Thursday, September 7, 2017
In 2015, Texas Governor Greg Abbott signed into law the Texas Compassionate Use Act. This Act, among other things, allows individuals with intractable epilepsy to obtain cannabidiol (CBD) oil, a form of low-THC cannabis. The Act gives authority to the Department of Public Safety (DPS), to regulate and award dispensary licenses.
Now, nearly two years later, Texas has issued its first medical marijuana license to the company Cansortium Texas. Two more proposed growers had their applications accepted previously and it is expected that those two will also be awarded licenses in the next days or weeks. Though these new developments might seem like a step in the right direction, there have been many critics of the Act and the stringent regulations imposed by DPS. Bob Sechler of the Austin American-Statesman, explores what lies ahead for the industry in Texas:
The Texas licenses won’t equate to quick profits, however, and success in Texas over the long haul might depend as much on the Legislature as on business acumen. Cansortium and the two other companies expected to operate in Texas are facing strict state regulations that limit their customer bases solely to patients with intractable epilepsy and that constrain how they formulate their products — on top of investment costs running into the millions of dollars.
“It is safe to say that it is a challenging market,” said Morris Denton, chief executive of Compassionate Cultivation.
Denton said an initial goal for his company will be to prove that medical marijuana can be dispensed safely in Texas and that it is beneficial, with the aim of persuading state leaders to make it available to patients suffering from a wider variety of ailments in coming years.
Hidalgo said Cansortium considers the market among Texas patients suffering from intractable epilepsy potentially lucrative enough and didn’t opt to expand into the state because of the prospect that additional medical conditions eventually will be made eligible. Still, he said he considers it likely that future discussions among the state’s leaders regarding medical marijuana will revolve around “what conditions and for what reasons they are considering expanding” its availability.
“I think it remains to be seen what will happen (in Texas), but the evidence is out there,” Hidalgo said.
Proponents in Texas already are anticipating a major push during the next regular session of the Legislature in 2019 to try to increase patient access to medical cannabis. Some industry experts have said the Texas market for medical cannabis could rival California’s estimated $2.8 billion market, if restrictions are loosened and it becomes more widely available.
As things stand, each of the three companies selected for licenses is required to pay a $488,520 fee upon final approval, followed by a license renewal fee of $318,511 in two years if they want to stay in business. The fees are designed to cover the cost of regulating the new industry, state officials have said.
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The Compassionate Use Act legalized the production and sale of cannabidiol, an oil derived from the cannabis plant that doesn’t produce a high, by the state-licensed dispensaries. But the law limits use of the oil, commonly called CBD, to certain patients suffering from intractable epilepsy — and only if they have a doctor’s prescription for it and already have tried two conventional drug treatments that proved to be ineffective.
Observers of the burgeoning legal marijuana industry in the U.S. say the new Texas law is significantly more restrictive than medical marijuana laws in the 29 other states that have enacted them.
“We have not yet seen any other state try to launch a medical cannabis program based solely on a single condition,” said John Kagia, executive vice president for industry analytics at New Frontier Data, a cannabis market research firm based in Washington. “Under the (Texas) law as it is currently structured, it is going to remain a fairly narrow, constrained market. It is going to be a relatively limited business environment.”
The Epilepsy Foundation Texas has pegged the number of Texans with intractable epilepsy at about 150,000.
But only a fraction are expected to meet the Compassionate Use Act’s eligibility requirements for CBD, want to try it and know a doctor willing to write a prescription for it.
New Frontier Data hasn’t yet estimated the monetary value of the Texas medical cannabis market under the new law, but Kagia said it’s just a sliver of what it could be.
-- Victoria Olivarez