To legally sell cannabis in Texas, you need a dispensing organization license issued by the Department of Public Safety under the Texas Compassionate Use Program, and the state only allows 15 of them. The initial Texas cannabis license fee is $488,520 for a two-year term, on top of a $7,356 application fee, and the license covers growing, processing, and dispensing low-THC cannabis to registered patients all under one roof.1Cornell Law Institute. Texas Administrative Code 37 TAC 12.14 – Application and Licensing Fees and Method of Payment As of early 2026, three organizations are fully operational and several more hold conditional approvals as DPS works through the expansion authorized by House Bill 46.2Texas Department of Public Safety. DPS Accepting Applications for Texas Compassionate Use Program Expansion
What a Texas Cannabis License Actually Covers
Before you spend any money on an application, understand what you can and cannot do with this license. Texas does not issue standalone cultivation licenses, standalone retail dispensary licenses, or adult-use recreational licenses. There is one license type, and it binds the entire supply chain to a single organization: the same company that grows the plant must process it and dispense the finished product directly to the patient.
The product itself is tightly restricted. Chapter 487 of the Health and Safety Code defines low-THC cannabis as the plant Cannabis sativa L., or any derivative, containing no more than 10 milligrams of tetrahydrocannabinols per dosage unit.3Texas State Law Library. Compassionate Use Program – Cannabis and the Law Your customers are limited to patients a DPS-registered physician has prescribed low-THC cannabis for through the Compassionate Use Registry of Texas. Qualifying conditions include epilepsy, seizure disorders, multiple sclerosis, spasticity, ALS, autism, terminal cancer, and incurable neurodegenerative diseases.4State of Texas. Texas Medical Marijuana Anyone outside that patient pool is not a legal customer.
What It Costs
The fee structure is among the steepest in the country, and the published figures are only the beginning of the capital you’ll need.
- Application fee: $7,356, paid by wire transfer to the Comptroller when you submit. DPS opens a submission window, and applications with unpaid fees by the deadline are not considered. You pay this whether or not you are approved.5Texas Department of Public Safety. New Applications
- Initial license fee: $488,520 for a two-year license.1Cornell Law Institute. Texas Administrative Code 37 TAC 12.14 – Application and Licensing Fees and Method of Payment
- Biennial renewal fee: $318,511 every two years to keep the license active.6Department of Public Safety. Application Information
Add construction of a secured cultivation and processing facility, surveillance and alarm infrastructure, staffing, equipment, and two years of operating runway, and the real cost of entry runs into the millions. The statute requires you to prove you can sustain operations for at least two years from the date of application, and DPS will test that claim.
Who Qualifies to Apply
Section 487.102 of the Health and Safety Code does not hand you a checklist. It sets capability thresholds, and DPS decides whether you clear them. There are four:
- Technical and technological ability to cultivate cannabis and produce finished low-THC products. DPS expects detailed cultivation plans, processing methods, and evidence that your team has relevant agricultural or pharmaceutical manufacturing experience.
- Resources and personnel to operate the organization, including a facility located so patients on the registry can actually reach it through existing roads and infrastructure.
- Accountability and diversion prevention, meaning tracking of raw materials, finished products, and by-products close enough to prevent theft, unauthorized access, or diversion at every stage.
- Financial staying power to maintain operations for at least two years from the date of application.
Every director, manager, and employee also has to register individually with DPS under Subchapter D of Chapter 487. The statute gives the DPS director authority to impose additional criteria beyond what the law lists, so expectations can rise from one application cycle to the next.
How to Apply
The application is form CUP-101, downloaded from the DPS Compassionate Use Program website. You submit the completed form through the DPS Regulatory Services Division Contact Us portal, with supporting documentation labeled Exhibits A through G uploaded through a separate secure portal.5Texas Department of Public Safety. New Applications The exhibits cover cultivation and processing plans, business structure, financial documentation, and security protocols.
Financial documentation is where most applicants underestimate the effort. DPS wants evidence you can sustain operations for a minimum of two years, and the application asks whether you have a Dun & Bradstreet report. If you don’t, you need to explain why.5Texas Department of Public Safety. New Applications Bank statements, financial projections, and documented capital commitments help build the case.
Signing CUP-101 also binds you to something people miss: you consent to DPS entering your premises for inspection at any time during regular business hours, and that consent runs for as long as the license is active.8Texas Department of Public Safety. Compassionate Use Program Dispensing Organization Application
Background Checks for Everyone Involved
Section 487.105 requires you to give DPS the name of every director, manager, and employee, and DPS runs a criminal background check on each one. Under 37 Texas Administrative Code Section 12.12, those individuals must submit fingerprints in a manner approved by the department, either as part of the initial license application or before they start work at an already-licensed organization.9Cornell Law Institute. Texas Administrative Code 37 TAC 12.12 – Application for Registration
Anyone with a disqualifying criminal history is denied registration, and that denial applies to future hires too: if you want to bring someone on after the license issues, you must submit their name to DPS first and they cannot start until they clear. The license is also not freely transferable. If you sell the business, the new owner and all of their directors, managers, and employees must pass the background check before the license moves with it.10Justia Law. Texas Health and Safety Code Chapter 487 – Texas Compassionate-Use Act
Building a Compliant Facility
The security standards in 37 Texas Administrative Code Section 12.31 are minimums. DPS can require more. All cultivation must take place in an enclosed, secured building. Access to cultivation, processing, and storage areas is restricted to registered directors, managers, and employees acting in their official capacity, and every physical barrier to those areas must have a mechanical locking device that stays closed and locked whenever it isn’t actively being used. Signs at every access point must state in block letters at least one inch tall that entry is restricted to individuals registered with DPS.11Cornell Law Institute. Texas Administrative Code 37 TAC 12.31 – Security of Facilities
Alarm and surveillance coverage must be continuous, with cameras, door switches, motion sensors, and smoke detectors monitoring the premises for both fire and intrusion. The system must be capable of immediately alerting local law enforcement of a fire at any time and of a security breach during non-business hours, and staff must be able to trigger it manually during business hours. Camera footage must be recorded for at least 90 days on an external hard drive at a minimum resolution of 720 by 350, covering all regulated areas and every entrance and exit, including the exterior of the building.11Cornell Law Institute. Texas Administrative Code 37 TAC 12.31 – Security of Facilities Any unregistered visitor must be continuously escorted by a registered employee, wear a dated name badge, and be logged in and out.
Inspections and Ongoing Compliance
Once licensed, you are subject to inspection at any time during regular business hours. DPS inspectors may be accompanied by peace officers, the State Fire Marshal’s office, or other state and local regulatory agencies. Inspections can cover the original application representations, your security equipment and protocols, and your recordkeeping.12Texas Department of Public Safety. Texas Administrative Code 37 TAC 12 – Compassionate Use Low-THC Cannabis Program Administrative Rules
If inspectors cite violations, you have 30 calendar days from receiving written notice to report your corrective actions and the dates each was completed. Refusing to cooperate with an inspection is itself grounds for suspension or revocation of both individual registrations and the organization’s license. The regulated premises must also pass an annual fire inspection conducted by the State Fire Marshal or a local designee.12Texas Department of Public Safety. Texas Administrative Code 37 TAC 12 – Compassionate Use Low-THC Cannabis Program Administrative Rules
Renewal and Revocation Risk
A dispensing organization license lasts two years. To stay licensed, you submit a renewal application and pay the $318,511 biennial renewal fee before the current license expires.6Department of Public Safety. Application Information Renewal reassesses your continued compliance with Chapter 487 and the administrative rules, with updated background checks for anyone who joined since the last cycle. An organization that received its license must begin dispensing low-THC cannabis within 24 months of the license date; failing to launch or maintain operations is itself a compliance problem that can jeopardize renewal.
Eligibility has to hold continuously, not just at application. If a director or employee is later found to have a disqualifying criminal history, or if the organization loses the financial capacity to operate, DPS can act on the license. Given the half-million-dollar entry fee and the years of planning behind a compliant facility, losing the license is a catastrophic financial event, and the organizations that last are the ones that treat compliance as a daily operational priority rather than a renewal-season exercise.