1. (a) Application for license as a dispensing organization may only be made in the manner determined by the department.

   1. (1) The department will provide public notice on its website and in the Texas Register of an open application period when one or more of the fifteen statutorily authorized dispensing organization licenses become available to be issued.
   2. (2) The department will provide an open application period of at least 90 days from the date of providing public notice.
   3. (3) The department will complete its review of applications within 180 days of the close of the application period. Upon completion of the department's review of all applications, the department will notify the selected applicant(s) of the department's conditional approval of the application under subsection (c) of this section.

2. (b) A complete application must include the items detailed in this subsection, in a manner determined by the department:

   1. (1) Proof of ownership and current status in the manner required by the department, including but not limited to a current Certificate of Existence or Certificate of Authority from the Texas Office of the Secretary of State and a Certificate of Good Standing from the Texas Comptroller of Public Accounts;
   2. (2) All application fees required under §12.14 of this title (relating to Application and Licensing Fees and Method of Payment);
   3. (3) Names, dates of birth, addresses, and all other information required by the department necessary to verify the identity of all directors, owners, managers, members, and employees of the applicant;
   4. (4) Criminal history disclosure of all convictions and deferred adjudications for each individual listed on the application as directors, owners, managers, members, and employees of the dispensing organization;
   5. (5) Complete registration applications for all directors, owners, managers, members, and employees submitted in the manner approved by the department and in compliance with §12.12 of this title (relating to Application for Registration);

   6. (6) Proof of commercial general liability insurance coverage against claims of liability for damage to property of third parties and for personal injuries to third parties, including bodily injury, property damage, and product liability, with limits of:

      1. (A) $1,000,000 each occurrence;
      2. (B) $2,000,000 General Aggregate limit; and
      3. (C) $1,000,000 Product Liability.

   7. (7) Evidence of the qualifications detailed in this paragraph as determined at the time of the required onsite inspection, in the manner determined by the department:

      1. (A) The technical and technological ability to cultivate, process, and/or dispense low-THC cannabis, evidenced by experience in the areas of:

         1. (i) Cultivation, analytical organic chemistry and micro-biology, and analytical laboratory methods; and
         2. (ii) Patient education, interaction, and the handling of confidential information including familiarity with the requirements of the Health Insurance Portability and Accountability Act (HIPAA).

      2. (B) The ability to secure the premises, resources, and employees necessary to operate as a dispensing organization, evidenced by:

         1. (i) Descriptions of all properties applicant proposes to utilize to cultivate, process, store, and dispense low-THC cannabis, including ownership information for the properties;
         2. (ii) The address and description of any satellite location that will be used by the applicant for secure storage of low-THC cannabis;
         3. (iii) Descriptions of the methods proposed for the cultivation, processing, storing, and dispensing of low-THC cannabis;
         4. (iv) Descriptions of the types and locations of worker safety equipment and plans and procedures for complying with federal Occupational Safety and Health Administration (OSHA) regulations for workplace safety;
         5. (v) A list of current and proposed staff, including position, duties, and responsibilities, and an organizational chart illustrating the supervisory structure of the dispensing organization;
         6. (vi) Description of the applicant's proposed testing laboratory and description of the proposed testing protocols and methods;
         7. (vii) A proposal establishing the ability to secure premises reasonably located to allow patient access through existing infrastructure; and
         8. (viii) Department approved acknowledgments executed by the applicant's directors, owners, managers, members, and employees indicating familiarity with the federal laws governing marihuana and its interstate transportation.

      3. (C) The ability to maintain accountability of all raw materials, finished products, and any by-products to prevent diversion or unlawful access to or possession of these substances, evidenced by:

         1. (i) Floor plan of each facility or proposed floor plans for proposed facilities, including:

            1. (I) Locking options for all means of ingress and egress consistent with life safety requirements;
            2. (II) Alarm systems;
            3. (III) Video surveillance;
            4. (IV) Name, layout, and function of each room; and
            5. (V) Storage, including safes and vaults.
         2. (ii) Diversion prevention procedures;
         3. (iii) Emergency management plan;
         4. (iv) System for tracking source plant material throughout cultivation, processing, storing, and dispensing;
         5. (v) Inventory control system as required by §12.8 of this title (relating to Inventory Control System);
         6. (vi) Policies and procedures for recordkeeping;
         7. (vii) Electronic vehicle tracking systems;
         8. (viii) Vehicle security systems;
         9. (ix) Methods of screening and monitoring employees;
         10. (x) Employee qualifications and experience with chain of custody or other tracking mechanisms;
         11. (xi) Waste disposal plan;
         12. (xii) Recall procedures for any product that has a reasonable probability of causing adverse health consequences based on a testing result, patient reaction, or other reason; and
         13. (xiii) Access to specialized resources or expertise regarding data collection, security, and tracking.

      4. (D) Infrastructure reasonably located to dispense low-THC cannabis to registered patients, evidenced by:

         1. (i) Map showing the location of the applicant's proposed dispensing facilities with streets, property lines, buildings, parking areas, outdoor areas if applicable, fences, security features, fire hydrants if applicable, and access to water and sanitation systems;
         2. (ii) Floor plan of the actual or proposed building or buildings where dispensing activities will occur showing areas designed to protect patient privacy and areas designed for retail sales with proposed hours of operation;
         3. (iii) HIPAA compliant computer network utilized by all facilities;
         4. (iv) Identifying descriptions of any vehicles to be used to transport product; and
         5. (v) Description of all communication systems.

      5. (E) The financial ability to maintain operations for two (2) years from the date of application, evidenced by:

         1. (i) Applicant's business organization and corporate structure if applicable;
         2. (ii) List of all owners of any non-corporate applicant or all shareholders of a corporate applicant;
         3. (iii) All individuals and entities with control over the applicant;
         4. (iv) Projected two (2) year budget; and
         5. (v) Description of available assets sufficient to support the dispensing organization activities.
3. (c) Subsequent to the submission of all information and documentation required by subsection (b)(1) - (6) of this section and the conditional approval of the application, the department will conduct an onsite inspection to confirm applicant's compliance with the requirements of subsection (b)(7) of this section and of this chapter generally. The applicant must pass the inspection prior to licensure. Failure to pass the inspection will result in notification of the basis for the failure. Failure to address the basis for the failure within sixty (60) days of notice may result in the denial of the application pursuant to §12.15 of this title (relating to Denial of Application for License). Upon request of the applicant, the department may extend the period to address the basis for the failure for one (1) additional thirty (30) day period.

Source Note:The provisions of this §12.11 adopted to be effective January 10, 2016, 41 TexReg 492; amended to be effective March 15, 2017, 42 TexReg 1145; amended to be effective October 29, 2025, 50 TexReg 6965.