Judge Delays New Texas Hemp Rules

A Texas judge blocked new hemp regulations from taking effect until at least late July, keeping the state’s fast-growing network of hemp retailers, manufacturers and distributors in a holding pattern.

District Court Judge Daniella Deseta Lyttle on Friday extended a temporary restraining order that prevents the Department of State Health Services from enforcing four rule changes. Industry groups say the new regulations would materially reshape the hemp market, KXAN reported. In addition, the order barred DSHS from enforcing a proposed ban on transporting hemp across state lines.

Two additional provisions are also on ice: steep licensing-fee increases and a rule treating each day of a violation as a separate violation. The fee schedule included raising the annual fee per retailer from $155 to $5,000, according to the outlet, which is a more than 3,000 percent increase.

The same morning Lyttle issued the injunction, the Supreme Court of Texas delivered a setback to the industry by allowing the Department of State Health Services to ban Delta-8 THC, which occurs in trace amounts in hemp but is commonly produced from CBD and added to products for intoxicating effects.

The rules from the Department of State Health Services originally set to take effect March 31 cap total THC in consumable hemp products at 0.3 percent — a shift from prior interpretations that focused only on Delta-9 THC. That distinction had allowed manufacturers to sell products rich in THCA, a compound that converts to THC when heated.

The pause prolongs uncertainty for hemp retailers, including smoke shops and CBD stores that have expanded across Texas shopping centers. Bisnow estimates the state is home to 1,500 stores occupying millions of square feet. Therefore, the legal battle over hemp in Texas could affect retail portfolios, particularly in strip mall shopping centers where hemp tenants have become a steady source of occupancy.

At the industrial level, the blocked transport rule intersects with warehousing and distribution, which rely on interstate shipping lanes and third-party logistics operators, according to the publication.

The regulatory overhaul follows a near-death experience for the industry last year, when lawmakers passed a bill that would have effectively banned hemp-derived THC products before Gov. Greg Abbott issued a last-minute veto. In its place, state agencies were tasked with tightening oversight.

— Eric Weilbacher