By: Mónica Enriquez

The Texas Department of State Health Services (DSHS) is requesting formal comments on the latest version of their proposed rules for consumable hemp products. The deadline to submit formal comments on these rules is 6/8/20. While we strongly recommend that you read the proposed rules, executive director of Texas NORML Jax Finkel shares some key takeaways:

  • The manufacture, processing, distribution, or retail sale of consumable hemp products for smoking will be prohibited. ​
  • A consumable hemp products license will be required before engaging in manufacture, processing or distributing consumable hemp and hemp derived products.
    • These licenses are valid for one year and will cost $250 per facility.
  • Retailers will be required to obtain licenses in order to sell consumable hemp products.
    • These licenses are valid for one year and will cost $150 per location.
  • All hemp or hemp derivatives will be required to be tested by an accredited lab to determine:
    • Presence and concentration of cannabinoids (including THC, which must measure 0.3% or less).
    • Presence or quantity of residual solvents, heavy metals, pesticides and harmful pathogens.
  • Labeling for CBD products will be required to include:
    • Product name, lot ID number and lot date
    • QR codes
    • Manufacturers’ phone numbers and email addresses
    • Certificate of Analysis

Texas businesses will be prohibited from manufacturing, processing, distributing, and retail sale of consumable hemp products for smoking, though consumers will not be banned from possessing these products or from purchasing them online from other states.

Last year, both the state and federal governments legalized low-THC (.3%) cannabis, defining it as hemp. While the in-state manufacturing of hemp products intended for smoking is prohibited by state law (refer to HB 1325), in-state retail sales of products manufactured outside of Texas are not prohibited, as long as the products are federally compliant. Consumable hemp is now completely legal to possess and use. These products – including oils, edibles, hemp flower, and vape cartridges – are widely available throughout Texas. None of the rules up for consideration would ban consumers from possessing these products or from purchasing them online from other states.

According to the proposal, DSHS does not anticipate a cost to local governments from the implementation of the rules. However, for the first five years with these rules in effect, Chief Financial Officer Donna Sheppard has estimated additional cost and revenue to the state government.

“The effect on state government for each year of the first five years the proposed rules are in effect is an estimated cost of $401,008 in fiscal year (FY) 2020; $598,992 in fiscal year FY 2021; $1,067,814 in FY 2022; $1,269,503 in FY 2023; and $1,499,838 in FY 2024; and an estimated increase in revenue of $1,200,000 in FY 2020; $1,475,000 in FY 2021; $1,807,500 in FY 2022; $2,194,000 in FY 2023; and $2,637,500 in FY 2024.”

Also in the first five years with these rules in effect, Sheppard determines that those required to comply may incur economic costs due to requirements for licensure fees and testing of hemp products for consumable hemp manufacturing, processing, and distributing entities, and registration fees for entities involved in the consumable hemp product sales.

Concerning small businesses, micro-businesses, or rural communities, Sheppard does not anticipate an adverse economic effect. The proposal states, “The new rules will expand economic opportunity for individuals interested in the manufacture, processing, or retail sale of consumable hemp products.”

But Texas NORML, a non-profit organization focused on promoting awareness of cannabis laws, offers a different perspective:

“If adopted, these regulations would ban Texas businesses from selling hemp/CBD vape cartridges, cutting them out of this thriving market and pushing consumers to out-of-state retailers. It would also require that any hemp flower being sold is marketed for non-smokable purposes (making tinctures, oils, edibles, lotions, etc.). This means pre-rolled hemp would not be allowed.

Prohibiting Texas companies from selling a product that is legal to possess and use in our state is bad for business and bad for our state. Plus, courts in Indiana and Florida have ruled already against these kinds of restrictions.”

Hemp and CBD retailers like Lazydaze Coffeeshop in San Marcos, TX (pictured) may be required to obtain licenses in order to sell consumable hemp products.

“There’s about a week left to provide your valuable input and hopefully help craft these rules that will shape what the Texas hemp industry looks like in the next few years,” said Hans Enriquez, founder of Texas Green Rush, an organization that provides networking and resources for entrepreneurs and professionals in the hemp and cannabis industry. Enriquez, who recently acquired licenses for handling and producing hemp, continued: “If you haven’t yet, take the time to consider the pros and cons carefully and really communicate your concerns, not just from a business standpoint, but also for the consumers. The industry needs regulation, but we want to be careful of any overreach that prohibits the growth of this booming industry. I am grateful that the DSHS is taking our opinion into consideration as a part of the process.”

Written comments on the proposal may be submitted by email to [email protected]. Please indicate “Comments on Proposed Rule 19R074 Hemp Program” in the subject line. To be considered, comments must be emailed before midnight on the last day of the comment period.

(Learn more about formal comments.)