Texas Hemp 'Regulatory Scheme' Could Ban Half The Industry
After dodging extinction during last year's legislative session, the estimated $8B Texas hemp retail industry could go up in smoke thanks to new regulations set to take effect next week.
The Texas Department of State Health Services’ new regulations on consumable hemp-derived THC products will go into effect on March 31. The more than 3,000% increases in licensing fees and stricter rules on product composition and sales could significantly impact, if not shutter, numerous hemp retail businesses, industry insiders say.
The DSHS regulations decrease the amount of total THC in sellable products to 0.3%, a change from the previous Texas law and the federal Farm Bill that defined hemp as containing less than 0.3% of intoxicating Delta-9 THC. Manufacturers worked within the latter law by producing hemp plants with THCA, which can produce a high when ignited, the Texas Tribune reported.
The new rules will require tests to measure the THC in a product, which would likely ban THCA flower and prerolled joints, some of the most popular hemp products. Edibles and beverages will still be available because they have lower THC concentrations or fall under the purview of the Texas Alcoholic Beverage Commission, which has not banned them, according to the Tribune.
“We estimate this will hand 50% of the legal market to illicit operators, making our state less safe,” Texas Cannabis Policy Center Director Heather Fazio told the outlet.
Manufacturer licenses will now cost $10K per facility annually, up from $258 previously, and retail registrations will cost $5K annually, up from $155, according to the Texas Hemp Business Council.
“They did a ban with their own regulatory scheme,” Lukas Gilkey, CEO of hemp product manufacturer Hometown Hero, told the Tribune. “The way they wrote the rules, it’s going to eliminate a lot of products that are fully legal and fully fine and not harmed anyone.”
The regulations come after a bill nearly banned the state’s hemp industry last year before a shocking last-minute veto by Gov. Greg Abbott. The governor said the bill would not survive legal challenges. Hemp proponents argued that, while they support sensible regulations, the bill went too far.
After the veto, Abbott asked the TABC and DSHS to increase regulations on the industry.
The new DSHS regulations also require clearly marked, child-resistant, tamper-evident and resealable packaging for hemp products and prohibit sales to customers under the age of 21, both of which hemp industry representatives have said they support.
The industry has boomed in Texas since the state legalized the sale of hemp products in 2019, following the standard set by the 2018 Farm Bill. Though the industry has grown to become a significant part of the state economy, occupying millions of square feet of retail space across 1,500 shops and employing 50,000 Texans, it has faced and continues to face numerous threats.
A bill to reopen the federal government late last year also included a provision to ban all THC-containing hemp products nationwide. Some lawmakers are fighting to delay the ban, which is set to take effect on Nov. 13 of this year.
