Texas hemp shops file lawsuit against state over new regulations on THC
A group of Texas hemp shops filed a new lawsuit on Thursday aimed at stopping the Texas Department of State Health Services (DSHS) from enforcing new policies on hemp-derived THC.
According to the suit, which was filed in Travis County, the rules imposed by the DSHS are unlawful because they change the definition of hemp under Texas law without involvement of the Legislature. The lawsuit comes weeks after the new guidelines took effect, which imposed a ban on the sale of certain products that have been legal in the state since 2019.
The rules significantly curtail a large part of what has become a booming hemp industry across the state.
"Thousands of small business owners built enterprises, hired workers, and invested capital relying on that law," said David K. Sergei, a San Marcos-based attorney representing the plaintiffs. "DSHS does not have the constitutional authority to rewrite statutes or destroy an industry simply because it disagrees with legislative policy."
The lawsuit asks a judge for a temporary restraining order to stop enforcement immediately while the court process over the regulations' legality plays out.
The new Texas regulations on smokable hemp
Hemp farming has been legal in Texas since 2019, when the Legislature passed House Bill 1325. The legislation legalized all forms of the hemp plant other than those that contain more than 0.3% of delta-9 THC, the psychoactive chemical in marijuana.
However, there exist other forms of THC derived from the hemp plant that were not explicitly banned, including delta-8 and delta-10. That created a loophole that critics said amounted to legalized marijuana in the state.
The new DSHS rules, which took effect on Aug. 1 after a court-ordered delay in a separate case, outlaw hemp products that contain more than 0.3% of any type of THC, not just delta-9. The lawsuit alleges that is an overreach of the agency's authority, and only the Legislature can make that change.
The new regulations also impose significant new costs and fees upon businesses that sell hemp-derived THC.
The fees to license a business that manufactures hemp-derived THC products rose from $258 to $10,000 per facility, according to the Texas Tribune; Registrations for retail stores that sell grew from $155 to $5,000. In addition, the businesses are now responsible for implementing new labeling, testing and bookkeeping requirements.
All of the new rules pose a risk to the industry that sprang up in the wake of the 2019 law, which Sergi says generates over $5 billion in revenue, sustains nearly 49,000 jobs and contributes over $250 million in tax money.
Political fallout of Texas THC policy
The regulations took effect about a year after the topic was a big issue in the Texas Legislature. A complete ban on all THC passed both houses in the regular session, but Gov. Greg Abbott vetoed it at the 11th hour after an intense opposition push.
They argued that if the bill became law, it would force thousands of people out of their jobs and cause billions of dollars in economic losses for the state. They also argued it would harm veterans and others who use THC instead of opioids to treat chronic pain, forcing them to buy from drug dealers to get the same relief.
After Abbott's veto, he said he would call a special session and push lawmakers to pass a bill that would ban the sale of THC to people under 21 and impose more regulations on the industry.
Two special sessions failed to produce a new bill that could pass and receive Abbott's support. In September, Abbott issued an executive order on THC that spurred the new regulations.
The issue was one of the highest priorities for Lt. Gov. Dan Patrick, who is also president of the state Senate. In the wake of the veto, Patrick sharply criticized Abbott, which led to perhaps the biggest rift between the two men since they were both elected in 2014.
