Last year Go Green Botanicals co-owner Maurice Salazar and his business partners were forced to close two of their three local CBD shops due to the economic downturn caused by the coronavirus pandemic.
The stores sold myriad cannabidiol products such as gummies, infused coffee beans, lollipops, caramels, and oils at locations in New Braunfels and in San Antonio at Alamo Ranch and North Star Mall.
While selling hemp-based products containing CBD – a compound found in cannabis that does not cause a high but has other relaxing properties – became legal the United States in 2015, Texas’ marijuana laws, including for medical use, are among the most restrictive in the nation. To a growing number of Texans, it was starting to look like a lost business opportunity.
Should marijuana products containing THC – another cannabis compount called tetrahydrocannabinol that is primarily responsible for marijuana’s euphoric high – be legalized in Texas in the near future, Salazar sees a wealth of opportunity for expanding his business based on what would become an entirely new agricultural industry in Texas.
“One new product could create tenfold the number of jobs and businesses” in Texas, Salazar said.
That kind of potential for economic growth hasn’t gone unnoticed. Following the economic downturn caused by the pandemic, marijuana advocates are now pushing for the legalization of weed in Texas with renewed vigor.
Texas is one of 13 states that have not yet legalized marijuana (or products containing THC) to some extent. Currently, 37 states have legalized marijuana for medical use and 17 states also have legalized it for recreational use.
Most recently, New York, Virginia, and New Mexico have legalized recreational marijuana. All states surrounding Texas have legalized medical marijuana as of this year. Medical marijuana is often used to treat PTSD, specific forms of epilepsy, and to help cancer patients regain their appetite.
The Texas House on Thursday approved a bill that would expand the state’s restrictive medical cannabis program to include those with chronic pain, cancer patients, and Texans suffering from PTSD, the Texas Tribune reported. House Bill 1535 also would allow the Department of State Health Services to add other conditions that would qualify an individual for medical marijuana through administrative rule-making. Currently, the Legislature must pass a law expanding eligibility when a medical condition is to be added.
Forty bills were filed in the Texas House and Senate this session related to easing the state’s marijuana laws. While some deal directly with the legalization of marijuana for medical or recreational purposes, others relate to the decriminalization of marijuana or to reducing penalties for possessing cannabis.
Last month, a bill to decriminalize marijuana possession in Texas was approved by the House. The legislation, House Bill 441 by Rep. Erin Zwiener (D-Austin), would prevent the loss of a driver’s license or the creation of a criminal record for possession of up to 1 ounce by reducing the penalty from a Class B to a Class C misdemeanor. A Class C misdemeanor is punishable by a fine of not more than $500. Punishment can also include up to 180 days of deferred disposition.
Under the recent passage of House Bill 2593, anyone who is found with more than 1 ounce but less than 2 ounces of cannabis concentrates could still be given a class B misdemeanor. A Class B misdemeanor is punishable by a fine of not more than $2,000, confinement in jail for a term not to exceed 180 days, or both.
The bills approved by the House await debate in the Texas Senate.
Texas seeks a downturn remedy
With the coronavirus pandemic having dealt a devastating blow to state sales tax revenue, some Texas legislators are eyeing taxation of legal marijuana as a potential revenue source. If Texas taxed cannabis sales as Colorado does, it would generate more than $555 million a year in new state revenue, according to an analysis by a Colorado-based law firm specializing in cannabis law and policy.
By failing to legalize marijuana and its production, the state is missing out on needed tax revenue and huge economic benefits that would be a shot in the arm to the recovering Texas economy, said state Sen. Roland Gutierrez (D-San Antonio), whose estimate of tax revenue far exceeds the Colorado law firm’s.
“We could generate $3.6 billion per biennium. That’s just the truth,” Gutierrez told the San Antonio Report. “We are six times the size of Colorado. Colorado last year generated more than $300 million” in state sales tax revenue from marijuana.
Colorado brought in more than $387 million in taxes and fees from marijuana sales in 2020, according to the state’s marijuana tax reports.
Insufficient sales tax income will greatly affect the state’s budget and its ability to render services during a time when need is very high, Gutierrez said.
“Never has there been a time in the history of Texas where we can generate new tax revenue without raising your property taxes at home, and also create 30,000 jobs,” Gutierrez said in a recent pro-legalization film he helped create. “There’s not an industry that’s done it, there’s not a manufacturing process that has done it. This is the only way that we can generate that kind of revenue that is so vital for our community.”
Beyond missing out on tax revenue, Gutierrez said, if Texas doesn’t act now it will fall behind other states that are already taking advantage of a new agricultural and manufacturing sector.
“Imagine a world four, five years from now, [where marijuana is completely] legal across the United States,” he said. “Texas will have done nothing. All we will be left with is to opt in or opt out. Likely at that point we’d opt in, but we would have lost every opportunity to leverage manufacturing and agricultural institutions to come into Texas and create jobs, create opportunity for Texans, because at that point, I’ll just deliver the product from other states.”
While such revenue-generating power sounds great, it’s not likely marijuana will be fully legalized this legislative session, nor is its tax revenue as needed as advocates are saying, said James Henson, a government professor at the University of Texas at Austin and director of the Texas Politics Project.
“As the projections have gotten better, the comptroller now only projects only about a billion dollars in revenue shortfall, and that’s from a $250 billion budget,” Henson said. “That’s just not that much. On top of that, because there’s been so much stimulus money coming from Washington, D.C. … those revenue arguments are just not carrying the day anymore.”
A “silver bullet” is rare when it comes to generating new revenues in the state that would actually have the kind of impact advocates are claiming, said Joshua Blank, research director of the Texas Politics Project.
Creating a path forward
In November, Gutierrez filed Senate Bill 140, which would legalize the “the cultivation, manufacture, distribution, sale, testing, possession, and use of cannabis and cannabis products” in Texas. The District 19 state senator and former state representative for District 119 has made legalizing marijuana a staple of his platform for the past several years.
The bill was referred to the state affairs committee in March but has made no further progress.
“I’ve been in [the] Legislature for 12 years, and I certainly know what the sense or what the willingness of my Republican leadership is on cannabis, so it’s not a surprise to me that a full-recreational cannabis bill isn’t moving,” Gutierrez told the San Antonio Report.
Last month, Gutierrez and his team released a 40-minute video on YouTube discussing the benefits of fully legalizing marijuana in Texas. The short film was directed by Nicco Vasquez of Nicco Vasquez Films and produced by Andrew Kovach, Chris Cantu, and Jorge Vasquez. Gutierrez, its executive producer, said the purpose of the film is to dispel many of the myths surrounding marijuana and to showcase its usefulness as a medicinal drug.
Aimed at Texas constituents, the video highlights Colorado residents who left Texas to seek medical marijuana and shows the regulation process in place in Colorado for extracting marijuana compounds and placing them into products. Gutierrez acts as the interviewer throughout the film, discussing medical marijuana, economic benefits of marijuana, and decriminalization of marijuana. The video concludes with Gutierrez asking Texans to call their local senator in support of Senate Bill 140.
“At the end of the day, our filing of … Senate Bill 140, and our documentary that we created, was more exactly to create a discussion and to break some paradigms, break some ideas and misconceptions that people have had about cannabis,” he said.
Overall, Texans’ attitudes toward cannabis appear to be changing. According to a recent Texas Politics Project poll released in March, only 13% of Texans believe marijuana possession should not be legal under any circumstance. That’s down from 20% in 2019 and 24% in 2015.
Closer to home, the most recent Bexar Facts poll, released last month in conjunction with the San Antonio Report and KSAT-TV, showed 32% of Bexar County voters oppose the legalization of recreational marijuana, while 64% support its legalization and taxation.
The progress marijuana reform will make this legislative session is still unclear but will likely be slight, Henson said.
“In terms of what’s going on this session, I think it’s it’s unfolding as we speak,” he said.
Preparing for the future
As a hemp grower in Texas, MediCure Organics co-owner Luis Maldonado said he and business partner Leticia Cantu are already preparing for a day when Texas’ marijuana laws are looser.
“The pandemic did cause us to take a hit on the retail side,” Maldonado said. “But another opportunity came up to start growing hemp during the pandemic. Right now we’re positioning ourselves to prove our model as growers and producers and manufacturers.”
While MediCure Organics is currently only a retail outlet selling CBD products, Maldonado and Cantu grow their own hemp and extract the CBD from their plants growing inside their downtown store off South Frio Street. Maldonado explained they have the legal permits to grow hemp and that they are using the opportunity to prove, should the state ever fully legalize marijuana, that they can be responsible marijuana growers by following all regulations and rules currently in place.
With the proper tools such as UV lighting and watering systems, MediCure would be able to easily convert to growing legal marijuana should the time come, Maldonado said.
“Texas can generate money for the sale of these items, and regulation is key,” he said. “We’re all about education. We need to educate people about the beneficial aspects of legalization. … It would give the Texas ag industry another crop to grow and put more money into our economy.”