New state rules that eliminate natural smokeable hemp products and increase licensing fees will go into effect at the end of the month. Hemp industry leaders say these new regulations will eliminate a majority of their inventory and force those who don’t have extra income to meet these new fees to close stores.
Earlier this month, the Texas Department of State Health Services released regulations on consumable hemp-derived THC products that will go into effect on March 31. These new regulations include child-resistant packaging, a significant increase in licensing fees, new labeling, testing, and bookkeeping requirements. The rules also codify the legal purchasing age to 21, which went into effect last year as an emergency directive.
However, hemp retailers say the regulation that decreases the amount of total THC in products they sell to 0.3% will eliminate popular smokeable hemp products, such as rolled joints and smokeable flower buds, which make up more than 50% of some stores’ inventories.
The Texas Legislature voted to ban the products out of fear that these intoxicating products were consistently getting into the hands of children. But, Gov. Greg Abbott vetoed the decision last summer, before asking the Texas Alcoholic Beverage Commission and DSHS to increase regulations on the industry instead.
The rules also increase licensing fees for manufacturers of hemp-derived THC from $258 to $10,000 per facility and retail registrations from $155 to $5,000, which industry leaders say will fulfill the ban by forcing businesses to close.
“They did a ban with their own regulatory scheme,” Lukas Gilkey, chief executive of Hometown Hero, a manufacturer of hemp-derived products, said. “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.”
What will Texans no longer be able to buy?
Under the new rules and regulations, Texans will no longer be able to purchase intoxicating smokeable hemp products, including hemp flower or pre-rolled joints. Consumers can still purchase edibles and beverages because they have lower THC concentrations or because they are under the purview of the TABC, which has not banned these beverages.
“We estimate this will hand 50% of the legal market to illicit operators, making our state less safe,” Heather Fazio, director of Texas Cannabis Policy Center, said.
Even though Texas law bans marijuana, lawmakers legalized hemp in 2019. State law defines hemp as containing less than 0.3% levels of intoxicating Delta-9 THC.
To get around the law’s Delta-9 THC restrictions, manufacturers started cultivating hemp plants with another type of THC, called THCA, that, when ignited in a joint or smokeable product, can produce a high. Many lawmakers have said this legal loophole has allowed a recreational THC market to appear overnight without direct approval from the state.
Under the new rules, laboratories tests will now measure the total amount of any THC in a product. If the THC levels exceed the 0.3% threshold even if it’s only activated upon being smoked, the product will be noncompliant under state regulations. As a result, some of the most popular hemp products, like THCA flower and pre-rolled joints, will be banned.
Hemp businesses caught selling noncompliant products will face a range of penalties and fines, including license revocation and up to $10,000 in violation fees for each day these products were sold in stores.
“Many hemp businesses that have operated legitimately for years will have to make a hard decision about whether or not they can keep their doors open,” said Fazio.
What happens if Texans are caught in possession of smokeable THC products?
People in Texas will not be committing a crime if they are in possession of smokeable THC products after March 31.
Fazio encourages Texans to take advantage of the sales on smokeable hemp products over the next couple of days, as hemp retailers are scrambling to clear these items from shelves.
“There is no risk to consumers who possess or consume hemp in any form,” she said.
Andrea Steel, a Houston attorney for several THC businesses, said in theory customers shouldn’t get in trouble, but expects law enforcement agencies will incorrectly arrest people caught smoking hemp products because they might assume smokeable hemp is banned, just like marijuana.
“Just a twist of the consequences of what happens when an agency goes too far,” she said.
Hemp retailers cannot sell to out-of-state customers, said Fazio, meaning store owners will be stuck with any non-compliant products that they can’t sell before the end of the month.
“They can keep it for themselves, but they cannot sell it,” she said.
Why are hemp industry leaders opposed to these changes?
Fazio said many hemp industry leaders are grateful to see tighter restrictions from DSHS, including requiring stores to verify customers’ ages and ensure products have warning labels and child-proof packaging, because many businesses have operated with very little accountability.
“Good actors welcome increased regulatory enforcement, while bad actors should be concerned about this new level of accountability that will protect consumers,” she said. “However, two major changes greatly concern us: licensing fees and regulatory product restrictions.”
Restricting levels of any THC in hemp will wipe out stores’ most popular products, smokeables. Raising licensing fees for hemp manufacturers from $250 to $10,000 and retailer fees from $150 to $5,000 will close businesses, industry members say.
Under the new rules, hemp retailers and manufacturers will also need to keep detailed records for each product type to ensure THC levels are consistent, records for every production run, documentation of raw materials and ingredients, and formal procedures for documenting and investigating complaints, among other requirements.
While larger hemp manufacturers can handle this new demand, some of the smaller THC retailers, usually located in rural areas of Texas, will close because they lack resources, staff, or time to implement those changes. These extra requirements for retailers could inadvertently cut off access to recreational THC in those regions.
“This death by a thousand paper cuts,” Gilkey said. “The problem is that the desire for these products is not going to go away; they will just order them online, where it’s still legal, or off the street, where we have no testing and no guidance.”
Why do state leaders want these types of restrictions?
Supporters of the licensing fee increase say the new regulations are a necessary step to protect children and consumers from hemp products that have dangerously high amounts of THC in them.
“Cannabis advocates say this is a billion-dollar industry. It’s fair and appropriate for the people who profit from selling a billion dollars in intoxicating products to create fees that help cover the cost associated with the regulation and societal burden of the product,” Betsy Jones, director of policy and strategy at Texans for Safe and Drug-Free Youth, told the state health agency earlier this year.
Data provided from the Texas Poison Center Network confirms a sharp increase in cannabis-related poisoning calls starting in 2019, a year after hemp-derived THC was legalized by the federal government, from 923 to a 10-year high of 2,592 in 2024. However, those calls dropped to 1,485 last year. The majority of these calls involve suspected poisoning of children under the age of five and teenagers.
Drug policy experts said these numbers seem alarming, but it is natural for poisoning calls to increase when a drug has become legalized, and the data needs additional context before making conclusions from it.
Concerns about the safety of these high-THC products among youth led lawmakers to attempt to ban hemp-derived THC products outright last year. While the overall ban didn’t succeed, lawmakers did successfully ban vape pens containing THC and other hemp-derived intoxicating chemicals. Lawmakers banned it for everyone because they were concerned cannabis vape pens were so popular among teenagers because they can use them discreetly.
Also, hemp supporters have accused law enforcement agencies of attempting to rein in the industry by unlawfully raiding stores. Law enforcement agencies accused these hemp shops of selling dangerous products, especially to children, and engaging in other unscrupulous activities such as money laundering. Many of those retailers have not yet been found guilty of any crime, according to their attorneys.
What does the future hold?
Multiple hemp industry leaders and advocates say a conglomerate of hemp businesses plan to sue the state to block these new regulations from taking effect.
Gilkey said the hemp industry’s battle to stay alive in Texas started back in 2021 when the state health agency classified any amount of a natural intoxicating hemp compound called Delta-8 THC as illegal, leading to a lawsuit that the Texas Supreme Court is expected to consider this year.
“It has been a long, hard battle,” Gilkey said.
Steel predicts Texans will find workarounds to the new regulations, including smoking “semi-synthetic” or “converted” cannabis products, which are items sprayed with various chemicals to mimic marijuana’s high.
“You’ll see edibles and beverages trying to take that gap, but people want to smoke, and so they’re going to fill that gap with something that complies with the law, or at least on its face appears to comply with the law,” she said.
This article first appeared on The Texas Tribune.
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Texas
Cannabis
