Texas cannabis sellers rally as case for statewide ban heads to Supreme Court

An updated version of the U.S. farm bill likely won't be released for another year, leaving states once again left to grapple with hemp regulations on their own.

The list of disputes in the states is now growing. California and New Jersey recently imposed sweeping bans, and Georgia introduced its own restrictions on Tuesday.

But the Texas hemp industry faces a different challenge as it awaits a decision from the state Supreme Court that could reshape the market for hemp-derived products.

A 2021 lawsuit challenged Texas' attempt to ban Delta-8 THC and made its way to the state's highest court, where it now sits. But the impact of the potential ruling goes beyond this specific context, according to Cynthia Cabrera, director of the Texas Hemp Business Council and chief strategist officer at Hometown Hero, the ban's main opponent.

“The way this ban is worded, it covers anything that could contain a trace of delta-8, so all cannabinoids,” Cabrera said Green market report.

An injunction essentially allowed hemp companies in the state to continue operating, a move that Cabrera said was critical to the market.

“Without our injunction, no one would be in business,” Cabrera said, noting they were seeking protection “for everyone.”

Recent discussions at the Statehouse have raised more “red flags.” Cabrera cited a hearing in May where state lawmakers even raised the issue of THCA flower, in addition to Delta-8 and Delta-9 products.

And with the court's decision not expected until early 2025, hemp advocates are simultaneously preparing for legislative battles as the new session approaches.

We keep it together

Cabrera noted that a variety of interests continue to vie for influence over hemp policy, such as beer retailers, package stores, “people who are in the medical marijuana program and would like to see us go away or brought under their umbrella, and then the legislators who do that.” I just don’t want to bring the products to market at all.”

The Texas hemp market has grown significantly since 2019, when the state passed regulations that Cabrera calls groundbreaking. However, she warned that opportunistic players are misinterpreting market size data. While there are more than 8,000 registered hemp sellers in Texas, Cabrera noted that number includes mainstream retailers that only sell non-psychoactive CBD products.

“If you control Whole Foods, HEB, which is like the largest supermarket chain here, Walgreens, CVS and all these types of stores, the number drops by half,” she explained.

“Contrary to some marijuana industry rumors, there are a lot of taxes paid in the market for hemp products,” said economist Beau Whitney. “It may not be taxed as heavily as marijuana, but it certainly generates tax revenue.”

Whitney's findings estimate the Texas industry's economic impact will be $8 billion in 2022, with direct sales accounting for approximately $6 billion. That economic analysis, which examined potential job losses and impacts on tax revenues, along with support from unexpected allies — veterans — has provided ammunition to push back against the attempted restrictions.

“The veterans came in and started talking about how they don't have any access to cannabinoids at all other than hemp right now,” Whitney explained. “And if they gave up hemp, they would have nothing. When you combined that with the economic impact, the whole problem and the anti-hemp legislation just disappeared.”

However, he warned that the issue “keeps flaring up.”

Ultimately, whether the legislature pulls the plug or the court rules against Hometown Hero, it would push Texans into unregulated markets.

“There are only three (medical marijuana) license holders in Texas, and one of them has 70% of the market,” Cabrera said.

“I don’t know why anyone would subscribe to the Texas medical marijuana program in its current form because it is so restrictive. It’s hard to make money when 12,000 patients ride bikes every year because they discovered hemp products are available to them.”