By: González of Dallas H.B. No. 169       A BILL TO BE ENTITLED   AN ACT   relating to the regulation of the cultivation, processing,   packaging, labeling, distribution, sale, testing, transportation,   delivery, transfer, storage, dispensing, 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 494 to read as follows:   CHAPTER 494. REGULATION OF CANNABIS   SUBCHAPTER A. GENERAL PROVISIONS          Sec. 494.0001.  DEFINITIONS. In this chapter:                (1)  "Adult" means an individual 21 years of age or   older.                (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   term does not include:                      (A)  the mature stalks of the plant or fiber   produced from the stalks;                      (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   121.001, Agriculture Code; or                      (F)  a consumable hemp product, as that term is   defined by Section 443.001.                (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   resin.                (4)  "Cannabis establishment" means an entity licensed   by the department under this chapter to process cannabis and   cannabis products and to 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   cannabis establishment.                (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   in:                      (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   into the human body.                (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   Licensing and Regulation.                (11)  "Cultivate" means to propagate, breed, grow,   harvest, dry, cure, or separate parts of the cannabis plant by   manual or mechanical means.                (12)  "Department" means the Texas Department of   Licensing and Regulation.                (13)  "Executive director" means the executive   director of the department.                (14)  "Marihuana" has the meaning assigned by Section   481.002.                (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   cannabis products.   SUBCHAPTER B. PROTECTIONS FROM LEGAL ACTION RELATED TO CANNABIS          Sec. 494.0051.  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   public;                (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. 494.0052.  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   paraphernalia;                (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   paraphernalia to an adult;                (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   establishment; and                (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. 494.0053.  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 494.0051   or 494.0052.          (b)  The fact that a person engages in conduct authorized by   Section 494.0051 or 494.0052 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. 494.0054.  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,   occupies, or manages.          (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. 494.0055.  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   public road;                      (B)  an aircraft, while the aircraft is in flight   or in a public area;                      (C)  a watercraft, while the watercraft is on a   public waterway; or                      (D)  a public place, unless:                            (i)  the public place is an area designated   by the applicable political subdivision as an area where using   cannabis is permissible; and                            (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   school;                      (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   civil commitment facility; or                (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. 494.0101.  DUTIES OF DEPARTMENT. The department shall   administer this chapter.          Sec. 494.0102.  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   Section 494.0251.          (d)  The commission shall adopt rules for the reasonable   regulation of cannabis growers and cannabis establishments,   including rules that:                (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   cannabis products;                (4)  require recordkeeping and monitoring to track the   transfer of cannabis and cannabis products between license holders;   and                (5)  require security measures, provided that the   security measures do not restrict the cultivation of cannabis   outdoors or in greenhouses.          Sec. 494.0103.  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   and cannabis products.          (b)  In establishing standards for packaging and labeling   requirements under Subsection (a)(3), the commission shall require   that:                (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   commercially sold candy;                (2)  cannabis and cannabis products be clearly labeled;   and                (3)  the label for a cannabis product disclose the   amount of cannabis contained in that product.          Sec. 494.0104.  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. 494.0105.  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   department under this chapter.          (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. 494.0106.  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   regulation under this chapter:                (1)  the number of applications received for each class   of license under this chapter;                (2)  the number of licenses issued for each class of   license under this chapter;                (3)  demographic information pertaining to license   holders;                (4)  a description of any fines imposed on a license   holder or disciplinary actions taken against a license holder by   the department; and                (5)  a statement of revenues and expenses of the   department related to the implementation, administration, and   enforcement of this chapter.   SUBCHAPTER D. LICENSING          Sec. 494.0151.  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. 494.0152.  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. 494.0153.  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   amount set by commission rule.          (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   license.          Sec. 494.0154.  ISSUANCE, RENEWAL, OR DENIAL OF LICENSE.     (a)  The department shall issue or renew a license under this   chapter only if:                (1)  the department determines the applicant meets the   qualifications for the class of license sought established under   Section 494.0152; and                (2)  the applicant is in compliance with any applicable   local regulations.          (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. 494.0155.  DUTY TO MAINTAIN QUALIFICATIONS. A license   holder shall maintain compliance at all times with the   qualifications for the applicable class of license established   under Section 494.0152.          Sec. 494.0156.  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   494.0152 or has failed to comply with a duty imposed under this   chapter.          (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   Subchapter E, Chapter 481.          (d)  Chapter 2001, Government Code, applies to a proceeding   under this section.          Sec. 494.0157.  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   Bureau of Investigation.          (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   under this section.          (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. 494.0201.  DUTIES RELATING TO DISPENSING CANNABIS OR   CANNABIS PRODUCTS. Before dispensing cannabis or cannabis products   to an adult, a cannabis establishment must make reasonable efforts   to verify that:                (1)  the person receiving the cannabis or cannabis   product is an adult;                (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   provided by Section 494.0051.          Sec. 494.0202.  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   optical aids or aircraft.          (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. 494.0203.  LICENSE HOLDER OPERATIONS. (a)  A license   holder may not employ or otherwise accept the services of a person   younger than 21 years of age.          (b)  A cannabis establishment may not sell tobacco products,   as defined by Section 155.001, Tax Code.          Sec. 494.0204.  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   QUALITY CONTROL          Sec. 494.0251.  CANNABIS REGULATION ACCOUNT. (a) The   cannabis regulation account is an account in the general revenue   fund administered by the department.          (b)  The account consists of:                (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   Section 494.0102.          (c)  Money in the account may be appropriated only to the   department for implementing and administering this chapter.          Sec. 494.0252.  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   Department of Public Safety.          (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. 494.0253.  CANNABIS ESTABLISHMENT REGULATION AND   OVERSIGHT LOCAL SHARE ACCOUNT; PAYMENT FROM ACCOUNT. (a) In this   section:                (1)  "Account" means the cannabis establishment   regulation and oversight local share account created under this   section.                (2)  "Fiscal year" means the fiscal year of a   qualifying local government.                (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   local government.          (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   adopted under Subchapter G.          (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   applies.          (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   made.          (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   implement this section.   SUBCHAPTER G. LOCAL REGULATION AND OVERSIGHT          Sec. 494.0301.  DEFINITION.  In this subchapter, "health   authority" has the meaning assigned by Section 431.002.          Sec. 494.0302.  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. 494.0303.  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. 494.0304.  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   cannabis establishment;                (2)  enter a vehicle being used to transport cannabis;   or                (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,   and labeling of any item.          Sec. 494.0305.  COMPLAINTS. (a)  A county, municipality, or   health authority, as applicable, shall maintain a record of any   complaints made regarding the operations of a cannabis   establishment.          (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   TO MINORS PROHIBITED          Sec. 494.0351.  DEFINITION. In this subchapter, "minor"   means a person younger than 21 years of age.          Sec. 494.0352.  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   chapter:                (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   subject to prosecution.          (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   identification.          (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   government.          SECTION 2.  Section 122.103(c), Agriculture Code, is amended   to read as follows:          (c)  A qualified applicant who along with the application   submits proof to the department that the applicant holds a license   under Chapter 487 or 494, 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, as amended   by S.B. No. 3070, Acts of the 89th Legislature, Regular Session,   2025, is amended to read as follows:          (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   Chapter 1001, Education Code;                      (B)  a license under Chapter 466;                      (C)  a license under Chapter 202, Occupations   Code;                      (D)   a license under Chapter 401, Occupations   Code;                      (E)   a license under Chapter 402, Occupations   Code;                      (F)  a license under Chapter 2001, Occupations   Code; or                      (G)   an instructor license or motorcycle school   license under Chapter 662, Transportation Code;                (2)  a person who is:                      (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]                (3)  a person who:                      (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   (A); or                (4)  a person who is an applicant for or holds a license   issued under Chapter 494, Health and Safety Code, to be a cannabis   grower, cannabis establishment, cannabis secure transporter, or   cannabis testing facility, as defined by Section 494.0001, Health   and Safety Code.          SECTION 4.  Section 443.202(a), Health and Safety Code, is   amended to read as follows:          (a)  This section does not apply to low-THC cannabis   regulated under Chapter 487 or cannabis regulated under Chapter   494.          SECTION 5.  Section 443.2025(a), Health and Safety Code, is   amended to read as follows:          (a)  This section does not apply to low-THC cannabis   regulated under Chapter 487 or cannabis regulated under Chapter   494.          SECTION 6.  Section 481.062, Health and Safety Code, is   amended to read as follows:          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   Enforcement Administration]:                (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   employment;                (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   Schedule V;                (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   its derivatives:                      (A)  a Department of State Health Services   official, a medical school researcher, or a research program   participant possessing the substance as authorized under   Subchapter G; or                      (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 494 that possesses cannabis or cannabis products; or                (8)  a person who possesses cannabis or cannabis   products in accordance with Chapter 494.          (b)  In this section, "cannabis" and "cannabis product" have   the meanings assigned to those terms by Section 494.0001.          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 494.          (h)  For purposes of Subsection (g), "cannabis" and   "cannabis product" have the meanings assigned to those terms by   Section 494.0001.          SECTION 8.  Section 551.004, Occupations Code, is amended by   amending Subsection (a) and adding Subsection (a-1) to read as   follows:          (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 494, Health and Safety Code, that cultivates,   processes, distributes, delivers, sells, tests, transports, or   dispenses cannabis or a cannabis product as authorized by that   chapter; or                (7)  a person who transfers cannabis without   remuneration as authorized by Section 494.0051, Health and Safety   Code.          (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   494.0001, Health and Safety Code.                (2)  "Dispensing organization" and "low-THC cannabis"   have the meanings assigned by Section 487.001, Health and Safety   Code.          SECTION 9.  Section 151.313(c), Tax Code, is amended to read   as follows:          (c)  A product is a drug or medicine for purposes of this   section if the product:                (1)  is intended for use in the diagnosis, cure,   mitigation, treatment, or prevention of disease, illness, injury,   or pain;                (2)  is applied to the human body or is a product that a   human ingests or inhales;                (3)  is not an appliance or device; [and]                (4)  is not food; and                (5)  is not cannabis or a cannabis product, as those   terms are defined by Section 494.0001, 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 494.0001, Health and   Safety Code.          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 494.0001, Health and   Safety Code.          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   494.0001, 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   or a cannabis product.          Sec. 166.0003.  APPLICATION OF OTHER PROVISIONS OF CODE.   (a)  The tax imposed under this chapter is in addition to the taxes   imposed under Chapter 151.          (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,   collected, and enforced; and                (2)  the provisions of Chapter 151 applicable to the   sales tax imposed under Subchapter C, Chapter 151, apply to the tax   imposed under this chapter.          Sec. 166.0004.  DISPOSITION OF PROCEEDS. The comptroller   shall deposit the proceeds from the tax imposed under this chapter   as follows:                (1)  10 percent to the credit of the cannabis   regulation account under Section 494.0251, Health and Safety Code;                (2)  10 percent to the credit of the cannabis testing   and quality control account under Section 494.0252, Health and   Safety Code;                (3)  20 percent to the credit of the cannabis   establishment regulation and oversight local share account under   Section 494.0253, Health and Safety Code; and                (4)  the remainder to the credit of the foundation   school fund.          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 494, 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 494, Health   and Safety Code, as added by this Act, provided that the applicants   for a license have met all requirements for approval under Chapter   494, 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   the liability for those taxes.          SECTION 15.  This Act takes effect on the 91st day after the   last day of the legislative session.