Texas Cannabis Energy: TCUP Medical Program, ERCOT Retail Choice, and 4CP Transmission Costs
Texas has no adult-use cannabis program and no conventional medical marijuana market. The Compassionate Use Program licenses vertically integrated dispensing organizations to grow, process, and dispense low-THC cannabis to registered patients, with HB 46 (2025) expanding conditions and raising the license cap from 3 to 15. In ERCOT choice areas, every commercial customer must choose a Retail Electric Provider, and cultivation peaks during June through September 4CP intervals set the following year's transmission bill.
Figures from the Texas data file, last verified 2026-09-11. Sources listed at the bottom of this page.
How the Texas cannabis market is structured
Texas has no adult-use cannabis program and no conventional medical marijuana program. The Texas Compassionate Use Program (TCUP), created by SB 339 (2015), lets DPS-licensed dispensing organizations cultivate, process, and dispense low-THC cannabis to patients registered in the Compassionate Use Registry of Texas [dps-tcup]. HB 46 (89th Legislature, signed June 20, 2025, effective September 1, 2025) expanded TCUP: it replaced the 1% THC-by-weight cap with a limit of 10 mg THC per serving and one gram per package, added qualifying conditions, and raised dispensing organization licenses from 3 to 15 [tlo-hb46] [dps-tcup-phase-2]. This is not an adult-use market. Plan energy budgets for a small number of purpose-built, vertically integrated low-THC facilities, not a broad cultivation license base.
As of April 1, 2026, three dispensing organizations are fully licensed [dps-tcup-phase-2]. HB 46 authorized 12 additional conditional licenses in two phases (nine announced December 1, 2025; three on April 1, 2026) [dps-tcup-phase-2] [dps-tcup-phase-1]. Conditional licenses do not permit cultivating, manufacturing, distributing, or selling until final DPS approval [dps-tcup-phase-2].
Separately, hemp-derived THC products remain legal for adults after Governor Abbott vetoed the SB 3 hemp THC ban on June 22, 2025, and Executive Order GA-56 (September 10, 2025) imposed age and labeling enforcement instead [tx-tribune-hemp-impasse] [gov-sb3-veto]. Hemp processors and extraction labs form a distinct, larger energy customer segment.
Facility guides: cultivation, extraction and processing, dispensary retail, multi-site operators.
How electricity choice works in Texas
Senate Bill 7 (76th Legislature, 1999) opened retail competition on January 1, 2002 in ERCOT areas served by investor-owned TDUs [tlo-sb7-analysis] [ercot-retail-market]. All customer classes choose a PUCT-certified Retail Electric Provider (REP), which bills for energy and passes through regulated TDU delivery charges [ercot-retail-market].
Choice areas include Oncor, CenterPoint Energy Houston Electric, AEP Texas Central, AEP Texas North, Texas-New Mexico Power, and Lubbock Power and Light [ercot-retail-market]. About 85% of Texas electricity consumers have retail choice [ercot-retail-market].
Non-choice territories: Austin Energy, CPS Energy (San Antonio), most electric cooperatives, and non-ERCOT areas (Entergy Texas, SPS, El Paso Electric, SWEPCO) [ercot-retail-market].
There is no utility default supply to compare against. Every choice-area customer must be with a REP [ercot-retail-market]. Larger commercial loads are priced off ERCOT wholesale plus TDU pass-throughs.
What commercial power costs in Texas vs. the U.S.
| Sector | Texas, June 2026 | U.S. average, June 2026 |
|---|---|---|
| Commercial | 8.66 cents/kWh | 14.19 cents/kWh |
| Industrial | 6.58 cents/kWh | not in state file |
Source: EIA Electric Power Monthly, Table 5.6.A [eia-epm-5-6-a].
Texas commercial power runs about 39 percent below the national average on a bundled EIA figure. ERCOT real-time price spikes and summer 4CP transmission allocation can push all-in cost well above the average for cultivation loads that peak in afternoon hours.
| State | Avg. commercial price | Cannabis market | Energy choice |
|---|---|---|---|
| California | 27.33 cents/kWh | Adult-use + medical | Commercial-only choice |
| Massachusetts | 24.52 cents/kWh | Adult-use + medical | Full commercial choice |
| New York | 23.56 cents/kWh | Adult-use + medical | Full commercial choice |
| Washington, D.C. | 23.38 cents/kWh | Medical only | Full commercial choice |
| Rhode Island | 22.70 cents/kWh | Adult-use + medical | Full commercial choice |
| Maine | 22.24 cents/kWh | Adult-use + medical | Full commercial choice |
| New Hampshire | 21.22 cents/kWh | Medical only | Full commercial choice |
| Connecticut | 19.62 cents/kWh | Adult-use + medical | Full commercial choice |
| New Jersey | 18.47 cents/kWh | Adult-use + medical | Full commercial choice |
| Maryland | 16.84 cents/kWh | Adult-use + medical | Full commercial choice |
| Michigan | 16.63 cents/kWh | Adult-use + medical | Capped commercial choice |
| Illinois | 14.53 cents/kWh | Adult-use + medical | Full commercial choice |
| Delaware | 14.40 cents/kWh | Adult-use + medical | Full commercial choice |
| Ohio | 13.77 cents/kWh | Adult-use + medical | Full commercial choice |
| Pennsylvania | 13.33 cents/kWh | Medical only | Full commercial choice |
| Nevada | 9.83 cents/kWh | Adult-use + medical | Commercial-only choice |
| Texas | 8.66 cents/kWh | Low-THC medical only | Full commercial choice |
The TDUs and where they serve
| TDU | Territory | Climate note |
|---|---|---|
| Oncor | Dallas-Fort Worth, Midland-Odessa, north and west-central Texas | Hot, dry; 2,809 CDD statewide [noaa-cag-texas] |
| CenterPoint | Houston metro | Humid Gulf Coast; high latent load [noaa-cag-texas] |
| AEP Texas | Corpus Christi, Valley, Abilene | Coastal humidity in south; dry in west |
| TNMP | Scattered ERCOT pockets | Smallest IOU TDU in choice areas |
Oncor's Secondary Service Greater Than 10 kW class bills an 80% ratchet on billing demand [oncor-tariff]. CenterPoint uses a similar structure [ercot-retail-market].
What the climate does to a grow's bill here
Texas averages 2,809 cooling degree days and 1,818 heating degree days statewide [noaa-cag-texas]. Houston dew points in the 70s F from May through September drive dehumidification load [noaa-cag-texas]. Cooling dominates indoor grow energy nearly year-round.
Incentives worth knowing
- Oncor Commercial Standard Offer Program. Pays per kW and kWh of verified summer peak savings; 2026 budget $4,925,481 [oncor-csop-2026]. Grow lighting retrofits go through the M&V track.
- CenterPoint Commercial Standard Offer Program. Similar structure for Houston-area facilities [cnp-csop].
Texas quirks that change the advice
TCUP is a 15-license vertically integrated program. Expect a handful of large purpose-built sites, not a broad market of small grows [dps-tcup-phase-2].
4CP season sets next year's transmission bill. Demand during four ERCOT system-peak intervals in June through September determines transmission charges for the following calendar year [oncor-tariff].
80% demand ratchet on Oncor. Billing kW equals the greater of current-month NCP or 80% of the highest NCP in the prior 11 months [oncor-tariff].
ERCOT wholesale volatility and REP contract risk
Senate Bill 7 opened retail competition January 1, 2002 [tlo-sb7-analysis]. Larger commercial loads price off ERCOT real-time and day-ahead markets plus TDU pass-throughs [ercot-retail-market]. Winter Storm Uri in 2021 showed index contracts can bill far above fixed offers during scarcity events; confirm with your advisor before signing index-only supply for a cultivation campus [ercot-retail-market].
Block-and-index products hedge baseload lighting while leaving HVAC on index [ercot-retail-market]. Pair contract review with fixed vs index vs block-and-index contracts.
PUCT 4CP review and transmission cost outlook
Transmission cost is allocated by ERCOT 4CP: average demand at four system-peak 15-minute intervals in June through September sets the following calendar year's transmission charges [oncor-tariff]. The PUCT has reviewed moving from 4CP to multi-peak allocation; confirm current docket status before telling a client 4CP rules are unchanged [oncor-tariff].
A TCUP grow that curtails 50 kW across four peak events can change next year's 4CP kW assignment even when monthly billing demand ratchet stays flat [oncor-tariff]. Hemp extraction labs in Houston face the same 4CP rules on CenterPoint wires [ercot-retail-market].
Non-choice cities where cannabis load still grows
Austin Energy and CPS Energy serve dense urban load with no REP choice [ercot-retail-market]. Hemp retail and processing in Austin or San Antonio follow municipal tariffs, not the Oncor ratchet and 4CP stack described on this page [ercot-retail-market] [tx-tribune-hemp-impasse]. Site selection between ERCOT choice and municipal territory is a permanent procurement fork [ercot-retail-market].
Climate-driven load by TDU territory
| TDU region | CDD / humidity note | Cultivation implication |
|---|---|---|
| Oncor / DFW | Hot, dry; 2,809 CDD statewide [noaa-cag-texas] | Sensible cooling dominates |
| CenterPoint / Houston | Gulf humidity, dew points 70s F May to Sept [noaa-cag-texas] | Dehumidification adds kWh and peak kW |
| AEP South | Coastal humidity in Valley [ercot-retail-market] | Latent load like Houston |
| West Texas | Dry [noaa-cag-texas] | Lower latent load, high sensible peaks |
TCUP and hemp facilities should size HVAC for territory humidity, not statewide averages alone [noaa-cag-texas]. CenterPoint Commercial Standard Offer Program parallels Oncor CSOP for Houston-area retrofits [cnp-csop] [oncor-csop-2026].
Facility guides on this site
- Cultivation facility energy for TCUP grow load and 4CP tactics.
- Extraction and processing for hemp and TCUP labs.
- Dispensary retail for satellite stores and the 10 kW threshold.
- Multi-site operators for portfolio REP and 4CP coordination.
- How to switch REPs for enrollment steps.
- Commercial electricity rates for EIA benchmarks and Oncor classes.
DPS licensing timeline and energization planning
Three dispensing organizations are fully licensed under TCUP; twelve conditional licensees await final DPS approval as of April 1, 2026 [dps-tcup-phase-2]. Conditional licenses do not authorize cultivation or sales until approved [dps-tcup-phase-2]. Align REP start dates and Oncor witness tests with DPS inspection milestones so empty-facility HVAC tests do not set ratchet demand [oncor-tariff] [dps-tcup]. Hemp processors operate under separate licensing after the SB 3 veto and GA-56 enforcement order [gov-sb3-veto] [tx-tribune-ga56].
Industrial rate gap and TCUP load factor
Texas industrial customers averaged 6.58 cents/kWh against 8.66 cents commercial in June 2026 [eia-epm-5-6-a]. High load-factor TCUP campuses on primary voltage may negotiate REP supply nearer the industrial line while TDU still bills secondary or primary delivery classes separately [oncor-tariff] [eia-epm-5-6-a]. All-in cost still includes ratchet demand and 4CP transmission pass-throughs [oncor-tariff].
Where to go next on this site (continued)
Compare ERCOT procurement with Ohio cultivation energy for PJM pass-through contrast, or the Nevada hub for a single bundled utility with no REP market [ercot-retail-market].
Where to go next on this site
- How to switch REPs in Texas.
- Texas commercial electricity rates.
- Fixed vs. index vs. block-and-index contracts.
Hemp processors as a separate energy segment
Governor Abbott vetoed SB 3 on June 22, 2025, and two special sessions ended without a hemp THC ban [gov-sb3-veto] [tx-tribune-hemp-impasse]. Executive Order GA-56 (September 10, 2025) directed age and labeling enforcement instead [tx-tribune-ga56]. Hemp extraction labs and retail stores form a larger, less restricted energy customer base than TCUP, with the same ERCOT REP rules [ercot-retail-market].
Oncor efficiency programs for new buildouts
Oncor Commercial Standard Offer Program pays per kW and kWh of verified summer peak savings [oncor-csop-2026]. The 2026 budget is $4,925,481 with about $1.9 million carry-over from 2025 [oncor-csop-2026]. TCUP cultivation buildouts and hemp lab retrofits can use the M&V track for grow lighting measures not in the Technical Reference Manual [oncor-csop-2026].
CenterPoint runs a parallel Commercial Standard Offer Program in the Houston area [cnp-csop].
Confirm current TCUP licensing status with DPS and REP contract terms with the PUCT before signing.
Texas guides by facility type
- Texas TCUP Cultivation Facility Energy: Low-THC Grows, ERCOT Supply, and Oncor 4CP Demand
What a Texas Compassionate Use cultivation site pays for power: 2,809 cooling degree days, Oncor 80% ratchet, 4CP transmission, and REP contract choice.
- Texas Cannabis and Hemp Extraction Energy: TCUP Labs, Hemp Processors, and ERCOT REP Pricing
Energy loads at a Texas TCUP processing site or hemp extraction lab: chillers, ovens, C1D1 ventilation, Oncor ratchet demand, and REP contract options.
- Texas TCUP Dispensary Retail Energy: Three Licensed Stores, REP Choice, and Small-Load Delivery
What a Texas Compassionate Use dispensary pays for power: small commercial REP contracts, Oncor secondary service, and satellite storefront loads under HB 46.
- Texas TCUP and Hemp Multi-Site Energy: ERCOT Portfolio Procurement, 4CP, and TDU Ratchets
Energy procurement for Texas TCUP operators and hemp MSOs: Oncor vs. CenterPoint territories, staggered REP contracts, and portfolio 4CP management.
- How to Switch Retail Electric Providers in Texas: A Step-by-Step Guide for Cannabis and Hemp Businesses
Step-by-step Texas REP switching for TCUP and hemp accounts: ESI ID enrollment, Oncor TDU pass-throughs, contract types, and 4CP planning.
- Texas Commercial Electricity Rates for Cannabis Facilities: ERCOT Pricing, TDU Demand, and 4CP Transmission
Texas commercial power at 8.66 cents/kWh vs. the U.S. average, Oncor delivery classes, 80% demand ratchet, 4CP transmission, and REP contract structures.
Where we work: 16 states plus Washington, D.C.
Every jurisdiction below has a licensed cannabis market and lets commercial customers choose their electricity supplier.
- Texas
Frequently asked questions
Is recreational or full medical cannabis legal in Texas?
No. Texas has no adult-use program and no conventional medical marijuana program. The Compassionate Use Program allows DPS-licensed dispensing organizations to provide low-THC cannabis to registered patients. HB 46 (2025) expanded qualifying conditions and raised the license cap to 15, but product remains low-THC, not full-strength adult-use cannabis.
How many cannabis cultivation sites operate in Texas?
Three dispensing organizations are fully licensed under TCUP as of April 1, 2026. HB 46 authorized 12 additional conditional licenses in two phases; conditional licenses do not permit cultivation or sales until final DPS approval. Each license is vertically integrated.
Can a Texas cannabis or hemp business choose its electricity supplier?
Yes, in ERCOT competitive areas served by Oncor, CenterPoint, AEP Texas, and TNMP. Senate Bill 7 opened retail choice January 1, 2002. Every customer must choose a Retail Electric Provider. Austin Energy, CPS Energy, and most cooperatives are non-choice territories.
Is Texas electricity cheap?
EIA shows Texas commercial customers paid 8.66 cents per kWh in June 2026 against a U.S. average of 14.19 cents. ERCOT wholesale volatility and summer 4CP transmission allocation can push all-in cost higher for peaky cultivation loads.
What is 4CP?
ERCOT allocates transmission costs based on a customer's average demand at the four ERCOT system-peak 15-minute intervals, one each in June, July, August, and September. Oncor updates 4CP kW each January 1 for the following calendar year.
Does hemp processing count as a cannabis energy customer?
Hemp-derived THC products remain legal for adults after Governor Abbott vetoed SB 3 in June 2025. Hemp extraction labs are a separate energy customer segment from TCUP, with a larger and less regulated footprint.
Related reading
- Texas TCUP Cultivation Facility Energy: Low-THC Grows, ERCOT Supply, and Oncor 4CP Demand
What a Texas Compassionate Use cultivation site pays for power: 2,809 cooling degree days, Oncor 80% ratchet, 4CP transmission, and REP contract choice.
- Texas Cannabis and Hemp Extraction Energy: TCUP Labs, Hemp Processors, and ERCOT REP Pricing
Energy loads at a Texas TCUP processing site or hemp extraction lab: chillers, ovens, C1D1 ventilation, Oncor ratchet demand, and REP contract options.
- Texas TCUP Dispensary Retail Energy: Three Licensed Stores, REP Choice, and Small-Load Delivery
What a Texas Compassionate Use dispensary pays for power: small commercial REP contracts, Oncor secondary service, and satellite storefront loads under HB 46.
- Texas TCUP and Hemp Multi-Site Energy: ERCOT Portfolio Procurement, 4CP, and TDU Ratchets
Energy procurement for Texas TCUP operators and hemp MSOs: Oncor vs. CenterPoint territories, staggered REP contracts, and portfolio 4CP management.
- How to Switch Retail Electric Providers in Texas: A Step-by-Step Guide for Cannabis and Hemp Businesses
Step-by-step Texas REP switching for TCUP and hemp accounts: ESI ID enrollment, Oncor TDU pass-throughs, contract types, and 4CP planning.
- Texas Commercial Electricity Rates for Cannabis Facilities: ERCOT Pricing, TDU Demand, and 4CP Transmission
Texas commercial power at 8.66 cents/kWh vs. the U.S. average, Oncor delivery classes, 80% demand ratchet, 4CP transmission, and REP contract structures.
- What Is Energy Deregulation? How Electricity Choice Works for Commercial Customers
How deregulation splits supply from delivery, who gets to choose a supplier, what the utility still does, and where cannabis businesses can shop in 17 markets.
- Fixed vs. Index vs. Block-and-Index Electricity Contracts
What each supply structure means, who carries price risk, which fits a 24/7 grow load, what pass-throughs do, and a worked 12-month comparison.
- Demand Charges Explained for Cannabis Cultivators
What a demand charge is, how utilities measure peak kW in 15- or 30-minute windows, why grow rooms get hit hard, how ratchets work, and a worked example.
- Ohio Cannabis Cultivation Facility Energy: Lighting, HVAC, and Demand Charges Under Four IOUs
What an Ohio indoor grow pays for power: lighting and dehumidification in a 5,689 HDD climate, GS-2 and GS-3 demand classes, a worked cost example.
Jason Taken founded Jaken Energy, the commercial energy procurement practice behind this site. He works with licensed cannabis operators in deregulated electricity markets to lower supply rates, manage demand charges, and evaluate efficiency upgrades.
Sources
Inline citations in this article, such as [eia-epm-5-6-a], refer to the entries below. Links open the primary source in a new tab.
- [eia-epm-5-6-a]Electric Power Monthly, Table 5.6.A: Average Price of Electricity to Ultimate Customers by End-Use Sector, by State, June 2026 and June 2025 — U.S. Energy Information Administration. Accessed 2026-09-11.
- [dps-tcup]Compassionate Use Program — Texas Department of Public Safety. Accessed 2026-09-11.
- [dps-tcup-phase-2]DPS Update: Phase II of Texas Compassionate Use Program Expansion Selection Process (April 1, 2026) — Texas Department of Public Safety. Accessed 2026-09-11.
- [tlo-hb46]HB 46, 89th Regular Session: bill history (signed June 20, 2025; effective September 1, 2025) — Texas Legislature Online. Accessed 2026-09-11.
- [ercot-retail-market]ERCOT Grid Insights: Competitive Retail Market of Texas (choice areas, NOIEs, REPs, TDSPs) — Electric Reliability Council of Texas. Accessed 2026-09-11.
- [oncor-tariff]Tariff for Retail Delivery Service, Oncor Electric Delivery Company LLC (rate schedules effective June 1, 2026) — Oncor Electric Delivery. Accessed 2026-09-11.
- [noaa-cag-texas]Climate at a Glance: Texas statewide heating and cooling degree days, 1991-2020 base period averages — NOAA National Centers for Environmental Information. Accessed 2026-09-11.
- [tx-tribune-hemp-impasse]Most Texas THC products remain legal after GOP leaders fail to break legislative impasse (September 3, 2025) — The Texas Tribune. Accessed 2026-09-11.
- [dps-tcup-phase-1]DPS Update: Phase I of Texas Compassionate Use Program Expansion Selection Process (December 1, 2025) — Texas Department of Public Safety. Accessed 2026-09-11.
- [gov-sb3-veto]Governor Abbott Vetoes Senate Bill 3 (89R), June 22, 2025 — Office of the Texas Governor. Accessed 2026-09-11.
- [tlo-sb7-analysis]SB 7, 76th Regular Session: Senate committee report bill analysis (electric restructuring, customer choice January 1, 2002) — Texas Legislature Online. Accessed 2026-09-11.
- [tx-tribune-ga56]Gov. Greg Abbott orders minors banned from THC products (Executive Order GA-56, September 10, 2025) — The Texas Tribune. Accessed 2026-09-11.
- [oncor-csop-2026]2026 Commercial Presentation (Commercial Standard Offer Program kickoff, January 15, 2026) — Oncor Electric Delivery, Energy Efficiency Program Management. Accessed 2026-09-11.
- [cnp-csop]Commercial Standard Offer Program — CenterPoint Energy. Accessed 2026-09-11.