HB 1208

relating to the regulation of the cultivation, manufacture,
processing, distribution, sale, testing, transportation, delivery,
transfer, possession, use, and taxation of cannabis and cannabis
products and local regulation of cannabis establishments;
authorizing the imposition of fees; requiring an occupational
license; creating a criminal offense; imposing a tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Subtitle C, Title 6, Health and Safety Code, is
amended by adding Chapter 491 to read as follows:
CHAPTER 491. REGULATION OF CANNABIS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 491.0001.  DEFINITIONS.  In this chapter:
(1)  "Adult" means an individual 21 years of age or
(2)  "Cannabis" means the plant Cannabis sativa L.,
whether growing or not, the seeds of that plant, and every compound,
manufacture, salt, derivative, mixture, or preparation of that
plant or its seeds. The term includes cannabis concentrate. The
(A)  the mature stalks of the plant or fiber
(B)  oil or cake made from the seeds of the plant;
(C)  a compound, manufacture, salt, derivative,
mixture, or preparation of the mature stalks, fiber, oil, or cake;
(D)  the sterilized seeds of the plant that are
incapable of beginning germination;
(E)  hemp, as that term is defined by Section
(F)  a consumable hemp product, as that term is
(3)  "Cannabis concentrate" means the resin extracted
from a part of the plant Cannabis sativa L. or a compound,
manufacture, salt, derivative, mixture, or preparation of the
(4)  "Cannabis establishment" means an entity licensed
by the department under this chapter to process and dispense
cannabis and cannabis products to an adult.
(5)  "Cannabis grower" means an entity licensed by the
department to cultivate cannabis for sale and distribution to a
(6)  "Cannabis product" means a product that contains
cannabis and is intended for use or consumption by humans,
including as an edible product or as a topical product, ointment,
oil, or tincture. The term includes products that consist of
cannabis and other ingredients.
(7)  "Cannabis-related drug paraphernalia" means
equipment, a product, or material that is used or intended for use
(A)  planting, propagating, cultivating, growing,
harvesting, manufacturing, compounding, converting, producing,
processing, preparing, testing, analyzing, packaging, repackaging,
storing, or containing cannabis or a cannabis product; or
(B)  introducing cannabis or a cannabis product
(8)  "Cannabis secure transporter" means an entity
licensed by the department under this chapter to transport cannabis
from a cannabis grower to a cannabis establishment.
(9)  "Cannabis testing facility" means an entity
licensed by the department under this chapter to analyze the safety
and potency of cannabis and cannabis products.
(10)  "Commission" means the Texas Commission of
(11)  "Cultivate" means to propagate, breed, grow,
harvest, dry, cure, or separate parts of the cannabis plant by
(12)  "Department" means the Texas Department of
(13)  "Executive director" means the executive
(14)  "Marihuana" has the meaning assigned by Section
(15)  "Process" means to separate or otherwise prepare
parts of the cannabis plant and to compound, blend, extract,
infuse, or otherwise make or prepare cannabis concentrate or
SUBCHAPTER B. PROTECTIONS FROM LEGAL ACTION RELATED TO CANNABIS
Sec. 491.0051.  AUTHORIZED CONDUCT: PERSONAL USE OF
CANNABIS.  An adult is authorized under this chapter to:
(1)  use, possess, and transport not more than 2.5
ounces of cannabis, except that not more than 15 grams of that
amount may be in the form of cannabis concentrate;
(2)  transfer without remuneration to another adult not
more than 2.5 ounces of cannabis, except that not more than 15 grams
of that amount may be in the form of cannabis concentrate and
provided that the transfer is not advertised or promoted to the
(3)  possess, store, or process on the premises of the
adult's private residence not more than 10 ounces of cannabis,
provided that the amount in excess of 2.5 ounces is stored in a
container or area equipped with locks or other security devices
that restrict access to the container or area;
(4)  use, possess, process, transport, or transfer to
another adult without remuneration an amount of cannabis products
specified by rule of the commission as the allowable amount of
cannabis for purposes of this subdivision; and
(5)  use, possess, transport, or transfer to another
adult without remuneration cannabis-related drug paraphernalia.
Sec. 491.0052.  AUTHORIZED CONDUCT: RETAIL CANNABIS
OPERATIONS.  This chapter authorizes the conduct of:
(1)  a cannabis grower director, manager, or employee
who, acting within the scope of the grower's license:
(A)  cultivates cannabis or produces cannabis
products for sale or transfer to a cannabis establishment; and
(B)  possesses cannabis or cannabis-related drug
(2)  a cannabis establishment director, manager, or
employee who, acting within the scope of the establishment's
license, possesses cannabis or cannabis products or transfers or
sells cannabis, cannabis products, or cannabis-related drug
(3)  a cannabis secure transporter director, manager,
or employee who, acting within the scope of the secure
transporter's license, transports, transfers, or delivers cannabis
or cannabis products from a cannabis grower to a cannabis
(4)  a cannabis testing facility director, manager, or
employee who, acting within the scope of the facility's license,
possesses or tests cannabis, cannabis products, or
cannabis-related drug paraphernalia.
Sec. 491.0053.  PROTECTION FROM LEGAL ACTION FOR AUTHORIZED
CONDUCT.  (a)  A person is not subject to arrest, prosecution,
forfeiture of property, or penalty in any manner or denial of any
right or privilege, including any civil penalty or disciplinary
action by a court or occupational or professional licensing board
or bureau solely due to conduct authorized under Section 491.0051
(b)  The fact that a person engages in conduct authorized by
Section 491.0051 or 491.0052 does not in itself constitute grounds
for denying, limiting, or restricting conservatorship or
possession of or access to a child under Title 5, Family Code.
Sec. 491.0054.  PROHIBITION OF CANNABIS ON PRIVATE PROPERTY;
EXCEPTION.  (a)  Except as otherwise provided by Subsection (b), a
person may prohibit or restrict the possession, consumption,
cultivation, distribution, processing, sale, or display of
cannabis or cannabis products on property the person owns,
(b)  A person may not prohibit a residential tenant under a
lease agreement from possessing cannabis, cannabis products, or
cannabis-related drug paraphernalia or consuming cannabis by means
other than smoking on the premises.
Sec. 491.0055.  CONDUCT NOT AUTHORIZED UNDER THIS CHAPTER.
This chapter does not authorize the following conduct:
(1)  operating a motor vehicle while intoxicated or
otherwise violating Chapter 49, Penal Code;
(2)  smoking or otherwise consuming cannabis in:
(A)  a motor vehicle while the vehicle is on a
(B)  an aircraft, while the aircraft is in flight
(C)  a watercraft, while the watercraft is on a
(i)  the public place is an area designated
by the applicable political subdivision as an area where using
(ii)  the area described by Subparagraph (i)
is not accessible to persons younger than 21 years of age;
(3)  possessing or consuming cannabis or cannabis
products or possessing cannabis-related drug paraphernalia:
(A)  on the premises of a public or private
child-care facility, prekindergarten, or primary or secondary
(B)  on a school bus that serves a facility or
school described by Paragraph (A); or
(C)  on the premises of a correctional facility,
as defined by Article 18A.251, Code of Criminal Procedure, or a
(4)  separating resin from the cannabis plant by butane
extraction or another method that uses a substance with a
flashpoint below 100 degrees Fahrenheit in a public place or motor
vehicle or within the curtilage of a residential structure.
SUBCHAPTER C. DUTIES OF COMMISSION AND DEPARTMENT
Sec. 491.0101.  DUTIES OF DEPARTMENT.  The department shall
Sec. 491.0102.  RULES; FEES.  (a)  The commission shall adopt
all necessary rules for the administration and enforcement of this
chapter, including rules imposing fees under this chapter in
amounts sufficient to cover the cost of administering this chapter.
(b)  The commission by rule shall set application and license
fees under this chapter in amounts sufficient to administer this
chapter and may annually adjust the fees for inflation.
(c)  A fee collected under this chapter shall be deposited to
the credit of the cannabis regulation account established under
(d)  The commission shall adopt rules for the reasonable
regulation of cannabis growers and cannabis establishments,
(1)  restrict the use of dangerous pesticides;
(2)  regulate the packaging and labeling of cannabis
products available at a cannabis establishment;
(3)  restrict advertising and display of cannabis and
(4)  require recordkeeping and monitoring to track the
transfer of cannabis and cannabis products between license holders;
(5)  require security measures, provided that the
security measures do not restrict the cultivation of cannabis
Sec. 491.0103.  TESTING, PACKAGING, AND LABELING STANDARDS.
(a)  The commission by rule shall establish standards for:
(1)  the operation of cannabis testing facilities;
(2)  the testing of cannabis and cannabis products; and
(3)  packaging and labeling requirements for cannabis
(b)  In establishing standards for packaging and labeling
requirements under Subsection (a)(3), the commission shall require
(1)  cannabis and cannabis products be packaged in
opaque, resealable, child-resistant packaging that does not
resemble and may not be easily confused with typical packaging for
(2)  cannabis and cannabis products be clearly labeled;
(3)  the label for a cannabis product disclose the
amount of cannabis contained in that product.
Sec. 491.0104.  SECURE TRANSPORTATION OF CANNABIS.  The
commission by rule shall establish standards applicable to cannabis
secure transporters, including standards to ensure all cannabis
establishments are properly served.
Sec. 491.0105.  CONFLICT OF INTEREST.  (a)  A person who is
involved in the implementation, administration, or enforcement of
this chapter as a member of the commission, an employee of the
department, or a consultant to the commission or the department may
not also hold a pecuniary interest in any entity licensed by the
(b)  A person who holds a pecuniary interest in a cannabis
testing facility or a cannabis secure transporter who holds a
license issued under this chapter may not hold a pecuniary interest
in any entity that holds a cannabis establishment or cannabis
grower license issued under this chapter.
(c)  A person may not hold a pecuniary interest in more than
five entities that are licensed under this chapter as a cannabis
grower, except as provided by commission rule.
Sec. 491.0106.  ANNUAL REPORT.  The executive director shall
annually submit to the governor, the executive commissioner of the
Health and Human Services Commission, and the legislature a report
providing the following information regarding licensing and
(1)  the number of applications received for each class
(2)  the number of licenses issued for each class of
(3)  demographic information pertaining to license
(4)  a description of any fines imposed on a license
holder or disciplinary actions taken against a license holder by
(5)  a statement of revenues and expenses of the
department related to the implementation, administration, and
Sec. 491.0151.  LICENSE REQUIRED.  A person must hold a
license issued by the department under this chapter to operate as a
cannabis grower, cannabis establishment, cannabis secure
transporter, or cannabis testing facility.
Sec. 491.0152.  QUALIFICATIONS FOR LICENSURE.  The
commission by rule shall provide for each class of license issued
under this chapter qualifications for licensure that are
demonstrably related to the operations authorized and duties
imposed under that class of license.
Sec. 491.0153.  APPLICATION.  (a)  A person may apply for an
initial or renewal license under this chapter by submitting a form
prescribed by the department along with the application fee in an
(b)  The application must indicate the class of license
sought and include the name and address of the applicant, the name
and address of each of the applicant's directors, managers, and
employees, and any other information considered necessary by the
department to determine the applicant's eligibility for the
Sec. 491.0154.  ISSUANCE, RENEWAL, OR DENIAL OF LICENSE.
(a)  The department shall issue or renew a license under this
(1)  the department determines the applicant meets the
qualifications for the class of license sought established under
(2)  the applicant is in compliance with any applicable
(b)  If the department denies the issuance or renewal of a
license under Subsection (a), the department shall give written
notice of the grounds for denial to the applicant.
(c)  A license issued or renewed under this section expires
as determined by commission rule and the department in accordance
with Section 51.406, Occupations Code.
Sec. 491.0155.  DUTY TO MAINTAIN QUALIFICATIONS.  A license
holder shall maintain compliance at all times with the
qualifications for the applicable class of license established
Sec. 491.0156.  LICENSE SUSPENSION OR REVOCATION.  (a)  The
department may at any time suspend or revoke a license issued under
this chapter if the department determines that the license holder
has not maintained the qualifications established under Section
491.0152 or has failed to comply with a duty imposed under this
(b)  The department shall give written notice to a license
holder of a license suspension or revocation under this section and
the grounds for the suspension or revocation. The notice must be
sent by certified mail, return receipt requested.
(c)  After suspending or revoking a license issued under this
chapter, the department shall notify the Department of Public
Safety. The public safety director of the Department of Public
Safety may seize or place under seal all cannabis, cannabis
products, and cannabis-related drug paraphernalia owned or
possessed by the license holder. If the license is revoked, a
disposition may not be made of the seized or sealed cannabis,
cannabis products, or cannabis-related drug paraphernalia until
the time for administrative appeal of the order has elapsed or until
all appeals have been concluded. When a revocation order becomes
final, all cannabis, cannabis products, and cannabis-related drug
paraphernalia may be forfeited to the state as provided under
(d)  Chapter 2001, Government Code, applies to a proceeding
Sec. 491.0157.  CRIMINAL HISTORY BACKGROUND CHECK.  (a)  In
addition to satisfying the other requirements provided by
commission rule under this chapter, an applicant for a license
under this chapter must submit to the department a complete and
legible set of fingerprints, on a form prescribed by the
commission, for the purpose of obtaining criminal history record
information from the Department of Public Safety and the Federal
(b)  The department may deny a license to an applicant who
does not comply with the requirement of Subsection (a). Issuance of
a license by the department is conditioned on the department
obtaining the applicant's criminal history record information
(c)  The commission by rule shall establish criteria for
determining whether a person passes the criminal history background
check for purposes of this section.  The rules adopted under this
section may not disqualify a person for licensure solely for a
conviction of an offense that involves the possession of marihuana
or the delivery of marihuana to a person 18 years of age or older.
SUBCHAPTER E. DUTIES OF LICENSE HOLDERS
Sec. 491.0201.  DUTIES RELATING TO DISPENSING CANNABIS OR
CANNABIS PRODUCTS.  Before dispensing cannabis or cannabis products
to an adult, a cannabis establishment must make reasonable efforts
(1)  the person receiving the cannabis or cannabis
(2)  the cannabis or cannabis product complies with
department testing and labeling rules; and
(3)  the amount dispensed is not greater than the
amount of cannabis or cannabis product allowed for personal use as
Sec. 491.0202.  DUTIES RELATING TO SECURITY.  (a)  A license
holder shall ensure that the cultivation, processing, sale, or
display of cannabis, cannabis products, and cannabis-related drug
paraphernalia is not visible from a public place without the use of
(b)  A license holder may not cultivate, process, store, or
sell cannabis, cannabis products, or cannabis-related drug
paraphernalia at a location other than the physical address
approved by the department for the establishment under the license
issued to the establishment under this chapter.
(c)  A license holder shall adopt reasonable security
measures necessary to restrict access to areas where cannabis,
cannabis products, or cannabis-related drug paraphernalia are
stored and to prevent theft of cannabis, cannabis products, and
cannabis-related drug paraphernalia.
Sec. 491.0203.  LICENSE HOLDER OPERATIONS.  (a)  A license
holder may not employ or otherwise accept the services of a person
(b)  A cannabis establishment may not sell tobacco products,
as defined by Section 155.001, Tax Code.
Sec. 491.0204.  MONTHLY SALES REPORT.  A cannabis
establishment shall monthly submit a report to the comptroller
specifying the amount of cannabis sold, the number of cannabis
products sold, the number and types of cannabis-related drug
paraphernalia sold, and the amount of money collected in sales by
the establishment during the preceding month.
SUBCHAPTER F.  FUNDING FOR REGULATION, OVERSIGHT, TESTING, AND
Sec. 491.0251.  CANNABIS REGULATION ACCOUNT.  (a)  The
cannabis regulation account is an account in the general revenue
fund administered by the department.
(1)  money deposited to the credit of the account under
Section 166.0004, Tax Code; and
(2)  fees deposited to the credit of the account under
(c)  Money in the account may be appropriated only to the
department for implementing and administering this chapter.
Sec. 491.0252.  CANNABIS TESTING AND QUALITY CONTROL
ACCOUNT.  (a)  The cannabis testing and quality control account is
an account in the general revenue fund administered by the
(b)  The account consists of money deposited to the credit of
the account under Section 166.0004, Tax Code.
(c)  Money in the account may be appropriated only to the
Department of Public Safety for monitoring compliance with testing
and quality control requirements imposed on license holders by this
chapter or by commission rules adopted under this chapter.
Sec. 491.0253.  CANNABIS ESTABLISHMENT REGULATION AND
OVERSIGHT LOCAL SHARE ACCOUNT; PAYMENT FROM ACCOUNT.  (a)  In this
(1)  "Account" means the cannabis establishment
regulation and oversight local share account created under this
(2)  "Fiscal year" means the fiscal year of a
(3)  "Qualifying local government" means a
municipality or county in which at least one cannabis establishment
is located during any portion of the applicable fiscal year.
(b)  The cannabis establishment regulation and oversight
local share account is an account in the general revenue fund
administered by the comptroller.
(c)  The account consists of money deposited to the credit of
the account under Section 166.0004, Tax Code.
(d)  Money in the account may be used by the comptroller only
to make a cannabis establishment regulation assistance payment to a
qualifying local government in the manner provided by this section.
(e)  To serve the state purpose of ensuring that local
governments in which cannabis establishments are located may
effectively participate in the regulation and oversight of those
establishments, a qualifying local government is entitled to a
cannabis establishment regulation assistance payment from the
state for each fiscal year that the local government is a qualifying
(f)  Except as provided by Subsection (j), the amount of the
cannabis establishment regulation assistance payment to which a
qualifying local government is entitled for a fiscal year is equal
to the cost incurred by the local government to enforce regulations
(g)  Not later than April 1 of the year following the end of a
fiscal year for which a qualifying local government is entitled to a
cannabis establishment regulation assistance payment, the
qualifying local government may submit an application to the
comptroller to receive a cannabis establishment regulation
assistance payment for that fiscal year.  The application must be
made on a form prescribed by the comptroller.  The comptroller may
require the qualifying local government to submit any information
the comptroller needs to determine the amount of the cannabis
establishment regulation assistance payment to which the
qualifying local government is entitled.
(h)  A qualifying local government that does not submit an
application to the comptroller by the date prescribed by Subsection
(g) is not entitled to a cannabis establishment regulation
assistance payment for the fiscal year for which that deadline
(i)  The comptroller shall review each application by a local
government to determine whether the local government is entitled to
a cannabis establishment regulation assistance payment.  If the
comptroller determines that the local government is entitled to the
payment, the comptroller shall remit the payment using available
money in the account to the qualifying local government not later
than the 30th day after the date the application for the payment is
(j)  If at the time a cannabis establishment regulation
assistance payment must be remitted to a qualifying local
government under Subsection (i) the comptroller determines the
available amount in the account is insufficient to make the
payment, the comptroller may reduce the amount of the payment to the
qualifying local government.  If more than one payment must be
remitted at a time when the available amount in the account is
insufficient to make those payments, the comptroller shall make
reduced payments to each qualifying local government.  The
comptroller shall allocate the reductions in the amount of the
payments in a manner that is proportionate to the number of cannabis
establishments in each qualifying local government.
(k)  The comptroller shall adopt rules necessary to
SUBCHAPTER G. LOCAL REGULATION AND OVERSIGHT
Sec. 491.0301.  DEFINITION.  In this subchapter, "health
authority" has the meaning assigned by Section 431.002.
Sec. 491.0302.  LOCAL AUTHORIZATION REQUIRED.  A license
holder under this chapter may not operate in a county or
municipality without an order or ordinance adopted by the county or
municipality, as applicable, authorizing the operation of cannabis
growers, cannabis establishments, cannabis secure transporters, or
cannabis testing facilities in the county or municipality.
Sec. 491.0303.  LOCAL REGULATION.  A county or municipality
that authorizes the operation of cannabis growers, cannabis
establishments, or cannabis testing facilities in the county or
municipality may adopt regulations consistent with this chapter
governing the hours of operation, location, manner of conducting
business, and number of cannabis growers, cannabis establishments,
cannabis secure transporters, or cannabis testing facilities.
Sec. 491.0304.  PUBLIC HEALTH INSPECTIONS.  A health
authority may, on presenting appropriate credentials to the license
holder or employee of the cannabis establishment:
(1)  enter at reasonable times the premises of a
(2)  enter a vehicle being used to transport cannabis;
(3)  inspect at reasonable times, within reasonable
limits, and in a reasonable manner, the establishment or vehicle
and all equipment, finished and unfinished materials, containers,
Sec. 491.0305.  COMPLAINTS.  (a)  A county, municipality, or
health authority, as applicable, shall maintain a record of any
complaints made regarding the operations of a cannabis
(b)  A county, municipality, or health authority, as
applicable, shall investigate a complaint or refer the complaint to
the department, as appropriate.
SUBCHAPTER H. SALE OR DISTRIBUTION OF CANNABIS OR CANNABIS PRODUCT
Sec. 491.0351.  DEFINITION.  In this subchapter, "minor"
means a person younger than 21 years of age.
Sec. 491.0352.  SALE OR DISTRIBUTION OF CANNABIS OR CANNABIS
PRODUCT TO MINORS PROHIBITED; PROOF OF AGE REQUIRED.  (a)  A person
commits an offense if the person, under the authority of this
(1)  sells, gives, or causes to be sold or given
cannabis or cannabis products to a minor; or
(2)  sells, gives, or causes to be sold or given
cannabis or cannabis products to another person who intends to
deliver the cannabis or cannabis products to a minor.
(b)  If an offense under this section occurs in connection
with a sale by an employee of the owner of a cannabis establishment,
the employee is criminally responsible for the offense and is
(c)  An offense under this section is a Class C misdemeanor.
(d)  It is a defense to prosecution under Subsection (a)(1)
that the person to whom the cannabis or cannabis products were sold
or given presented to the defendant apparently valid proof of
(e)  A proof of identification satisfies the requirements of
Subsection (d) if it contains a physical description and photograph
consistent with the person's appearance, purports to establish that
the person is 21 years of age or older, and was issued by a
governmental agency. The proof of identification may include a
driver's license issued by this state or another state, a passport,
or an identification card issued by a state or the federal
SECTION 2.  Section 122.103(c), Agriculture Code, is amended
(c)  A qualified applicant who along with the application
submits proof to the department that the applicant holds a license
under Chapter 487 or 491, Health and Safety Code, is not required to
pay an application fee, and the department shall issue the license
to the applicant within the time prescribed by Subsection (b).
SECTION 3.  Section 411.093(a), Government Code, is amended
(a)  The Texas Department of Licensing and Regulation is
entitled to obtain criminal history record information as provided
by Subsection (b) that relates to:
(1)  an applicant for or the holder of:
(A)  a driver education instructor license under
(B)  a license under Chapter 202, Occupations
(C)  a license under Chapter 401, Occupations
(D)  a license under Chapter 402, Occupations
(E)  an instructor license or motorcycle school
license under Chapter 662, Transportation Code;
(A)  an applicant for or the holder of a license
under Chapter 91, Labor Code; or
(B)  a controlling person, as defined by Chapter
91, Labor Code, of an entity described by Paragraph (A); [or]
(A)  is an applicant for or the holder of a license
under Chapter 455, Occupations Code; or
(B)  has an interest described under Section
455.1525(e), Occupations Code, in an entity described by Paragraph
(4)  a person who is an applicant for or holds a license
issued under Chapter 491, Health and Safety Code, to be a cannabis
grower, cannabis establishment, cannabis secure transporter, or
cannabis testing facility, as defined by Section 491.0001, Health
SECTION 4.  Section 443.202(a), Health and Safety Code, is
(a)  This section does not apply to low-THC cannabis
regulated under Chapter 487 or cannabis regulated under Chapter
SECTION 5.  Section 443.2025(a), Health and Safety Code, is
(a)  This section does not apply to low-THC cannabis
regulated under Chapter 487 or cannabis regulated under Chapter
SECTION 6.  Section 481.062, Health and Safety Code, is
Sec. 481.062.  EXEMPTIONS.  (a)  The following persons are
not required to register and may possess a controlled substance
under this chapter [without registering with the Federal Drug
(1)  an agent or employee of a registered manufacturer,
distributor, analyzer, or dispenser of the controlled substance
[who is registered with the Federal Drug Enforcement Administration
and] acting in the usual course of business or employment;
(2)  a common or contract carrier, a warehouseman, or
an employee of a carrier or warehouseman whose possession of the
controlled substance is in the usual course of business or
(3)  an ultimate user or a person in possession of the
controlled substance under a lawful order of a practitioner or in
lawful possession of the controlled substance if it is listed in
(4)  an officer or employee of this state, another
state, a political subdivision of this state or another state, or
the United States who is lawfully engaged in the enforcement of a
law relating to a controlled substance or drug or to a customs law
and authorized to possess the controlled substance in the discharge
of the person's official duties;
(5)  if the substance is tetrahydrocannabinol or one of
(A)  a Department of State Health Services
official, a medical school researcher, or a research program
participant possessing the substance as authorized under
(B)  a practitioner or an ultimate user possessing
the substance as a participant in a federally approved therapeutic
research program that the commissioner has reviewed and found, in
writing, to contain a medically responsible research protocol; [or]
(6)  a dispensing organization licensed under Chapter
487 that possesses low-THC cannabis;
(7)  a cannabis grower, cannabis establishment,
cannabis secure transporter, or cannabis testing facility licensed
under Chapter 491 that possesses cannabis or cannabis products; or
(8)  a person who possesses cannabis or cannabis
products in accordance with Chapter 491.
(b)  In this section, "cannabis" and "cannabis product" have
the meanings assigned to those terms by Section 491.0001.
SECTION 7.  Section 481.111, Health and Safety Code, is
amended by adding Subsections (g) and (h) to read as follows:
(g)  Sections 481.113, 481.116, 481.120, 481.121, and
481.125 do not apply to a person who engages in the acquisition,
possession, production, processing, cultivation, delivery,
transportation, disposal, transfer, or use of a raw material used
in or by-product created by the production or cultivation of
cannabis or cannabis products if the conduct is expressly
authorized by Subchapter B, Chapter 491.
(h)  For purposes of Subsection (g), "cannabis" and
"cannabis product" have the meanings assigned to those terms by
SECTION 8.  Section 551.004, Occupations Code, is amended by
amending Subsection (a) and adding Subsection (a-1) to read as
(a)  This subtitle does not apply to:
(1)  a practitioner licensed by the appropriate state
board who supplies a patient of the practitioner with a drug in a
manner authorized by state or federal law and who does not operate a
pharmacy for the retailing of prescription drugs;
(2)  a member of the faculty of a college of pharmacy
recognized by the board who is a pharmacist and who performs the
pharmacist's services only for the benefit of the college;
(3)  a person who procures prescription drugs for
lawful research, teaching, or testing and not for resale;
(4)  a home and community support services agency that
possesses a dangerous drug as authorized by Section 142.0061,
142.0062, or 142.0063, Health and Safety Code; [or]
(5)  a dispensing organization[, as defined by Section
487.001, Health and Safety Code,] that cultivates, processes, and
dispenses low-THC cannabis, as authorized by Chapter 487, Health
and Safety Code, to a patient listed in the compassionate-use
registry established under that chapter;
(6)  a cannabis grower,  cannabis establishment,
cannabis secure transporter, or cannabis testing facility licensed
under Chapter 491, Health and Safety Code, that cultivates,
manufactures, processes, distributes, delivers, sells, tests,
transports, or dispenses cannabis or a cannabis product as
(7)  a person who transfers cannabis without
remuneration as authorized by Section 491.0051, Health and Safety
(a-1)  For purposes of this section:
(1)  "Cannabis," "cannabis establishment," "cannabis
grower," "cannabis product," "cannabis secure transporter," and
"cannabis testing facility" have the meanings assigned by Section
491.0001, Health and Safety Code.
(2)  "Dispensing organization" and "low-THC cannabis"
have the meanings assigned by Section 487.001, Health and Safety
SECTION 9.  Section 151.313(c), Tax Code, is amended to read
(c)  A product is a drug or medicine for purposes of this
(1)  is intended for use in the diagnosis, cure,
mitigation, treatment, or prevention of disease, illness, injury,
(2)  is applied to the human body or is a product that a
(3)  is not an appliance or device; [and]
(5)  is not cannabis or a cannabis product, as those
terms are defined by Section 491.0001, Health and Safety Code.
SECTION 10.  Section 151.314, Tax Code, is amended by adding
Subsection (i) to read as follows:
(i)  The exemption provided by Subsection (a) does not apply
to a cannabis product, as defined by Section 491.0001, Health and
SECTION 11.  Section 151.316, Tax Code, is amended by adding
Subsection (e) to read as follows:
(e)  The exemption provided by Subsection (a)(5) does not
apply to cannabis, as defined by Section 491.0001, Health and
SECTION 12.  Subtitle E, Title 2, Tax Code, is amended by
adding Chapter 166 to read as follows:
CHAPTER 166.  TAX ON CANNABIS AND RELATED PRODUCTS
Sec. 166.0001.  DEFINITIONS.  In this chapter, "cannabis"
and "cannabis product" have the meanings assigned by Section
491.0001, Health and Safety Code.
Sec. 166.0002.  CANNABIS SALES TAX.  (a)  A tax is imposed on
each sale in this state of cannabis and cannabis products.
(b)  The tax rate is 10 percent of the sales price of cannabis
Sec. 166.0003.  APPLICATION OF OTHER PROVISIONS OF CODE.
(a)  The tax imposed under this chapter is in addition to the taxes
(b)  Except as provided by this chapter:
(1)  the tax imposed under this chapter is
administered, imposed, collected, and enforced in the same manner
as the taxes under Chapter 151 are administered, imposed,
(2)  the provisions of Chapter 151 applicable to the
sales tax imposed under Subchapter C, Chapter 151, apply to the tax
Sec. 166.0004.  DISPOSITION OF PROCEEDS.  The comptroller
shall deposit the proceeds from the tax imposed under this chapter
(1)  10 percent to the credit of the cannabis
regulation account under Section 491.0251, Health and Safety Code;
(2)  10 percent to the credit of the cannabis testing
and quality control account under Section 491.0252, Health and
(3)  20 percent to the credit of the cannabis
establishment regulation and oversight local share account under
Section 491.0253, Health and Safety Code; and
(4)  the remainder to the credit of the foundation
SECTION 13.  (a) Not later than July 1, 2026, the Texas
Commission of Licensing and Regulation shall adopt rules as
required to implement, administer, and enforce Chapter 491, Health
and Safety Code, as added by this Act.
(b)  Not later than November 1, 2026, the Texas Department of
Licensing and Regulation shall begin licensing cannabis growers,
cannabis establishments, cannabis secure transporters, and
cannabis testing facilities in accordance with Chapter 491, Health
and Safety Code, as added by this Act, provided that the applicants
for a license have met all requirements for approval under Chapter
491, Health and Safety Code, as added by this Act.
SECTION 14.  The changes in law made by this Act do not
affect tax liability accruing before the effective date of this
Act. That liability continues in effect as if this Act had not been
enacted, and the former law is continued in effect for the
collection of taxes due and for civil and criminal enforcement of
SECTION 15.  This Act takes effect September 1, 2025.