Texas Health Department Sets March 31 Start for Ban on Smokable Hemp Sales

Texas stores will have to pull smokable cannabis products from their shelves by the end of the month under new hemp regulations adopted by the state health department. The rules take effect March 31.

The Texas Department of State Health Services (DSHS) adopted the final version last week. Most edible hemp products will remain legal, though they will face tougher packaging and testing requirements. Retailers and manufacturers will also pay sharply higher fees, which, although lower than first proposed, could push up prices or drive some businesses under.

The regulations were first recommended in December. They grew out of an executive order from Gov. Greg Abbott, issued after the Texas Legislature failed to agree on whether to regulate THC products more tightly or ban them outright.

The smokable-product ban works through a change in how DSHS measures Delta-9 THC, the main psychoactive compound in cannabis. Under Texas' 2019 hemp law, cannabis containing no more than 0.3% Delta-9 by dry weight counts as legal hemp. The new "total THC" rule also counts THCA, a compound that converts to Delta-9 when heated or smoked. That conversion is why THCA flower has become so popular in Texas.

Hundreds of people told DSHS during the public comment period that they opposed counting THCA as Delta-9. Neither state nor federal law explicitly bans THCA. DSHS responded that its approach follows existing state and federal regulations. The Texas Agriculture Commission adopted rules in 2020 requiring tests to account for THCA's potential conversion to Delta-9. The U.S. Department of Agriculture proposed a similar rule on the last day of President Trump's first term, and the Biden administration adopted it two months later.

The final rules cut back a proposed 10,000% fee increase, but the adopted charges are still steep: $5,000 per year for each retail location and $10,000 per year for each manufacturing facility. Those amounts are 33 and 40 times current levies, respectively. State health records show more than 9,100 retail locations registered to sell consumable hemp products.

Some retailers say the combination of fees and the smokable ban is crippling. Estella Castro, owner of Austin Cannabis Co., said the fee alone would be feasible, "but then we come into the [THCA] regulations." Smokable products make up about 40% of her sales. "If you don't have the flower, and the flower is going off completely, I don't think you're going to have the $5,000," she said.

Cannabis advocates welcomed new product recall standards and a process for tracking consumer complaints. But Heather Fazio, who leads the Texas Cannabis Policy Center, said high fees and the ban on flower and extracts will strengthen the unregulated market. Consumers, she said, can still get these products from out-of-state operators or the illicit market, which "doesn't have age restrictions" or "safety mechanisms and consumer protection."

Mark Bordas, head of the Texas Hemp Business Council, compared the $10,000 manufacturing fee with the $3,000 the Texas Alcoholic Beverage Commission charges distillers every two years. He warned that the measures are "so draconian" that they could drive people out of business and limit access to products, and said a lawsuit is likely, at taxpayer expense. The rules govern the manufacture, distribution and sale of hemp products, not their possession, which state law still allows.