Texas Gov. Greg Abbott pledged to regulate hemp-derived THC products rather than ban them outright. But six months later, the state's enforcement actions have effectively shut down much of the industry anyway.
The disconnect between Abbott's public statements and the Texas Department of State Health Services' regulatory approach has left hundreds of hemp retailers scrambling. Many have closed their doors or stopped selling THC products entirely, even though no statewide ban exists on paper.
"The governor said regulation, not prohibition," said one Austin-based hemp retailer who asked not to be named. "But when the state sets testing requirements that 95% of products can't meet, what's the difference?"
The Regulatory Squeeze
Texas implemented new hemp rules in September 2023 that require all hemp-derived consumable products to be tested by state-approved labs. The catch: only a handful of labs have received approval, and their testing capacity falls far short of industry demand. Products must also meet a 0.3% delta-9 THC limit when measured by weight, not volume, a standard that disqualifies most hemp beverages and edibles currently on shelves.
The rules also mandate that retailers obtain a "consumable hemp license" and display products behind the counter, away from minors. Violations carry penalties up to $25,000.
Industry groups estimate that 60-70% of Texas hemp retailers have stopped selling THC products since the regulations took effect. The Texas Hemp Coalition reported that at least 200 retail locations have closed entirely.
What Abbott Actually Said
During the 2023 legislative session, Abbott vetoed a bill that would have banned delta-8 THC and other hemp-derived cannabinoids. In his veto statement, he wrote that he supported "common-sense regulations" but opposed "an outright ban on products that are legal under federal law."
That position aligned with hemp industry advocates, who argued that Texas should follow the 2018 Farm Bill's framework allowing hemp with less than 0.3% delta-9 THC. But the governor's subsequent signing of enabling legislation gave state health officials broad authority to craft the implementation rules.
"We took the governor at his word," said Lukas Gilkey, CEO of Hometown Hero, a Texas-based hemp company. "We thought we'd see sensible guardrails. Instead, we got a regulatory structure that makes compliance nearly impossible for small operators."
Industry Response
Several hemp companies have filed lawsuits challenging the testing requirements and licensing structure. They argue that the regulations exceed the state's authority under the Farm Bill and create an unconstitutional burden on interstate commerce.
The Texas Hemp Coalition has called for emergency rule revisions, including expanding the list of approved testing labs and adjusting the THC measurement standard to match federal guidelines. So far, state health officials have not indicated any willingness to modify the rules.
Meanwhile, larger multi-state operators with deeper pockets have adapted more successfully. They've absorbed the compliance costs and secured testing slots, gaining market share as smaller competitors exit.
What Happens Next
The Texas Legislature won't reconvene until January 2025, leaving the current regulatory framework in place for at least another year. Some lawmakers have already signaled plans to file bills that would either loosen the testing requirements or ban hemp THC products entirely.
Rep. Stan Gerdes, who authored the original delta-8 ban bill that Abbott vetoed, told local media he intends to file similar legislation in 2025. "If we can't regulate it properly, we should ban it," he said.
For now, Texas hemp businesses face a choice: invest heavily in compliance with uncertain returns, or exit the THC market altogether. Many are choosing the latter.
The irony hasn't been lost on industry observers. Texas avoided a ban only to watch regulation accomplish the same result through attrition. Whether that was the intended outcome or an unintended consequence of bureaucratic rulemaking remains an open question.
This article is based on original reporting by mjbizdaily.com.
