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Breaking Ground in Texas: A Guide to Applying for a Cannabis Business License

Updated: May 6

The legalization of cannabis for medical use has been gaining momentum across the United States, and Texas is no exception. In 2015, Texas passed the Compassionate Use Act, which allows the use of low-THC cannabis for medical purposes. In 2019, the Texas Legislature passed a bill that expanded the program to include more medical conditions and allowed for the establishment of cannabis dispensing organizations (CDOs). If you're interested in applying for a CDO license in Texas, here's what you need to know.

What is a Texas Cannabis Dispensing Organization (CDO)?

The Texas Compassionate Use Act, which was passed in 2015, allows for the use of low-THC cannabis for medical purposes by patients with certain qualifying medical conditions. The Act provides for the licensing of a limited number of Dispensing Organizations (DOs) to cultivate, process, and dispense low-THC cannabis products to qualified patients.

Under the Act, the types of cannabis businesses that Dispensing Organizations in Texas are permitted to operate include:


Dispensing Organizations are allowed to cultivate cannabis for medical use. However, they are only permitted to grow cannabis with a low THC content, defined as no more than 0.5% THC by weight.


Dispensing Organizations are permitted to process cannabis into a variety of products, including oils, tinctures, and other forms that can be used for medical purposes.


Dispensing Organizations are allowed to dispense cannabis products, including delivering cannabis products, to qualified patients who have received a prescription from a licensed physician.

It's important to note that the Texas Compassionate Use Act has very strict requirements and regulations for the licensing and operation of Dispensing Organizations, and only a limited number of licenses are available. The Act also only allows the use of low-THC cannabis for certain medical conditions, and does not permit the use of cannabis for recreational purposes.

Texas neon sign with each letter written within a red star

Understand the Requirements

Before you begin the application process, it's important to understand the requirements for a CDO license in Texas. According to the Texas Department of Public Safety, applicants must meet several criteria, including:

  • Be a resident of Texas for at least two years before applying

  • Have a background in agriculture, medicine, or pharmaceuticals

  • Have experience managing a business

  • Pass a background check

  • Show proof of financial responsibility

Additionally, applicants must submit a proposed location for their CDO and meet several security requirements to ensure the safety of their operation.

Complete the Application

Once you've determined that you meet the requirements, it's time to complete the application. The application is available on the Texas Department of Public Safety's website and includes several sections, including:

  • Business information: This section asks for basic information about your business, such as its name, address, and contact information.

  • Management information: Here, you'll provide information about the management team of your CDO, including their names, roles, and qualifications.

  • Security information: This section asks about the security measures you plan to implement to ensure the safety of your operation.

  • Financial information: You'll need to provide proof of financial responsibility, such as a surety bond or letter of credit, to demonstrate that you have the financial resources to operate a CDO.

  • Location information: This section asks for information about the proposed location of your CDO, including the address and a site plan.

Wait for Approval

Once you've completed the application, you'll need to submit it along with the required documents and fees. The Texas Department of Public Safety will review your application and notify you if any additional information is needed. If your application is approved, you'll be granted a license to operate a CDO in Texas.

Open for Business

With your license in hand, it's time to open your CDO. You'll need to comply with all of the state's regulations and requirements, including ensuring that all cannabis products sold are properly labeled and tested. You'll also need to maintain accurate records and report any adverse events to the state.


Applying for a cannabis dispensing organization license in Texas can be a complex process, but it's worth it if you're interested in participating in the state's medical cannabis program. By understanding the requirements, completing the application, and complying with all of the state's regulations, you can open a successful CDO that provides patients with access to the medicine they need.

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