In a rare move diverging from his Texas Republican fellows, Texas Gov. Greg Abbott vetoed a bill that would have killed the state's $8B hemp industry and closed thousands of businesses overnight.

Abbott late Sunday vetoed Senate Bill 3, which would have banned the sale of THC-containing consumable hemp products, effectively closing or seriously hamstringing more than 8,500 hemp-cannabinoid businesses that operate in Texas. Those businesses occupy millions of real estate SF.

Both chambers handily passed a total ban that landed on the governor’s desk May 25 and would have become effective on Sept. 1 if the governor took no action. Abbott previously declined to comment on his intentions to pass or veto the bill, leading many business owners to prepare for the worst.

“We already had a plan to start reducing our staff and eventually shut our doors on Aug. 15,” said Eddie Velez, founder and CEO of Oak Cliff Cultivators, a Dallas-based hemp farming and retail business. “That was our plan until this veto came through.”

Velez, who is also president of the Texas Hemp Coalition, said he stayed up late Sunday night to find out whether he could reverse his plans.

Abbott vetoed the bill less than an hour before the midnight deadline that would have ensured passage, saying it would not have survived legal challenges, the Houston Chronicle reported.

“Governor Greg Abbott’s veto of SB 3 reinforces Texas’ reputation as a leader in business innovation and practical policymaking,” the Texas Hemp Business Council said in a statement early Monday. “By choosing balance over overreach, Governor Abbott protected a vibrant, federally legal hemp industry that employs 53,000 Texans and generates over $4.3 billion in annual sales.”

That sentiment was not shared by Texas Lt. Gov. Dan Patrick, who started this year's session saying he had “never been more passionate about anything” during his legislative career and at one point said he would delay other major legislation if the ban did not succeed.

In a statement Sunday, Patrick pointed to law enforcement and medical testimony, citing families that saw lives destroyed by the drug.

“I feel especially bad for those who testified and poured their hearts out on their tragic losses,” Patrick said, according to the Chronicle.

Abbott said in a proclamation that the hemp industry needs to be strongly regulated, which he intends for lawmakers to address during a special session set to begin July 21.

The Texas Hemp Business Council and others have repeatedly said they support regulations, including limiting sales to people 21 or older, requiring child-resistant packaging and establishing setbacks from schools.

Advocacy groups had been heavily involved in trying to prevent a total ban of THC-containing hemp products in Texas, which were made legal in 2019 following the 2018 federal Farm Bill.

The business council and other advocates delivered 5,000 handwritten letters and a petition with nearly 150,000 signatures to Abbott’s office on June 2 urging him to veto the bill. The Texas Hemp Coalition distributed a template for commercial real estate landlords to write letters to the governor, informing him specifically about the real estate space the industry occupies.

While there are no published studies on how much retail space the industry occupies in Texas, it could be as much as 17M SF, assuming an average store size of 2,000 SF. Just one cannabis-focused REIT, Innovative Industrial Properties, has $30M of committed capital and 148K SF in Texas.

As the future of the industry seemed dim less than a month ago, the Texas Hemp Coalition is now thanking the governor for listening to constituents and vetoing the bill, Velez said.

“Now we’re just getting ready for a special session July 21,” Velez said. “We’re back at it in 30 days, working with the House, working with the Senate to get a good, common-sense policy pushed through.”