront application and licensing fees, depending on the type and volume of pot sold, plus additional fees.

See here for the background. One can look at the inexpensive fees for the grow/extract/dispense licenses and see low barriers to entry for cannabis entrepreneurs, and one can see a missed opportunity for generating revenue, since many of the arguments for legalizing pot in Texas come down to revenue in one form or another. What the Lege actually legalized is pretty limited, and some advocates for medical marijuana opposed the bill that got passed on the grounds that it didn’t really do anything for a class of people who need it. As such, I’m not sure how big or lucrative this business is going to be just yet. That said, I’m sure this issue will continue to be discussed in the Legislature, so the possibility of expansion will be there as well. We’ll see what the financial figures for these businesses look like once they’re fully operational.

Related Posts:

5 Comments

  1. It’s time for texas to expand its medical marijuana similar to other states.

  2. Bill Daniels says:

    @Joe:

    It’s time for Texas to just give up on the puritanical drug war all together. The only folks that should be prohibited from possessing pot and other drugs ought to be minors, and maybe people on parole or probation, who voluntarily agree to stay away from drugs in exchange for not being incarcerated for other crimes.

    Don’t expect much from the Texas Taliban in charge, though.

  3. Bill,

    This is why average Texans need to run for office with real policy solutions.

    I knew a friend of a friend that ran for justice of the peace in houston

    He got 30% of the vote without even trying.

    Voters are ignorant.

  4. voter_worker says:

    @Joe thanks for your vote of confidence in us voters.

  5. I used to vote and not pay attention to local politics.

    But now that I’ve dived into local politics.
    I mostly blame candidates and local media for not presenting non-partisan facts.

    I blame democratic mayor Lanier and Lee for starting TIRZ.
    I blame republicans for the revenue cap and rebuild.
    All three are horrible, horrible policies.
    They should be thrown out and replaced with a public bank and/or let council members decide.