Texas hemp businesses joined industry advocacy groups in a lawsuit to block enforcement of new state rules that would ban smokeable hemp products and greatly increase licensing fees for retailers and distributors.
The suit against the Texas Department of State Health Services (DSHS), the Texas Health and Human Services Commission (HHSC) and Texas Attorney General Ken Paxton seeks a temporary restraining order on the regulations, which became effective March 31. An immediate halt is needed because enforcement of the regulations would decimate their industry, the plaintiffs argue.
The Texas Hemp Business Council and Hemp Industry & Farmers of America — joined by dispensaries including TexaKana Organics, Elevate Wellness Dispensary and Serenity Organics — argue the agencies illegally bypassed the Texas Legislature when drawing up the rules at the behest of Republican Gov. Greg Abbott.
The new DSHS and HHSC regulations require hemp businesses to slash the total content of THC — the compound in cannabis that produces a high — in their products to just 0.3%. The change violates a definition of “hemp” the legislature passed in 2019, the suit maintains, and it criminalizes products lawmakers previously declared legal.
“At the heart of the legal challenge is the state’s attempt to replace the statutory definition of hemp. Under current Texas law (HB 1325), hemp is defined by its delta-9 THC concentration of not more than 0.3%,” David Sergi, the plaintiffs’ San Marcos-based attorney, said in an emailed statement. “These Texas officials and state agencies are clearly attempting to create new law in direct contradiction to what the Texas legislature intended.”
The filing also asks a judge to block the agencies from imposing steep new licensing fees on hemp producers and retailers, which Sergi said are designed to shut down the growing industry. Under the new rules, fees for manufacturers of hemp-derived THC products ballooned to $10,000 from $258, while the fee for retailers jumped to $5,000 from $155.
Legal challenges to the state’s new hemp regulations are likely to play out in court for years, but the industry hopes a restraining order can prevent the rules from being enforced while the fight continues.
Even so, the industry’s suit doesn’t target other state regulations, including that customers to be 21 or older and that hemp businesses use child-resistant packaging and new labels for their products, which now must undergo more rigorous testing.
“The Texas hemp business community is not challenging rules related to age verification or consumer protections. They wholeheartedly support those regulations, as they fall within the agency’s authority,” Sergi said. “We are seeking to halt rules that would effectively end the in-state production of hemp and the sale of hemp products — items the Legislature chose not to ban during recent legislative and special sessions.”
San Antonio-based hemp businesses recently told the Current that the new state rules are putting them under financial strain and have already convinced some in the industry to leave the state. Legal experts have also said they expect many hemp users to use mail-order to buy from out-of-state hemp suppliers.
“It’s definitely stress-inducing, and it does make people question whether they should stay in this industry,” said Brook Richie, owner of Bee’s Wellness Cafe, a dispensary in the Thousand Oaks Shopping Center.
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