AUSTIN – The first crop of cannabis companies in line for new THC dispensary licenses in Texas’ expanded medical-marijuana program includes a North Texas company owned by a local commercial construction executive, an outfit in Austin co-created by a political native son who was heavily involved in the state program’s conception, and a few of the largest medical cannabis companies in the nation.
Nine have been awarded the first round of “conditional” licenses this week by the Texas Department of Public Safety in an effort to expand the number of providers authorized to dispense high-potency marijuana and THC-infused treatments to patients across the state. Three more will be named next spring.
Texas has issued licenses for nine additional companies to sell medical THC in the state as early as next year. The state has an obligation to act carefully and fairly when it licenses companies to sell pharmaceuticals, including medical THC.
After the licenses are finalized, the new “dispensing organizations” will be permanently authorized to open an unlimited number of highly secure retail dispensaries in every region of the state — dramatically changing the landscape and reach of the 10-year-old program.
All of them have had their eyes on a coveted medical-marijuana license in Texas for years, some of them registering as early as 2019 and gaining political support for potential facilities as long as two years ago.
Political Points
They’ve since been waiting, applications gathering electronic dust in a state inbox somewhere, until the opportunity – and the legislative tipping point – finally arrived.
“We’ve long anticipated the opportunity to serve the patients under the Texas compassionate use program,” said James Leventis, chief strategy and compliance officer for Verano, which is assigned to West Texas and the El Paso area. “We’re going to be extremely strong stewards of the program, and what the Legislature intends with these expansions to the program.”
The exterior of Verano’s Zen Leaf dispensary in Gilbert, Ariz. The company plans to open the same brand of retail dispensaries in Texas after being preliminarily approved for a new medical THC license.
Courtesy: Verano Texas LLC
With near-unanimous agreement and support from GOP state leaders, the Texas Legislature raised the number of license holders from 3 to 15, allowed them to open dispensaries and storage facilities around the state, and expanded the list of conditions that would qualify patients for treatment with products containing medical-grade tetrahydrocannabinol, the psychoactive ingredient in marijuana.
The stakes are high for the providers and the patients. Texas has the highest rate of uninsured people in the nation, and dispensaries in states like Florida – which serves more than 900,000 residents in its medical marijuana program – have reported billions in annual revenue.
Known as TCUP, the program serves about 116,000 patients in what has been one of the nation’s most limited state medical marijuana programs. The program is administered by the DPS.
State public safety officials looked over 133 initial applications before naming the first nine on Monday.
The application process for each provider included reviewing company histories as well as documentation on their chemistry and extraction methods for cultivating, processing and dispensing the high-potency products.
Those documents included explanations on lab testing protocol, the ability to handle patient information within confidential rules, compliance with workforce regulations, inventory control and record-keeping systems – as well as security and operational plans that had to be updated in September.
The nine new providers and the public health regions they have been assigned as their base include:
- Verano Texas LLC, in the El Paso region
- Trulieve TX Inc. in the Panhandle
- Texas Patient Access LLC in North Texas
- Dilatso LLC in North Texas
- Lonestar Compassionate Care Group LLC in North Texas
- Lone Star Bioscience Inc. in San Antonio and Central Texas
- PC TX OPCO LLC/PharmaCann in the Houston area
- Story of Texas LLC in the Houston area
- Texa OP/TexaRx in the Rio Grande Valley
The new licensees will join the three current providers in the Texas Compassionate Use Program – only two of which, Goodblend Texas and Texas Original, are currently operating. They will be allowed to sell, cultivate, manufacture and distribute medical cannabis products to qualified patients.
As licensed “dispensing organizations,” the providers will have up to two years to get their hubs and dispensaries up and running.
At least one company, one of the largest medical-marijuana providers in the nation, promises to have their operation running “in record-breaking time.”
Verano submitted a detailed application in April 2023, including thousands of pages of operational, financial and compliance plans, Leventis said. The company plans to open Zen Leaf-branded dispensaries across Texas, prioritizing the public health region that includes El Paso.
With medical-focused dispensaries in 13 states, Verano plans to be operational sometime next year, Leventis said.
Unlike the vibey head shops and colorful lounges covered in photos of weed plants commonly associated with the THC-focused retail market, medical dispensaries in states where recreational marijuana is illegal – such as Texas – tend to have a more sterile aesthetic, dispensary owners said.
They cater to clients with real medical needs who want to buy their prescriptions in an environment they trust, Leventis said.
A customer enters Verano’s Zen Leaf dispensary in Aurora, IL.
Courtesy: Verano
The North Texas public health regions, as designated by the Texas Department of State Health Services, stretch from Rockwall on the east to Stonewall on the west, north to the Oklahoma border and south to Brownwood at the edge of the Texas Hill Country.
The region, which encompasses the entire Dallas-Fort Worth metroplex, will gain three licensed, vertically integrated “dispensing organizations.”
Lonestar Compassionate Care is co-founded by Frisco commercial construction executive William “Bill” Penz and is expected to build its primary growing, manufacturing and retail location in Pilot Point, according to 2023 city council documents.
Dilatso lists Arizona-based pharmacist and investor Jigar Patel as a managing member. Patel’s Arizona-based “Nature’s Medicines” began as a medical marijana company and expanded into states across the U.S. as both a medicinal and recreational retailer.
A third new licensee assigned to the North Texas public health region, Texas Patient Access LLC, was incorporated in March 2023 and lists as its parent DCEP Texas LLC, based in Ohio and registered in Texas the same year.
The expansion comes as the state’s hemp industry — the legal, recreational side of the cannabis market in Texas with more than 9,000 licensed retailers — wrestles with a potential federal ban on all hemp-based consumable items. Congress recently voted to make them illegal by November 2026. Some politicians in Washington, D.C., have signaled that they’ll support a law regulating the products and preempting the threatened ban.
The industry successfully batted away a statewide ban with the help of Gov. Greg Abbott, who in June vetoed the only hemp prohibition to make it out of the legislature.
Some local, some national
According to government and business records, none of the new licensees appear to have operated any sort of active cannabis-related business in Texas – including hemp-based consumables or non-intoxicating CBD products – although several have owners with deep Texas ties and at least one of those partners has experience with another medical-marijuana provider in the state.
Lonestar Compassionate Care LLC – founded by Penz and Armen Yemenidjian, a Nevada-based cannabis company investor, according to early company documents – was appointed to build a hub in the North Texas area.
That company registered with Texas in 2021 and was endorsed in 2022 by state Rep. Jared Patterson, R-Frisco, who wrote a letter on Penz’ behalf to the Texas Department of Public Safety.
In his letter, Patterson said the proposal for a hub in Pilot Point “demonstrates a clear commitment to operate within the parameters of the law” and noted that the organization had built an “impressive team” of business, healthcare, medical cannabis and security experts.
“While a medical cannabis facility enables access to medicine for patients and economic development to areas like ours, health and safety are my primary concerns,” Patterson wrote. “I recognize that the introduction of a medical cannabis facility can present both real and potential issues, but it is clear to me that this team has gone to great lengths to alleviate these concerns. Lonestar Compassionate Care’s dedication to becoming a reputable and involved member of the community is obvious.”
In a 2023 pitch to the Pilot Point City Council, Penz and Yemenidjian proposed a highly secure cultivation, processing, and dispensing facility in Denton County on a 23-acre tract of land owned by North Texas Natural Select Materials, LLC, also a Penz company. Penz could not immediately be reached for comment after a message was left for him at his company.
The “highly sophisticated production facility” will be an economic engine that would bring jobs to the area, but would also focus on the critical aspect of security, Penz and Yemenidjian said in their proposal.
The facility would include state-of-the-art security alarm and surveillance technology and the company – with a security director from the ranks of the U.S. military – would partner with local law enforcement and meet regularly with them to discuss and update alarm response protocols, criminal activity statistics, frequency of patrols and similar issues, the pitch said.
“Lonestar will ensure the safety of our employees and surrounding community is prioritized in every aspect of our operations,” the proposal said. “With deep Texas ties and decades of experience establishing successful businesses in highly regulated industries, Lonestar Compassionate Care has the financial stability and capability to implement a world-class medical cannabis production facility in Pilot Point.”
Lone Star Bioscience Inc., appointed to serve Texas out of a San Antonio-area hub, includes lifelong Texan John Pitts as a partner in the company, as well as longtime Texas resident Marcus Ruark. Pitts’ family includes an uncle who was a powerful House chairman two decades ago, while Ruark’s background includes standing up and managing Texas operations for one of the current TCUP licensees – Goodblend – until he departed that company in 2021.
On behalf of the Epilepsy Foundation, Pitts and his father led the lobbyists that helped pass the original TCUP legislation in 2015 with former Sen. Kevin Eltife, Chairman of the Board of Regents of the University of Texas system and UT Chancellor John Zerwas, a former state lawmaker, as well as former House Public Health Chair Stephanie Klick, a Fort Worth Republican.
“Our majority-veteran and majority-Texan owned and operated company is honored to make this preliminary list to serve patients in Texas and is focused at this time on DPS due diligence,” Pitts told The Dallas Morning News in a statement. “Having worked for many years with the patient groups participating in the CUP, including the veterans community and children with epilepsy and autism, our team knows how critical this life-saving medicine is for Texans.”
A few of the new licensees are large operators already running medical-marijuana or recreational or “adult-use” marijuana dispensaries in other states. The group includes Verano and Trulieve.
In 2014, Verano, founded by CEO and Chairman George Archos, became the first in Illinois to receive authorization to grow medical cannabis.
Verano now operates 15 large-scale cultivation and processing facilities that cover over 1 million square feet of production space, as well as 158 medical-marijuana dispensaries across the nation. All of its dispensary programs began as medical operations. In the states where adult-use became legal, some adapted to include those services.
“Texas is going to be our most recent foray into new markets, but we are incredibly experienced in standing up organic, natural, best-in-class operations like this, and we have a long standing history of winning awards via competitive-bid application processes, just like the one that has just taken place in Texas,” Leventis said.
Trulieve TX is another multi-state, vertically integrated operator with large markets in Pennsylvania, Arizona and Florida. Its parent company, Trulieve Holdings, Inc., is based in Delaware. The company’s hub will serve the Texas Panhandle, but, like the others, could open dispensaries throughout the state.
Researchers Sarah Haldeman and Rachel Friend contributed to this report.