Texas cannabis companies demand answers on dispensary licenses

Dr. Elias Jackson runs Vyripharm Biopharmaceuticals in the TMCX& Innovation Institute. The research company is part of a joint venture with Houston-based Indoor Harvest Corp. and San Antonio-based Alamo CBD through which all three groups will be able to produce personalized medical cannabis for patients of epilepsy. Vyripharm will specifically be able to check real time effects of the drugs in patients and modify doses as needed. Wednesday, April 26, 2017, in Houston. ( Marie D. De Jesus / Houston Chronicle ) less Dr. Elias Jackson runs Vyripharm Biopharmaceuticals in the TMCX& Innovation Institute. The research company is part of a joint venture with Houston-based Indoor Harvest Corp. and San Antonio-based Alamo CBD ... more Photo: Marie D. De Jesus, Staff Photo: Marie D. De Jesus, Staff Image 1 of / 33 Caption Close Texas cannabis companies demand answers on dispensary licenses 1 / 33 Back to Gallery

Companies denied licenses to dispense medical marijuana in the state, including one in Houston with ties to the Texas Medical Center, have filed demand letters to the Department of Public Safety. They request a hearing, claiming they deserved licenses under state law.

On May 1, the law enforcement agency approved only three out of 43 applications for a conditional license to produce and sell low-THC cannabis medication to patients with intractable epilepsy.

No dispensaries were approved in the Houston and Dallas-Fort Worth areas. The companies, some families, nonprofits and legal experts claim three licenses would not be enough to meet the needs of the estimated 150,000-plus patients in Texas.

Alamo CBD, a San Antonio-based company, applied for a license with the backing of Houston vertical farming group Indoor Harvest and a Medical Center-based startup Vyripharm Biopharmaceuticals. Together, the three entities planned to build state-of-the-art facilities east of San Antonio where they would cultivate low-THC cannabis to both sell and study for scientific evidence of medicinal properties.

Yet even with ties to the TMC, Alamo CBD's license for the Compassionate Use Program, or CUP, was denied conditional approval.

Keith Oakley, founder and CEO of the lobbying group Medical Cannabis Association of Texas, has submitted three demand letters to DPS on behalf of companies denied conditional licenses, and he sent out a sample demand letter to other applicants.

Alamo CBD submitted a filled-in version of Oakley's sample and the company appears prepared to sue should DPS deny the hearing request.

"There appears to be little doubt that CUP licensee applicants who have been denied a license would prevail in a declaratory judgment action," Alamo CBD's demand letter reads. "A sound policy decision would be for DPS to proceed with processing the applications of the remaining CUP applicants who have submitted properly completed application packages allowing the state to avoid litigation."

The letter goes on to claim that the Department of Public Safety's licensing policies and rules for the medical marijuana program did not comply with state administrative laws since "the selection model used to rate applicants and as the tool to select and award the three licenses was not posted for the required public comment period in the Texas Register."

A DPS spokesman in an emailed response restated that no license has been granted as the three conditionally approved companies must pass upcoming inspections.

"DPS does not speculate on potential litigation," the spokesman said.

In the meantime, Alamo CBD and Indoor Harvest have retained legal counsel to develop a joint venture project in Colorado. The pair has identified a 59,000-square-foot facility in Denver, where marijuana is more widely legal, and Indoor Harvest aims to oversee engineering and construction of the facility, with the ultimate goal of becoming a license holder in the state.

Oakley, who previously served in the Texas House and oversaw the public safety committee, said he hopes that by the next legislative session bills can be pushed forward to expand the state's medical marijuana program.