The Dallas-Fort Worth business opportunities within the budding cannabis industry could turn out to be really “Kush” … or a bunch of seeds and stems.
A panel of experts discussed medical cannabis and its impact on the local business community Thursday at the Dallas office of Munsch Hardt. The panel included Munsch Hardt attorneys Richard Cheng and Caleb Trotter; Martin Ray partner Zach Martin; and Patrick Moran, CEO of Texas-based cannabis company AquiFlow. The overarching message: Those that get into the industry early could get the largest return in a long-term investment if they’re willing to bet on the uncertain regulatory future.
“Do not build a short-term business model,” Moran advised about 50 people who attended the panel. “Pinpoint something that’s going to be profitable even if cannabis doesn’t take the turn you want.”
If Texas eventually loosens its regulations, real estate professionals could be some of the first to benefit from the burgeoning cannabis industry, estimated to be worth $25 billion in 2025, panelists said. And one company, based in Addison, is already counting on capitalizing on Dallas-Fort Worth’s cannabis real estate market.
Grupo Resilient International Inc.—an Addison-based holding company that focuses on real estate, infrastructure, energy, wellness, transportation, and data—acquired a 31,000-square-foot office and warehouse in the region in anticipation of the legalization of medical cannabis. The facility will serve as its Dallas cannabis “Agri-Campus” headquarters as part of its plan to offer solutions and services to accommodate cannabis growers. Similarly, Puration Inc., a Dallas-based company that extracts cannabis compounds, announced plans in June to acquire and expand a large nursery facility in East Texas for eventual cannabis production.
“Cannabis real estate is heating up just across the state line in places like Texarkana, Ark., as communities … jockey for cannabis businesses,” the presentation materials read.
“This is going to be a massive burgeoning industry, particularly for warehouse space,” Trotter said, citing examples in Colorado, where early adopters profited off their quick decisions.
Though some are trying to beat a potential rush into the space, there’s little certainty about the future of the industry and how long it will take for regulators to loosen restrictions in Texas. While eight states—Oregon, Washington, Colorado, Alaska, Rhode Island, Maine, California, and most recently Nevada—have opened up their markets to recreational marijuana use, Texas remains much more restricted.
Some states like Arizona, New Mexico, New York, and Florida allow medical cannabis. Texas only allows medical cannabis in very limited cases, and patients and healthcare providers have to show proof that other methods of treatments failed. While Texas remains highly regulated, it is slightly more lax in its regulations compared to states including Idaho, Kansas, Indiana, and Wisconsin, where all cannabis use is considered illegal.
To Cheng’s surprise, Texas passed Senate Bill 339, the Texas Compassionate Act, in 2015 to give individuals with epilepsy access to certain types of cannabis oils to treat seizures. The Department of Public Safety also approved provisional licenses to three companies allowing them to dispense medicine containing cannabidiol, one of the active compounds in cannabis, with low THC—the compound that creates the “high” feeling. Cheng says these moves all suggest Texas is slowly changing its mindset toward medical cannabis.
“It’s just a matter of time,” Cheng said about loosening restrictions. “When I got into this industry three-and-a-half years ago, people asked me, ‘Do you think this will ever be legalized in Texas?’ I said, ‘Yeah, a decade from now,’ but that was late 2013. [A bill] was signed in 2015. I was off by eight years.”
But some signals suggest Texas’ journey will not be seamless. DPS still has yet to issue two of the three approved provisional licenses, which were supposed to be granted on Sept. 1. Meanwhile, two of the three firms that were approved for provisional licenses were all out-of-state applicants, even though many of the in-state applicants were arguably more qualified, Cheng said. “They are trying to prevent any roots from settling in Texas,” Moran said. And Lt. Gov. Dan Patrick and Gov. Greg Abbott are not interested in expanding the number of patients applicable for the treatment, Martin said. Nor do either of them seem interested in offering a second round of provisional licenses, even though 43 firms applied in the first round, Cheng said.
“We’re archaic and years behind other states and other countries,” Cheng said about the state’s stance on cannabis. “So it’s time to kind of get with the game.”
The moral of the story, according the panel: Business professionals interested in the cannabis industry need to pay attention to the potential opportunities that could soon be presenting themselves—especially in healthcare and real estate. These little green plants might not only be a big opportunity to rake in profit, but a big leap in treating serious illnesses ailing thousands of North Texans.
