Cannabis Permits & Licenses in Austin, Texas

Required for all Texas LLCs regardless of industry. No renewal required, but periodic reports may apply.

File with SOS if interstate commerce or county clerk if local only. Renew every 10 years.

Applies to all retail businesses; cannabis would qualify if legal. Renew annually via franchise tax report.

Required for all LLCs; first report due with formation if after Jan 1.

Only legal cannabis framework in Texas via HB 2107 (2015, amended). Covers dispensing organizations only; no recreational or full medical market. Prerequisites include background checks, secure facilities, financial responsibility insurance.

Expanded from CUP; licenses for cultivation (up to 5M sq ft), processing, etc. Strict prerequisites: financials, security plans, lab testing, no prior cannabis convictions. Application window periodic via DPS.

Texas imposes sales tax on tangible personal property and certain services. However, marijuana is classified as a Schedule I controlled substance under Texas Health and Safety Code § 481.120, making commercial cannabis activity illegal. Only low-THC cannabis (under 0.5%) is permitted under the Texas Compassionate Use Program (Senate Bill 5, 85th Legislature), and only for certified patients. Even then, such products are not subject to standard sales tax but may be exempt or subject to special rules. No general cannabis retail sales are legally permitted in Texas.

A $10,000 surety bond is required for industrial hemp processors, handlers, and transporters under the Texas Industrial Hemp Program. This bond ensures compliance with state laws and regulations. See Texas Department of Agriculture – Industrial Hemp Program Application Requirements. No bond is required for growers only. Source: TDA Form 2084-1001, Industrial Hemp Processor/Handler Application.

Texas law requires all motor vehicles operated on public roads to carry minimum liability coverage: $30,000 for bodily injury per person, $60,000 for bodily injury per accident, and $25,000 for property damage (30/60/25). This applies to all businesses, including cannabis-related entities operating legally under hemp laws. Proof of insurance must be carried at all times.

Product liability insurance is not required by Texas law for cannabis or hemp businesses. However, it is strongly recommended for any business selling consumable or topical products (e.g., CBD oils, edibles, lotions). Absent insurance, businesses assume full financial risk for lawsuits related to alleged product defects or adverse reactions.

No Texas state agency requires E&O insurance for cannabis or hemp businesses. It may be required contractually by partners or landlords but is not a regulatory mandate.

Liquor liability insurance is not required for cannabis businesses in Texas, as they do not sell or serve alcohol. This coverage is relevant only to bars, restaurants, or events with alcohol service.

Required for all LLCs that hire employees or are taxed as corporations. Even single-member LLCs with no employees may need an EIN if they elect corporate taxation or open a business bank account. Not specific to cannabis, but universally required for applicable businesses.

All Texas LLCs must file Form 05-101/05-153 even if no tax is due (No Tax Due Report). However, because commercial cannabis operations are illegal under Texas law (except for limited Compassionate Use Program dispensaries licensed by the Texas Department of Licensing and Regulation), no private cannabis business may legally register or operate under this framework. Only state-licensed dispensing organizations under the Texas Compassionate Use Program may operate legally, and they are subject to franchise tax like any other business if they meet revenue thresholds.

Texas does not have a state income tax, so no state income withholding is required. However, federal withholding obligations still apply. This registration is only relevant for federal compliance, not state. Texas employers must still comply with federal IRS rules for payroll taxes (Form 941, etc.), but no state withholding tax exists.

All employers in Texas with one or more employees must register with TWC for unemployment insurance tax. However, because commercial cannabis businesses are illegal under Texas law, they cannot legally employ workers for cannabis-related activities. Only state-licensed Compassionate Use Program dispensing organizations may legally operate and thus register for UI tax.

All LLCs must obtain an Employer Identification Number (EIN) from the IRS regardless of employee status. This is required for federal tax reporting. However, under IRS Code Section 280E, cannabis businesses (even those compliant with state law) are prohibited from deducting most business expenses because marijuana remains illegal under federal law (Controlled Substances Act). This results in significantly higher effective tax rates. Since cannabis is illegal in Texas, no legal business may operate, and thus no EIN should be obtained for an illegal enterprise.

Many Texas cities require a business license or occupation tax permit. However, because cannabis businesses (outside the state-licensed Compassionate Use Program) are illegal under Texas law, no city may legally issue a business license for marijuana sales or cultivation. Any such license issued would conflict with state law and be unenforceable.

Texas does not impose a cannabis excise tax because recreational or commercial cannabis is illegal. Only low-THC cannabis is permitted under the Compassionate Use Program (Senate Bill 5, as amended by SB 269 in 2021 and HB 1805 in 2023), and no excise tax is currently levied on these products. Future legislation could introduce such a tax, but as of 2024, no such tax exists.

Required for all businesses operating within Austin city limits; cannabis-specific operations prohibited regardless of license

Does not apply within city limits; cannabis businesses illegal in county

Cannabis dispensaries, cultivation, or sales prohibited in ALL zoning districts per Austin City Code 25-2-401 et seq.; no compliant zones exist

Required even for legal businesses; cannabis facilities cannot proceed due to prohibition

Cannabis storage would classify as hazardous materials; prohibited activity

Cannot be issued for prohibited uses like cannabis retail per zoning code

Applies to all commercial properties; irrelevant for cannabis due to illegality

No local business licenses issued for cannabis; all activities illegal under Texas Health & Safety Code Chapter 481. State preemption prohibits local licensing of cannabis beyond hemp (THC<0.3%)

Houston Code of Ordinances Sec. 26-5; cannabis retail, cultivation banned in all districts. General business registration required for legal operations only

Section 280E prohibits businesses "trafficking in controlled substances" (per CSA) from claiming most deductions (e.g., rent, wages, utilities). Only "cost of goods sold" (COGS) is deductible. This uniquely impacts cannabis businesses despite state legality. IRS has consistently enforced this (see IRS Chief Counsel Advice memos). Confidence: high

General duty clause requires employers to provide a safe workplace. Cannabis businesses must comply with hazard communication, emergency action plans, and safety training. Not specific to cannabis, but applicable to all employers. See 29 U.S.C. § 654. Confidence: high

Title III of the ADA requires businesses open to the public to be accessible. This includes physical access, communication, and policies. Cannabis dispensaries are considered "public accommodations" even if state-legal. Applies regardless of federal illegality. Confidence: high

Cannabis extraction using certain solvents (e.g., butane, ethanol) may generate hazardous waste regulated under RCRA. Generators must comply with labeling, storage, manifesting, and disposal rules. See 40 CFR Part 262. Not all cannabis businesses trigger this. Confidence: high

FTC enforces against deceptive or unsubstantiated claims in advertising. Cannabis businesses cannot make health claims (e.g., "cures cancer") without FDA approval. Also applies to online marketing. See FTC Act § 5. Confidence: high

TML legal briefs confirm Texas cities/counties CANNOT license cannabis operations due to state prohibition (HB 1325, 2019 for hemp only); medical cannabis dispensaries require state DSP license only, no local permits needed beyond general business requirements

Texas is an 'opt-out' state for workers' comp. Employers may choose not to participate but must file a 'Non-Election' notice with TDI. If they opt out, they face greater liability exposure and must post notices. Most employers in high-risk industries like construction are required to carry it, but cannabis businesses are not specifically mandated unless they have employees and choose to opt-in. However, local municipalities or landlords may require proof of coverage.

While Texas does not explicitly mandate general liability insurance for all businesses, the Texas Department of Agriculture requires applicants in the Industrial Hemp Program to provide proof of liability insurance as part of licensing. This applies to cannabis-related businesses operating legally under the industrial hemp framework (THC ≤ 0.3%). Coverage must include at least $1 million in aggregate liability. See 4 Texas Administrative Code §113.73(c)(5).

Cannabis businesses with employees must file Form 941 (quarterly) and Form 940 (annually) with the IRS. Form 940 (Federal Unemployment Tax) is due January 31 following the tax year. Form 941 due dates are April 30, July 31, October 31, and January 31. Applies only if the business has W-2 employees.

All employers with employees must display the OSHA Job Safety and Health – It’s the Law poster in a conspicuous location accessible to employees. Available for free download from OSHA website. Applies to all employers in Texas, including cannabis businesses.

Texas law requires employers to post the 'Payday Notice' informing employees of pay frequency, payday, and pay location. Must be displayed in English and Spanish where employees can readily see it. Required for all Texas employers with employees.

All licensed dispensing organizations must enter patient dispensing records into the Compassionate Use Registry within 24 hours of dispensing. A monthly summary report must be submitted to DPS by the 5th of the following month. This is a mandatory reporting obligation for all licensed cannabis dispensaries in Texas.

TDLR conducts annual inspections of all licensed low-THC cannabis dispensaries, processors, and cultivators. Inspections include compliance with security, labeling, testing, recordkeeping, and operational standards under 16 TAC Chapter 1003.

All commercial cannabis facilities must comply with the International Fire Code (adopted in Texas). Inspections are conducted by the local fire marshal. Frequency and fees vary by city or county. Required for all commercial operations involving storage or processing of materials.

Cannabis facilities must comply with the Texas Building Code (based on IBC). Inspections are conducted by local building officials. Frequency and requirements vary by municipality. Applies to all commercial businesses in Texas with physical premises.

Responsible Officers must complete TDLR-approved continuing education in areas including security, recordkeeping, and compliance with the Compassionate Use Act. Course must be from a TDLR-registered provider. Requirement applies only to designated ROs, not all employees.

All cannabis cultivation, processing, and dispensing facilities in Texas must register with the DEA as manufacturers and/or distributors of Schedule I controlled substances. Registration must be renewed every three years. Fee is subject to change; current fee effective 2023. This is a federal requirement applicable to all state-licensed cannabis operators.

All licensed dispensaries and processors must maintain detailed records of seed-to-sale tracking, including cultivation, processing, testing, dispensing, and inventory. Records must be kept electronically in the state-approved system and backed up. Required under 25 TAC §1003.105.

Most cannabis businesses cannot access typical business deductions under IRC Section 280E. They must file using Form 1120 (or appropriate form) by April 15 annually. While not specific to cannabis, compliance with federal tax law is mandatory. LLCs taxed as corporations file Form 1120; partnerships file Form 1065.

All U.S. employers must complete Form I-9 to verify identity and work authorization. Applies regardless of industry. Cannabis businesses, though federally illegal, still hire workers and must comply. Failure to do so risks fines and debarment. Confidence: high

FLSA sets minimum wage, overtime, and recordkeeping rules. Applies to all employers with employees engaged in interstate commerce (broadly interpreted). Cannabis businesses are not exempt. State law may impose higher standards. Confidence: high

Requires eligible employers to provide 12 weeks of unpaid, job-protected leave for qualifying medical/family reasons. Cannabis businesses meeting employee threshold must comply despite federal illegality. Confidence: high

Cannabis (marijuana) is a Schedule I controlled substance under 21 U.S.C. § 812. No federal license exists for commercial cannabis activity. All such businesses violate federal law regardless of state authorization. This is not a "requirement" to comply but a legal barrier. No federal licenses (FDA, ATF, FCC, DOT, etc.) are available for cannabis businesses. Confidence: high

Texas currently only allows low-THC cannabis production and dispensing under the Texas Compassionate Use Program. Licenses are issued for cultivation, processing, and dispensing facilities. Renewal must be submitted before expiration. Fee based on current TDLR fee schedule effective September 1, 2023.

Texas does not require a traditional 'annual report' for LLCs, but the SOS sends a notice each year to confirm information. While there is no fee, failure to respond if selected for verification may lead to administrative dissolution. This is a mandatory compliance step for all Texas LLCs.

All Texas LLCs must file Form 05-158 (No Tax Due Report) or Form 05-169 (Franchise Tax Report) annually, even if no tax is owed. Due date is May 15 following the end of the fiscal year. Applies to all businesses, including cannabis entities.

Many Texas cities require a local business license or occupational tax permit. Renewal deadlines and fees vary by jurisdiction. For example, Austin requires annual renewal with the Finance Department. Required only if local ordinance mandates it.