Where Does the Texas Hemp Industry Go After the 2023 Legislative Session?

By Katelin Edwards, Andrea Golan

Aug 1, 2023

After the 2018 Farm Bill legalized hemp at the federal level, Texas was one of the last states to legalize it at the state level. Governor Abbot passed House Bill 1325 in 2019, legalizing hemp cultivation as well as the possession and sale of hemp-derived CBD products without the need for a doctor's approval.

Back in 2019 and 2020, we predicted that Texas, with its extensive farmland and farming communities as well as large manufacturing and research infrastructure, had the potential to be “The Great Hemp State.” As the FDA’s failure to regulate finished hemp products created regulatory instability that devastated the promising hemp industry nationwide, Texas too has struggled to get its hemp industry off the ground. Because Texas lacks adult-use cannabis or an expansive medical cannabis program—and consumers demand access to cannabis—more and more Texans are consuming hemp, resulting in the state’s booming consumer market for hemp-derived products. With the growing high-THC hemp market, Texas arguably has the biggest adult-use cannabis market in the country. Given its size and influence, Texas’s approach to cannabis regulation will undoubtedly have a significant impact on the country’s cannabis industry.

Setting the Stage for 2023

The last legislative session (which was in 2021 because Texas's part-time legislature meets for 140 days every other year) saw only a few marijuana policy successes. These “successes” include a bill that makes it harder for the state to remove a child from the home simply because a parent tests positive for marijuana, as well as a bill that expands the Texas Compassionate Use Program. The key hemp bill, which would have cleaned up some existing rules and improved hemp research opportunities, died after the Senate attempted to amend the bill with language restricting Delta-8 THC.   

In addition to largely unsuccessful legislative efforts in 2021, the Texas hemp industry faced a blow in the Texas court system with the ruling in Texas Dept of State Health Services v. Crown Distrib. LLC. In this case, Texas hemp companies challenged a rule adopted by the Texas Department of State Health Services prohibiting the “manufacture, processing, distribution, or retail sale of consumable hemp products for smoking.” The case made it all the way to the Texas Supreme Court, with the Court ultimately deciding that people can possess, buy, and sell smokable hemp in Texas, but the manufacturing and processing of smokeable hemp must be done outside of Texas.

The 2023 Texas Legislative Session

Between an unfavorable court ruling and an uninspiring 2021 legislative session, not to mention a major drought impacting all Texas crops, things were not looking good for hemp in Texas going into the 2023 legislative session. However, things began looking up when hemp-friendly bills were introduced. These bills included:

• HB 2818/SB 321: proposed to expand the Texas hemp program by creating research permits; give the Department of Agriculture authority to issue rules based on federal updates and changes; would have clarified the requirements for transporting, obtaining, and transplanting immature plants.

• HB 4918: would have repealed the ban on manufacturing smokable hemp products in Texas.

• HB 1467: proposed protections for employees and independent contractors of state agencies and political subdivisions and for other individuals who use low-THC cannabis and hemp.

• HB 382: would have created a defense to prosecution for the possession of certain consumable hemp products containing a controlled substance or marijuana when the product was marketed and sold as hemp.

• HB 218/SB 967: proposed the decriminalization of marijuana, certain tetrahydrocannabinols, certain synthetic cannabinoids, and drug paraphernalia.

Some of these bills, including HB 2818, HB 4918, and HB 218, were successful in the House but ultimately died in the Senate.

Where Does the Texas Hemp Market Go From Here? Four Predictions:

1. The battle to reverse the smokeable hemp ban will endure.

Texas Hemp Growers Association and several other organizations want to see the ban on processing or manufacturing smokable hemp reversed due to the burden the move has placed on the industry in Texas. These organizations were looking to the Legislature to step in this year, with even Texas Agriculture Commissioner Sid Miller pushing for change. Since the Legislature did not address this ban in 2023, advocates must spend the next two years garnering support so that a reversal can be addressed in the 2025 session.

2. The status of Delta-8 THC will remain in limbo.

The legal status of Delta-8 THC in Texas came into question when a judge signed an injunction temporarily removing Delta-8 from the controlled substance list after the Texas Department of State Health Services was sued upon placing Delta-8 on the state's list of controlled substances in 2021. Because of the confusion surrounding Delta-8, many were hoping that the 2023 legislature would provide a clear direction for the production, distribution, and possession of Delta-8 THC. Since that did not happen this year, stakeholders will have to look towards other legal pathways for answers, including how this lawsuit will unfold.

3. Hemp farmers will need reassurance.

With difficult growing conditions, high seed costs, and a lack of processing facilities for fiber or grain hemp crops—not to mention patchwork rules and regulations on everything from growing hemp to shipping it and selling it—farmers who were at first excited about hemp in Texas are losing confidence. It will be up to legislators and regulators, along with Texas agricultural experts and innovators, to step in and offer solutions to keep farmers interested and to keep the market competitive. Possible solutions include more funding for research and development, improving infrastructure, and raising the THC limit.

4. The Legislature will have to answer to the public.

New polls indicate that more than eight out of ten Texans support legalizing medical marijuana and almost seven out of ten Texans support legalizing the recreational use of marijuana for those age 21 and older. These polls suggest that Texans are ready to see progress in sensible marijuana policy, including hemp policy. Therefore, state law should reflect this. But with a Lieutenant Governor holding disdain towards marijuana and hemp, doubt has been raised over whether real advancement will be made, especially after this last legislative session. However, the Legislature must eventually be held accountable for addressing the will of the public.

In the words of Texas Agriculture Commissioner Sid Miller, “It is time for all of us, including the Governor, members of the Texas Legislature and others to come together and set aside our political differences to have an honest conversation about cannabis: where we have been, where we are going and what role government should properly play.”

Vicente LLP’s team is closely tracking all hemp and cannabis developments in Texas. Please contact us with any questions.

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