The Texas Medical Cannabis Program Stinks

Aided by a public policy and compliance company based in New Mexico, the Texas Department of Public Safety (DPS), in its Compassionate Use Program Analysis of 2024, showed that the program is a complete disaster.

The report started with an introduction that shared the background of the formation in 2015 and its launch in 2017. It shared a lot of data and suggested that the state needs to get more physicians involved, to allow more dispensary units outside of Central Texas and to increase the number of dispensing organizations.

Two big risks were discussed: unregulated hemp-derived cannabis products and the fact that one organization of the three approved dominates. I think that hemp-derived products are a real threat to the medical program. I wrote at New Cannabis Ventures that they are a threat to the entire cannabis industry or perhaps an opportunity. The growth in prescriptions is negative recently, and the DPS suggested that this may be the cause. I think that there is a lot more going on than just this. Here is the data on prescription growth:

As far as the industry competition goes, finally we have data that confirms what we all knew already: Compassionate Cultivation, which operates as Texas Original, dominates. I visited the company in the Austin area a bit over a year ago. Here is their market share for 2022:

Compassionate Cultivation, which is privately held, sold 77% of the units. Last place went to Surterra (Goodblend), which is also privately held and under intense financial pressure. Well, last place really went to Cansortium (CNTMF), a publicly traded company on track to merge with RIV Capital (CNPOF). The company operates Fluent. I am not a fan of these two companies, neither of which is part of my Focus List at 420 Investor.

The report showed some data for Texas relative to other states. How pathetic that the state has just 23K patients as of the end of 2023. Texas is the second-largest state by population. Even using what is an inflated number of patients at 66K, just 0.22% of the population is part of the medical cannabis program in Texas. All states that are medical-only average 5.32%. This includes Oklahoma, though, which is at 9.17%. Florida, a large state that reports patient count each week, is currently at 884K, which is about 4%. Pennsylvania, which is medical-only, is at over 5%.

Texas has a very poorly constructed program. Initially, only children with epilepsy were covered under it, but it was expanded to add several other health conditions, including PTSD.and cancer. An even bigger handicap is that there are so few organizations permitted to dispense.

Texas is a great state, but its medical cannabis program stinks and is facing failure. I hope that the state begins to offer adult-use sales, but that does not seem likely with the current Governor, Greg Abbott, or his Lieutenant Governor, Dan Patrick. One day we will move in the right direction. My guess is that Texas will be a great state for businesses that enter it. Legal cannabis will be a good thing for the residents of Texas too.