CBD retailer sues state of Texas over recent rule change that put Delta-8 on list of illegal substances

click to enlarge A San Antonio CBD retailer shows off Delta-8 gummies available for sale prior to the DSHS putting the product on its list of illegal substances.
A San Antonio CBD retailer shows off Delta-8 gummies available for sale prior to the DSHS putting the product on its list of illegal substances.

An Austin CBD retailer has filed a lawsuit challenging Texas regulators' stealthy addition of Delta-8 — a THC-containing hemp product sometimes referred to as "legal weed" — to the state's list of illegal drugs.

Sky Marketing Corp., which does business as Hometown Hero, sued in Travis County district court last week to block the Texas Department of State Health Services (DSHS) from taking “enforcement action” for low-THC hemp products the retailer argues were made legal under both state and federal law.

DSHS quietly updated its list of controlled substances on Oct. 15 to include Delta-8, a move that went unnoticed for several days but eventually provoked panic and confusion among CBD retailers.

The change seemed to fly in the face of Texas House Bill 1325, signed in 2019 by Gov. Greg Abbott, and federal Farm Bill, which became law in 2018. Both of those legalized hemp products containing less than 0.3% THC, the compound in marijuana that results in a high.

Retailers and distributors had begun selling Delta-8 in the wake of those laws because the products appeared to fall beneath that 0.3% threshold.  

In its suit, Sky Marketing argues that DSHS and its commissioner, John Hellerstedt, didn't seek adequate input on its rule change. It maintains the ban will create financial damages for the state's expanding hemp industry.

“After operating legally and consistent with Texas law for several years, Plaintiff and other similarly situated businesses and individuals now find themselves in potentially legal jeopardy, and their businesses and livelihood with an uncertain future,” the lawsuit states.

The suit also argues that the Texas Legislature never intended to outlaw the sale of Delta-8 products, noting that several bills came up during recent sessions seeking a ban. However, all of that legislation failed to pass.

Sky Marketing's suit appears to mirror an earlier legal fight over DSHS's 2020 ban on the sale of smokeable hemp products. The year-long challenge to that rule ended this summer with a Texas appeals court ruling that DSHS could prohibit the production of those items in the state but not their sale.

It's also unclear just how DSHS intends to enforce its ban. The agency has no enforcement authority, meaning it must rely local law enforcement officials to uphold the prohibition.

“We’ve talked to several customers who are in law enforcement — apparently, we’re nowhere on the agenda,” Ashley Flood, owner of a CBD American Shaman franchise in the North Texas town of Allen told the Dallas Morning News. “They were just as unaware as everybody else.”

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Sanford Nowlin

Sanford Nowlin is editor-in-chief of the San Antonio Current.

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