Consumable hemp, a form of legal THC you can buy in Texas, has become a big business.
But now the state is trying to impose new regulations — banning smokable hemp and raising fees on businesses who sell consumable hemp products. A lawsuit has paused those regulations for now, and a judge is hearing arguments in the case this week.
Katherine Harris, drug policy expert with the Baker Institute at Rice University, tracks the Texas hemp industry. She joined KERA's Miranda Suarez for her take on what impact these regulations could have on the hemp economy in Texas.
These interview highlights have been edited for length and clarity. To listen to the full conversation, click the 'listen' button above.
Business is booming
The industry is very popular. We know that there are over 9,000 licensed stores that sell consumable hemp products. When the state was debating whether or not to ban most consumable products in 2025, the estimate was that it would have a negative economic impact on the state of $27 million in lost revenue for over the next two years. So, we know that certainly the state does generate a lot of revenue from sales taxes and other kinds of fees and that the market itself has been quite popular throughout the state.
How regulations could change the hemp economy
During the last session, the legislature could not come to an agreement on a bill to regulate consumable hemp products. That led to Governor Greg Abbott signing an executive order directing the Department State Health Services and the Texas Alcoholic Beverage Commission to develop a list of rules to put some more parameters around this industry.
Retailers are now required to pay $5,000 a year per facility, and manufacturers are required to pay $10,000 per facility. These new rules have been challenged by the industry as being economically burdensome.
One of the other main points of contention is around how THC is measured. The practical effect of that is to say that almost all smokable hemp flower will now be banned. Estimates vary, but for some businesses, that made up to half of their revenue or half of their inventory.
Hemp vs. alcohol licensing fees
There's a tiered system for alcohol and when the comment period was open for these rules, one of the things that I had commented and suggested was that the state consider a tiered licensing system that would take business size into account. Not all businesses are the same size. They don't all provide the same products, so there should be some reflection of that in the cost for those licenses. But they did not adopt a tiered system. I think they probably just wanted one, blanket fee to simplify things.
Higher bar for entry
When you look at the fees around selling these products, they are naturally higher because you are dealing with a product that has the potential to have costs for public health. From that standpoint, I think it makes sense to have the bar for entry a little bit higher.
Going back to the fact that there are over 9,000 stores selling hemp consumables, that reflects the relatively low bar to entry into this market, and it makes it very difficult on the enforcement side for inspectors to ensure that businesses are compliant because they can't keep up with that many businesses.
A higher bar to entry reduces the number of stores and can make enforcement a little bit easier. It makes the folks that have to pay those fees more invested in that industry, it can help deter bad behavior, all of those things.
That said, I don't necessarily think that we want to encourage consolidation among just the largest industry actors, because I don't think that's great for consumers either. That's why I had urged for a tiered licensing system that reflected the fact that some businesses are just much smaller than others.
THC
I would really like us to start moving towards talking about THC and not about marijuana and hemp. From a public health perspective, THC is an impairing product. There is a demand for it. We need to develop a way to provide access to it in a manner that is safe, that protects against the highest risk products and protects youth from access.
That means creating a market that has guardrails, you know? I'm glad that we have the 21 and up age rule that's been finalized but the other thing is really cutting down on the commercialization of this market.
Miranda Suarez is a cohost of KERA's forthcoming talk show, NTX Now. Got a tip? Email her at msuarez@kera.org.
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