PUBLISHED: 8:11 PM 10 Jan 2018

“Why Not Do It?” Tiny Towns Step Up To Tackle Booming Industry

Knox Medical, owned by Jose Hidalgo, is opening the first medical marijuana dispensary in Texas. The dispensary will only sell low-THC products that are unlikely to get customers high. The benefit is purely medicinal.


Knox Medical, owned by Jose Hidalgo, is opening the first medical marijuana dispensary in Texas. The dispensary will only sell low-THC products that are unlikely to get customers high. The benefit is purely medicinal.

Three tentative marijuana dispensaries are about to open in small-town Texas. They’ll bear little resemblance to their California counterparts, however, as they’re only authorized to sell cannabidiol (CBD), a derivative of low-THC marijuana that doesn’t get you high.


“If it helps people and it doesn’t hurt anything,” asked Fayette County Judge Ed Janecka, “why not do it?”

The first dispensary to open, Knox Medical, is located in a Schulenberg, a tiny town populated by 3,000 people. It’s an ideal spot for an experimental business because it’s surrounded by lush farmland and shielded from disapproving eyes.


Despite the limitations set down by the state, the dispensaries’ existence signals a marked shift in Texas law. Legislators have long resisted calls to legalize medical marijuana. CBD is now legal because “a person would have to smoke an entire barrel of CBD to get high. With recreational use or abuse therefore unlikely, Texas lawmakers got onboard and passed the Texas Compassionate Use Act in 2015.”

The program is still in its infancy. Only three dispensaries are set to open. Just seven doctors have signed onto the program. In-store sales will be prohibited, dispensary workers will deliver the product in unmarked white vans.

Knox Medical is a massive, multi-state operation. As more and more states start embracing medical marijuana, certain entrepreneurs will start taking over the market. Opportunities for growth are currently limited in Texas, but that’s likely to change.

“For a small town that may not have many other opportunities for growth, this may be the right move,” Dietrich Vollrath, a University of Houston economics professor, said.


“Once you’re the first, the natural fit would be to expand the business from there. There’s no reason it has to be Schulenburg versus anywhere else in Texas, but if it becomes the marijuana capital of Texas, why not?”

Marijuana advocated hope that the recent changes in Texas law are just the beginning. Now that CBD is being sold in the state, it will be much harder for officials to argue against legalizing another form of marijuana.

The rest of the country is quickly going green. 14 states now have legalized marijuana in some form.

“On the medical side, it’s just a matter of time,” says Franklin Snyder, a Texas A&M University law professor.


“The evidence is accumulating about the benefits, and the drug is so much less dangerous than the alternatives. We have a nationwide opioid epidemic right now, and the fact that this could be a way to cut back on prescribing those drugs is going to propel this further.”


Texans who want to smoke marijuana for recreational uses won’t benefit from Knox Medical’s opening. High-THC strains are still illegal under state law.

Knox Medical is set to open against a backdrop of national confusion. States are embracing a new approach to marijuana while the federal government still considers it to be a schedule one narcotic. Attorney General Jeff Sessions started the new year by revoking an Obama-era policy that discouraged prosecutors from going after marijuana offenders.

“This move represents a broken campaign promise by the president,” said Tom Angell of the pro-legalization group Marijuana Majority.

“He clearly and repeatedly pledged that he would respect state marijuana laws if elected. With polls showing that marijuana legalization is way more popular than the president is, this will likely turn out to be a huge political disaster for the administration. Either way, it’s not going to stop even more states from modernizing their cannabis laws.”

Knox Medical will begin deliveries later this month.

Most Texas politicians are more in line with Sessions than the rest of the country. It’s unlikely, therefore, that the Attorney General’s crackdown will affect the state’s new CBD policy.

“If you tax medical marijuana, you can always collect tax revenue, but the true employment numbers, the GDP in the county, will hardly change at all,” said Jeffrey Miron, a Harvard economics professor.

“Selling low-THC marijuana is like low-alcohol drinks: Nobody wants it aside from those who need it, and the market for those who need it isn’t huge and the number who can actually afford it is even smaller.”