Texas could be big for these pot stocks, analyst says

Beacon Securities analyst Russell Stanley said Texas is “getting bigger for cannabis operators” after the state’s Department of Public Safety conditionally awarded nine new Compassionate Use Program licences, including to Verano Holdings (“Buy,” C$5/sh PT) and Trulieve Cannabis (“Buy,” C$20/sh PT).

In a Dec. 2 industry update, he called the development a meaningful long-term opportunity for both MSOs given Texas’s scale and recent regulatory shifts that broaden qualifying conditions and expand permissible product formats.

Texas, the second-largest U.S. state with a population of roughly 32 million, currently has only three licensed operators. Medical enrolment reached 127,000 patients in September, up 21% since January, but still represents just 0.4% penetration.

Stanley said that as Texas’s program continues to expand, penetration levels seen in more open markets (4%–5%) imply the potential for a ten-to-twelve-fold increase in patient count.

By population, Texas is nearly 50% larger than Florida, which remains the single largest EBITDA contributor for both Verano and Trulieve.

Under House Bill 46, DPS will issue 12 new licences in two phases; this first batch marks the start of Phase I, with three additional conditional licences expected in April 2026. Stanley noted that awards remain conditional and not a guarantee of a final licence, but said the inclusion of Verano and Trulieve reinforces their positioning in a high-growth market.

Texas recently added chronic pain, “the big one” for patient enrolment, to its qualifying conditions list, alongside several new medical indications, and adopted rules enabling physicians to recommend additional conditions over time. The state has also introduced standards for inhalation devices. These changes, combined with the previously announced clampdown on hemp-derived THC products, strengthen the economics for licensed operators, he said.

Verano said in a statement that DPS’s conditional approval “puts Verano one step closer” to cultivating, processing and dispensing medical cannabis in Texas. CEO George Archos said the expansion “marks a significant step forward for legal cannabis in the U.S.” and positions the company to apply its experience from 13 states and 158 Zen Leaf and MÜV stores.

Pending final approval, Verano plans to introduce its medical product portfolio to patients statewide and “create jobs and economic opportunities” as Texas’s program scales.

Trulieve, which also received conditional approval, said it intends to cultivate, manufacture and distribute medical cannabis through its Texas subsidiary.

“We are excited to be selected for a coveted Texas Dispensing Organization license,” CEO Kim Rivers said. “Pending necessary approvals, we plan to provide patients compassionate care and expanded access to high-quality medical cannabis products.”

Stanley characterized the developments as an early but meaningful step for both operators, given Texas’s population size, improving regulatory environment, and long-term revenue and EBITDA potential as the medical program matures toward commercial scale.

-30-