Supplemental (Phase 1) & New Applications (Phase 2)

There are two specific restrictions regarding ownership in an entity that is a TCUP licensee:

• A physician who is registered to prescribe medication in TCUP cannot also have an ownership interest in a dispensing organization.
• A person who has an ownership interest, as sole proprietor, partner, member or owner, cannot also have an ownership interest in another dispensing organization or application for another dispensing organization.

In both these scenarios, the applicant will need to divest themselves from one position or the other in order to remove the conflict. For applications that were submitted during the Phase I 2023 window, as part of their supplemental information, the applicant should include a statement explaining the resolution.

For example, the statement could be:

• Dr. Joe Sample is a registered physician in TCUP. He also holds a 10% ownership interest in the accompanying application. Dr. Sample will voluntarily revoke his registration in TCUP and will end his practice of treating TCUP patients in order to maintain ownership interest in the entity, should it be granted a license.

For purposes of the competitive selection process, only those individuals who will be involved in operational control of the entity need to be named at this time. Once conditional approval for a license is awarded, the department will conduct background checks as necessary at multiple levels of ownership.

Yes, applicants must demonstrate financial stability in a manner relevant to the application. However, if an applicant is using the financial information from its parent company, the applicant must report any outstanding state or federal tax liabilities or debt obligations of the parent company; including any outstanding tax liabilities or debt obligations from any other subsidiaries owned by the parent company.  If they are unable to provide the requested information, please submit a statement explaining this.
 

There are two specific restrictions regarding ownership in an entity that is a TCUP licensee:

• A physician who is registered to prescribe medication in TCUP cannot also have an ownership interest in a dispensing organization.
• A person who has an ownership interest, as sole proprietor, partner, member or owner, cannot also have an ownership interest in another dispensing organization or application for another dispensing organization.

In both these scenarios, the applicant will need to divest themselves from one position or the other in order to remove the conflict. For applications that were submitted during the Phase I 2023 window, as part of their supplemental information, the applicant should include a statement explaining the resolution.

For example, the statement could be:

• Dr. Joe Sample is a registered physician in TCUP. He also holds a 10% ownership interest in the accompanying application. Dr. Sample will voluntarily revoke his registration in TCUP and will end his practice of treating TCUP patients in order to maintain ownership interest in the entity, should it be granted a license.

To ensure statewide access, applicants may either stand up the cultivation site or a satellite location in their assigned Public Health Region. Additionally, according to House Bill 46, a “dispensing organization may not operate more than one satellite location in a public health region … until the dispensing organization operates one satellite location in each public health region.”

We have received several questions related to the process for supplementing Phase I applications. Recognizing that there is concern over applicants from 2023 attempting to take the opportunity to essentially submit a new application, we nevertheless believe targeted supplementation is warranted.

HB46 emphasizes three specific points:

• A refinement of the foundational directive for DPS; from issuing licenses only as necessary to ensure statewide access to issuing licenses in a manner that ensures patient access in each health region;
• Creation of the satellite location for storage and dispensing to patients at a local level;
• Specific admonishment for licensees to stand up operations within 24 months and continue engaged operation within the program.

The language that emphasizes these points are all new additions to Health and Safety Code Chapter 487, through the amendments in HB46; the language in these provisions were not in existence in 2023 when the application window was open. It is for this reason that the Department is allowing a supplement to – not a rewrite or a replacement of – the information provided in 2023.

If RSD staff determines that the supplemental information provided is responsive to one of these new additions under HB46, the information will be allowed and given appropriate weight by the selection committee. If the information is determined to be responsive only to information requested during the 2023 application window, the information will be discarded and only the information provided during the original application window will be considered. 

Only supplemental information should be provided; previous versions of exhibits will be considered. 

The Department will not be considering pickup or satellite locations for Phase 1 or Phase 2 applicants at this time. 

Site control is not required at the time of application and applicants will not be penalized for a lack of site control at the time of application. If a proposed site is no longer available upon award of a conditional license, an applicant may change the proposed site provided the applicant can demonstrate that the new site can meet or exceed the qualifications of the originally proposed site. For Phase 1 applicants submitting a supplemental application, the applicant shall generally identify a plan detailing how the applicant would begin operations if awarded a conditional license including timelines, deliverables, milestones, and projected date for filling prescriptions. The applicant’s plan should be applicable to any suitable site location which will be later determined on award of a conditional license.

There are no license brokers or other third-party entities outside of DPS that are involved with the TCUP expansion process. Please be wary of any entity offering assistance with your application and inferring that they have insight to the DPS process or staff. The Department has made clear that substitution of ownership interest beyond what is necessary will not be allowed; instead, applicants would need to fill out a new application in Phase 2. Further, the Department has stated that upon selection, these conditional license awards are subject to the entity standing up operations within the 24-month period as mandated by HB46. Substantive ownership changes will not be allowed during the conditional period. If an entity cannot continue for some reason, the Department will then move to the eligibility list.
 

A substantive change in ownership interest on an application, beyond what is reasonable (such as the death of a partner) will be disallowed. Further, upon award of a conditional license, that entity/ownership interest is responsible for standing up operations within the statutorily mandated 24-month period. Substantive change in ownership interest during the conditional period will be disallowed; if the existing ownership is unable to stand up operations, DPS will then move to the eligibility list for a new conditional award. A license only converts from conditional award to final award upon the beginning of full “seed-to-sale” operations, by the conditional licensee.

No.

Yes, the expectation is that the licensee’s cultivation center/HQ is also capable of dispensing to patients. However, depending upon the site layout of the center, if there are security concerns that need to be addressed regarding public access, RSD staff will work with the conditional licensee on an appropriate location for dispensing. Those conversations will occur post-award. The licenses under this program are fully integrated “seed-to-sale"; the licensee is responsible for handling all aspects of the program, including dispensing medication to patients. There are no separate licenses for cultivating versus dispensing.

The license awarded authorizes at a cultivation center to be a specific location address to conduct seed-to-sale operations. HB 46 authorizes additional satellite locations for storage and dispensing only. Therefore, two or more production facilities would not be authorized. However, based on the entity’s business model, nothing would prevent the licensee from having multiple buildings with different grow rooms or research functions all on the same campus/premises.

The Department will not be conducting background checks until after conditional licenses are awarded.

The “Applicant” refers to the entity in whatever format its business model dictates; that could be a sole proprietorship, a partnership, or some corporate structure. It is a separate question as to who will be subject to background checks, which is based on involvement with business operations or “direct control over daily operations,” as stated in HB 46. The application may be prepared by an agent of the applicants, but this does not affect the identity of the applicant. 

No. To ensure statewide access, applicants may either stand up the cultivation site or a satellite location in their assigned Public Health Region. Additionally, according to House Bill 46, a “dispensing organization may not operate more than one satellite location in a public health region … until the dispensing organization operates one satellite location in each public health region.”

Previous versions of exhibits will be considered. 

We have received several questions related to the process for supplementing Phase I applications.  Recognizing that there is concern over applicants from 2023 attempting to take the opportunity to essentially submit a new application, we nevertheless believe targeted supplementation is warranted.

HB46 emphasizes three specific points:

• A refinement of the foundational directive for DPS; from issuing licenses only as necessary to ensure statewide access to issuing licenses in a manner that ensures patient access in each health region;
• Creation of the satellite location for storage and dispensing to patients at a local level;
• Specific admonishment for licensees to stand up operations within 24 months and continue engaged operation within the program.

The language that emphasizes these points are all new additions to Health and Safety Code Chapter 487, through the amendments in HB46; the language in these provisions were not in existence in 2023 when the application window was open. It is for this reason that the Department is allowing a supplement to – not a rewrite or a replacement of – the information provided in 2023.

If RSD staff determines that the supplemental information provided is responsive to one of these new additions under HB46, the information will be allowed and given appropriate weight by the selection committee. If the information is determined to be responsive only to information requested during the 2023 application window, the information will be discarded and only the information provided during the original application window will be considered. 

A Dun & Bradstreet report is a comprehensive business credit report. If the applicant does not have a Dun & Bradstreet report, include a statement explaining why.

Only the requested supplemental information should be provided. A substantive change in ownership interest on an application, beyond what is reasonable (such as the death of a partner) will be disallowed.

The intent of question four of the CUP-101 Form is to verify if the applicant is in good standing if they are licensed in another state.

For Phase I applicants, the applicants must acknowledge that all information submitted in 2025 is true and correct. Information previously submitted must have been true and correct at the time of submission. The department recognizes that some materials in the original application may have changed, and the applicant will not be held criminally liable for currently incorrect statements that were true and correct at the time of original submission.

Phase II applicants must acknowledge that the entire application is true and correct at the time of submission. 
 

Applicants must demonstrate financial stability in a manner relevant to the application. However, if an applicant is using the financial information from its parent company, the applicant must report any outstanding state or federal tax liabilities or debt obligations of the parent company; including any outstanding tax liabilities or debt obligations from any other subsidiaries owned by the parent company. If they are unable to provide the requested information, please submit a statement explaining this.

A person who has an ownership interest, as sole proprietor, partner, member or owner, cannot also have an ownership interest in another dispensing organization or application for another dispensing organization in TCUP. Only those individuals who will be involved in operational control of the entity need to be named at this time. 

A substantive change in ownership interest on an application, beyond what is reasonable (such as the death of a partner), will be disallowed. For purposes of the competitive selection process, only those individuals who will be involved in operational control of the entity need to be named at this time. Once conditional approval for a license is awarded, the department will conduct background checks as necessary at multiple levels of ownership.

No. A substantive change in ownership interest on an application, beyond what is reasonable (such as the death of a partner), will be disallowed. Further, upon award of a conditional license, that entity/ownership interest is responsible for standing up operations within the statutorily mandated 24-month period. For purposes of the competitive selection process, only those individuals who will be involved in operational control of the entity need to be named at this time.  

No. There is no requirement to have owned or leased property under control as part of the application process. Site control is not required at the time of application and applicants will not be penalized for a lack of site control at the time of application. If a proposed site is no longer available upon award of a conditional license, an applicant may change the proposed site provided the applicant can demonstrate that the new site can meet or exceed the qualifications of the originally proposed site. To ensure statewide access, applicants may either stand up the cultivation site or a satellite location in their assigned Public Health Region. Additionally, according to House Bill 46, a “dispensing organization may not operate more than one satellite location in a public health region … until the dispensing organization operates one satellite location in each public health region.”

Only supplemental information should be provided; previous versions of exhibits will be considered. Site control is not required at the time of application and applicants will not be penalized for a lack of site control at the time of application. If a proposed site is no longer available upon award of a conditional license, an applicant may change the proposed site provided the applicant can demonstrate that the new site can meet or exceed the qualifications of the originally proposed site. For Phase 1 applicants submitting a supplemental application, the applicant shall generally identify a plan detailing how the applicant would begin operations if awarded a conditional license including timelines, deliverables, milestones, and projected date for filling prescriptions. The applicant’s plan should be applicable to any suitable site location which will be later determined on award of a conditional license.

To clarify Question 26 above, a substantive change in ownership interest on an application beyond what is reasonable will be disallowed. A specific percentage amount does not matter, but rather what is deemed reasonable.  

To clarify Question 5 above, when the Department states "[t]o ensure statewide access," the Department is referring to all fifteen licensees collectively to achieve statewide access.

In reference to Question 10 above, an applicant may not sell an applicant’s application spot to a third-party entity. 

Yes, Phase 2 applications must address all items detailed in T.A.C. Rule 12.11.

Yes, the FAQs will not be updated after Monday, September 15, 2025, at 8:00 a.m. for Phase 1 applicants.

The Department will not be considering pickup or satellite locations for Phase 1 or Phase 2 applicants at this time. 

No. For Phase 1 applicants submitting a supplemental application, the applicant shall generally identify “a plan detailing how the applicant would begin operations if licensed including timelines, deliverables, milestones, and projected date for filling prescriptions.”

A substantive change in ownership interest on an application, beyond what is reasonable (such as the death of a partner), will be disallowed. A specific percentage amount does not matter, but rather what is deemed reasonable. For purposes of the competitive selection process, only those individuals who will be involved in operational control of the entity need to be named at this time. Once conditional approval for a license is awarded, the department will conduct background checks as necessary at multiple levels of ownership.

Applicants must demonstrate financial stability in a manner relevant to the application. However, if an applicant is using the financial information from its parent company, the applicant must report any outstanding state or federal tax liabilities or debt obligations of the parent company; including any outstanding tax liabilities or debt obligations from any other subsidiaries owned by the parent company.  If they are unable to provide the requested information, please submit a statement explaining this.

Applicants must demonstrate financial stability in a manner relevant to the application. If the applicant does not have a Dun & Bradstreet report, include a statement explaining why.