Tag: Cannabis Texas

Dear Texas Monthly Editor

Written by Todd Harris on August 12, 2024. Posted in Business.

Access to hemp makes a difference in the lives of so many Texans. As the family that founded and operates The Happy Cactus Apothecary, we meet these folks every day. Since your story on hemp ran in the recent edition of Texas Monthly, many have asked us to share their stories and address the issues raised by the article.

Patty Boles describes herself as 75 years young and a believer in Christ Jesus. She feels blessed to be a parent, aunt, grandmother, and great-grandmother. For 43 years, she taught elementary school.

Patty’s story

At the age of 61, Patty experienced her first anxiety/panic attack. “It was terrifying, and I turned to my physician; he prescribed Lexapro, which helped. However, there was weight gain and a sense of not being myself. As time went on, I also began having trouble falling asleep. I turned to consuming small doses of over-the-counter sleep aids. These helped but left me with a morning hangover,” said Patty.

“Several years later, two additional attacks made me wonder if there might be an alternative. My beloved granddaughter suggested that I might visit Happy Cactus Apothecary in Austin, Texas. I will admit I was a bit skeptical about the use of Hemp products and overwhelmed by the array of them. The people took the time to listen and educate me about the products available. I left the apothecary with a small purchase of Delta 8 THC gummies.”

“What a revelation! I have been consuming half a gummy every night for approximately a year. I fall asleep peacefully and wake up refreshed and rested.”

“I have shared my experience with friends of my generation and firmly believe in this product’s benefits. I am grateful that I can purchase it so readily. I would be willing to argue the case for using Hemp products and their benefits.”

“Getting older is not for sissies. At my age, I am not ready to bow to anyone younger or anyone who has not tried them.”

Paige B’s story

Paige B is a single 32-year-old woman working two jobs. Her sciatica causes her trouble sleeping.

“I also am under a lot of stress DAILY, which makes it difficult to relax,” she said. “I am prescribed medication to help with the pain and to sleep, but it’s not something I want to be dependent on, so having one of the gummies from Happy Cactus Apothecary just before bedtime helps tremendously with relaxation and sleep.

She shared that without access to these products, she would be “extremely disappointed. I don’t want to rely on muscle relaxers & pain medication to help me sleep every night. I also quit drinking alcohol 4.5 years ago, and this is the BEST thing I have come across to help me ‘chill out’ when I am stressed.”

“I have genuinely never found a product that I can buy at a store that helps with my pain management, my trouble sleeping, and my mood. Finding Happy Cactus Apothecary has helped me feel better mentally and physically!”

Now, let’s take a closer look at some of the misconceptions in your story.

“The hemp industry argues that according to the letter of the law, the THCa level doesn’t matter. Any plant with less than 0.3 percent THC is hemp.”

The writer uses “THC” often in this article without describing which THC is being discussed: delta 9? delta 8? THCa?

Delta 9 THC is the only form of THC that is required to be less than 0.3 percent per dry weight. Defining the differences will provide the reader with more context. This lack of clear definitions is throughout the story.

“There was no way a plant that tested at legal THC levels at a manufacturing facility could test weeks later at 1.48 percent.”

What was the testing method for the White Wok sample? If it was tested with any type of heat, it most likely changed the plant’s chemical makeup, converting some THCa into delta-9 THC. Again, the article references THC levels without clarifying which form of THC they are referring to.

“Texas Monthly purchased smokable cannabis at eight dispensaries, two each in Austin, Dallas, Houston, and San Antonio. We bagged our purchases and sent them to Anresco for testing. All eight samples came back with delta-9 THC levels in excess of legal limits.”

We have serious questions about the laboratories’ methods. We respectfully ask for details about the testing procedures. More transparency is warranted and will benefit your readers. For example, did they use gas chromatography to test the samples? If so, that test includes heat, which will change the chemical makeup of the plant sample. To clarify, THCa degrades to delta 9 THC with heat, so a heated test would degrade the non-psychoactive THCa into the psychoactive delta 9 THC.

“His operation is regulated by Texas Department of Public Safety inspectors with the humorlessness of Soviet functionaries. They don’t worry him. What does are the thousands of licensed hemp dispensaries in the state that, he says, sell strains of cannabis that could lay low a three-hundred-pound rutting hog.” and enough to neutralize a half-ton bull alligator.”

Hemp is not to be used as a tranquilizer. Hyperbolic statements are unnecessary and only distract from an honest and science-based discussion about hemp use in Texas.

“The study tested 29 samples from prerolls and loose flower, all of which were sold with certificates indicating their THC was under 0.3 percent. Nineteen had levels above the limit. Factoring in the THCa, 25 were marijuana.”

What is meant by the term ‘factoring in.” Also, THCa is found in marijuana and hemp, which makes this statement confusing. Per the law, a cannabis plant containing high levels of THCa and less than .3% delta 9 THC is hemp. And a cannabis plant containing high levels of THCa and more than .3% delta 9 THC is marijuana. More explanation and context is needed to support this conclusion. Greater detail about testing procedures and laboratory standards is vital for a substantial discussion about access to hemp in Texas.

“Most of the hemp dispensaries out there, knowingly or unknowingly, are selling illegal federal marijuana. And they can do it because these stores operate at the crossroads of poorly written laws.”

These shops are selling legal Hemp flowers under the current written laws in Texas. Thanks to the plain language of those laws, Texans have access to hemp every day, which helps them with daily challenges.

“Texas Original grew alongside the program, adding customers and increasing revenue, Richardson said, until about 2023. He blames the proliferation of hemp dispensaries for this setback.”

The hemp dispensaries are not causing the setback – it is the unnecessarily restrictive laws in Texas surrounding the use of medical cannabis (marijuana). Those strict laws have put limits on what the Compassionate Use Program can sell; thus, the hemp dispensaries are legally filling in this gap for many Texans who need this plant for relief.

“Chemists and botanists in the hemp industry soon discovered that they could extract psychoactive compounds from hemp, such as THCa, thus skirting federal and state laws focused on delta-9 THC levels”

THCa is not a psychoactive compound. As previously mentioned, THCa can degrade into the psychoactive compound delta 9 THC with heat. Also, there is no need to extract THCa from Hemp; it occurs naturally in large amounts in Industrial Hemp (also known as THCa flower).

“Dispensary owners are confident they’re on the right side of the law.”

The law in Texas does not require testing to be done at any particular point in the plant’s life cycle. So if a THCa flower sample is tested before levels of delta-9 THC exceed legal limits, the plant is hemp and legal to sell in Texas. If that same sample (now packaged for sale) slowly or quickly converts (via heat) to having more than the legal limit of delta 9 THC, the law in Texas does not confirm that it is then an illegal product. Further testing is not required by Texas law after the initial testing. The law in Texas also doesn’t require any certain type of testing for hemp flower. For example, if we get a liquid chromatography test initially done for a hemp flower sample, and it doesn’t exceed the legal limits of delta 9 THC, it is legal to sell in Texas. Now, suppose that same sample is tested days or months later in Texas by an organization trying to determine its legality. In that case, they will most likely use gas chromatography testing here in Texas, which then heats the sample, degrading some of the THCa into delta 9 THC. If this change then provides the new test results with over-the-limit amounts of delta 9 THC, there is nowhere in Texas law saying that the sample is now illegal since its initial tests were within legal limits of delta 9 THC.

“Texas Monthly purchased two joints from its location across the street from a high school in South Austin.”

Despite there being no rules or regulations regarding age and consumption of hemp in the state of Texas (even though the local hemp industry has asked the state to regulate with an age gate), it has always been our policy not to sell THC products to anyone under 21. In fact, a person must be 21 or older to view our website. Furthermore, we are sending a letter to the High School advising them that their students are not welcome at our establishment and inviting them to work with us to keep them from entering our store.

“At a recent legislative hearing, state senator José Menéndez, a San Antonio Democrat, reflected on the spread of legal hemp stores selling products chemically similar to marijuana. ‘In a way, inadvertently, we passed a law that sort of legalized the use of cannabis in the state of Texas,’ he said.”

This language is confusing to the reader as hemp and marijuana are both “cannabis.” So yes, cannabis with less than 0.3% delta 9 THC is legal to use in Texas. If he is indeed referring to marijuana, then no, Texas has not legalized it. Texas has legalized hemp. What these shops are selling is technically and scientifically hemp.

We appreciate this opportunity to share with your readers the stories of our clients and additional information to provide broader context and the need to dig deeper into the science of testing Hemp products.

We believe we help our clients every single day. We do it legally and feel morally just because we see the difference it makes in their lives.

Thank you,
Todd Harris
Mickey Harris
The Happy Cactus Apothecary

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Practical Risk Management Tips for Texas Hemp and Cannabis Businesses

Written by texashempreporter on October 4, 2023. Posted in Business.

By Rae Guyse

Though coverage options have opened up to the hemp industry in recent years, hemp is still considered a high-risk industry with special insurance considerations that those in the hemp industry should be aware of. Whether you are a farmer, processor, manufacturer, or retailer, insurance is an important risk mitigation tool for you to have to in place. This article provides an overview of practical tips for securing the right insurance coverage for your business and includes other risk management issues to assess.

Work with a knowledgeable broker and shop around when securing insurance – and be sure to secure all required coverage lines needed to protect your business.

A broker with experience securing coverage for hemp and cannabis businesses can help you negotiate the right coverage. However, its important to do your own due diligence as well. Shop various coverage lines with multiple insurers. Not all insurance companies in this space are offering a good product, and some sell insurance coverage with so many exclusions you may be left high and dry should an accident occur. A skilled coverage attorney can also help by reviewing any policy terms you have been offered, breaking down your scope of coverage, and spotting any terms you may want to negotiate to have added for your specific business needs. Often, we see companies that believe they had secured correct coverage, only to find out during an adverse event that the coverage they needed had been whittled away by an exclusion to the policy.

Be sure to do a full business analysis to understand all of the coverage lines you require to be protected in all disaster scenarios. Ensure all buildings, machinery, crop, and lots are covered, but don’t just focus on only the product, equipment, or store front–you will need all the traditional first-party and third-party insurance coverage that every other type of standard business should have. First-party coverage refers to insurance for harms that occur directly to your property or business, such as property and crop insurance, business interruption insurance, intellectual property infringement, data loss, cyber insurance, and crime insurance. Third-party coverage covers liabilities to a third-party you may become responsible for, the most common being commercial general liability insurance. Commercial general liability generally affords protection when people get injured on your property (think “slip and fall” scenarios). Other types of insurance you likely need include commercial automobile insurance, workers’ compensation or employer liability insurance, and product liability insurance.

Should an incident arise, make sure you know which policies are triggered. Sometimes you can find surprise coverage in a policy you would not normally think would be triggered by a certain incident, so it is good practice to give each policy a quick review each time you have a potential claim.

Be familiar with your lease agreement and any included insurance requirements.

You should read and study your lease agreement cover to cover just like you would do with your insurance policy (and hire counsel to help you through it if resources allow). It is important that the landlord for any space you intend to rent for your hemp business understands the full purpose for which you plan to rent the space, especially any hemp cultivation or manufacturing activities. Your lease agreement governs the terms between the landlord and your business, and many of those terms relate to how risk is allocated between the parties. For example, your lease agreement should identify who is responsible for certain repairs, day to day maintenance of the building, and who owns improvements. It is also common for lease agreements to set forth certain minimum insurance requirements. Failure to adhere to the required insurance terms can put your lease at risk and reduce coverage availability. Make sure the “scope of use” terms of your agreement are broad enough to encompass your business activities. Also, take note of the renewal and termination terms, and whether and how much notice is required. Counsel may be able to help negotiate lease terms in your favor such as pushing the start date of your lease to after the date your business becomes fully operational, solidifying purchase options or the right of first refusal, or reducing certain obligations required of you under the proposed lease.

It is a good idea to have counsel in negotiating the terms of a lease agreement. It is relatively common for key terms to be missed in agreements drafted among parties, which can leave parties without much direction or recourse should something go wrong. It is smart to include terms that commit your landlord to complying with all rules and regulations needed to stay compliant for your businesses’ licensing or premises’ activities. Your landlord is equally likely to want to negotiate terms for legal “outs” for things such as illegal activity, bad grow years, lack of payment, and/or environmental violations. Landlords often also require indemnity from tenants for any liability or civil forfeiture issues.

Watch out for broadly written exclusions, and see if key endorsements can be added to your coverage.

Insurance policies are written in a complicated and hard to decipher format, where coverage is granted by a relatively broad coverage form, and that same coverage is then slowly stripped away by numerous exclusions and policy endorsements listed in different places throughout the policy. This is why it is important to read closely or work with coverage counsel to determine the scope of coverage your policy truly affords. For example, a broadly drafted “health hazard” exclusion in a product liability policy could remove coverage for the types of third-party injuries you would be seeking coverage for if it voids coverage for “any type” of adverse health effect resulting from the any use of your hemp product. Another one to look out for is language that bars coverage for any delta-8 or other novel cannabinoid product – many carrier forms will define “hemp” based on total THC content, not distinguishing between delta-9 and other variants. Vape-related exclusions are also common.

On the flip side, coverage counsel may also be able to help identify key coverage endorsements you can negotiate to have added to your policy. For example, a retailer selling CBD and delta-8 products would be smart to negotiate an Advertising Injury Endorsement, which protects the business from parties that claim to have been injured by an advertising claim made by the business. Make sure to ask your broker if they consider any form of false advertising claim fraudulent. This is one of those tricky areas where hemp or cannabis businesses often believe they have secured coverage – only to later find out when served with a lawsuit that the insurer will deny coverage. It is also a good idea to have an Intellectual Property Endorsement, which protects against accidental intellectual property infringement, a strict liability claim that can be costly to defend without proper coverage. Depending on the extent of your e-commerce activities, data loss coverage may also be recommended.

Understand the requirements of your insurance policies in the event you do need to make a claim.

All insurance policies will have specific terms within the policy you need to comply with in the event that you need to submit a claim. When an incident occurs that you think could be covered, don’t wait – most policies require you to provide prompt notice of a claim, and any significant delay could reduce or void coverage. Other terms explicitly require cooperation with the insurer’s investigation of the incident, and they will likely set forth numerous other policy conditions that must be satisfied for insurance to cover the incident. Compliance is also huge when it comes to ensuring you get the coverage you paid for – anywhere your business is out of compliance with federal, state, or local laws or regulations puts you at risk of losing coverage should an insurable event related to your business or product arise. You should also be mindful of what actions explicitly void coverage under your policy. Insurers will often dispute coverage and reserve their right to decline coverage when there is even a small chance that an exclusion may be found to apply to your claim. When communicating with your insurer, be sure to put everything in writing. Be sure to respond fully and promptly to all insurer requests. Also, be aware of privilege issues. Assume any communications with your broker will not be privileged in a later dispute over the claim should one arise, and do not forward any legal communications with your coverage counsel to another third party. In the event your insurer responds to your claim with a denial letter, skilled coverage counsel can review the basis for the denial and often find a legal basis for why coverage should be afforded. Where necessary, coverage counsel can escalate the denial to filing a demand or suit against your insurer.

While risk management is often the last thing a company wants to think about when getting started, it is essential to the long-term success of your business and one of the most important forward-facing steps you should cover from inception. It only takes one claim or lawsuit to put your business at severe financial risk. As the age old saying goes, an ounce of prevention is worth a pound of cure. Making sure you have a comprehensive insurance and risk management plan in place can help keep you protected.

Rae Guyse is an associate attorney with Ritter Spencer PLLC. Rae handles matters for companies in all sectors of the hemp, cannabis, and alternative medicine industries, including manufacturers, distributors, and retailers in matters related to compliance, licensing, insurance, trademarking and litigation. Prior to joining Ritter Spencer, Rae spent over two years as an insurance recovery attorney, helping companies maximize their insurance payout in claims against their insurers. As a skilled coverage attorney, Rae can assist you in reviewing your insurance policy before you sign the dotted line to ensure proper coverage. You can reach Rae at 214-295-5070, or email [email protected] to schedule a consultation with her.

If Texas Legalized Adult Use Cannabis Tomorrow, Who Would Get a License?

Written by shayda Torabi on January 2, 2023. Posted in Business. 1 Comment on If Texas Legalized Adult Use Cannabis Tomorrow, Who Would Get a License?

Coming off of an exciting Texas Hemp Summit, I can’t help but be a voice of reason in the room. It was awesome to see so much support and interest in the burgeoning hemp industry here in the lone star state. We got to hear from Texas AG Commissioner Sid Miller and had leaders in hemp fly in from across the United States to weigh in on the future of hemp, and really cannabis, in Texas.

As a CBD retail operator since 2018 myself, I am no stranger to the ever-moving landscape here. From newly discovered cannabinoids hitting the market like CBC and THCV, to the emerging market of chemically derived cannabinoids like hemp-derived delta 9 THC. We’ve faced lawsuits as a state, most recently losing the manufacturing and processing of smokable hemp products in Texas. And we’ve seen the state slowly introduce a medical marijuana program, which to me, is the domino that needs to fall before we see any type of adult use market here in Texas.

Which is exactly where I want to dive in. If Texas legalized adult-use cannabis tomorrow, who would get a license? How many licenses would they issue? What would a license cost? And if full plant access was granted, what would that do to the thousands of CBD retailers operating in Texas alone?

These are questions not meant to intimidate you, but rather to prepare you.

I spend a lot of time studying this market, as I mentioned I have skin in the game and want to ensure I’m doing my due diligence to take the best next step forward. But I also, through my podcast To Be Blunt, have ongoing conversations with industry leaders across the United States and even globally, deciphering their failures and successes in hopes of gathering enough intel to speculate what and when Texas might make her move.

I think a good indication is to look at where medical marijuana is currently at in Texas. For those who may be unaware, there are three licenses in circulation under the Texas Compassionate Use Program (TCUP), with only two in operation. The application to even apply for a dispensing organization license is $7,356 and the license fee is $488,520 for a two-year period. That is just to get your license to operate, not counting all the operational costs, etc. On top of that, the TCUP license requires vertical integration meaning you have to grow, extract, process, manufacture, distribute, and sell.

So I ask you, who has the funds and assets to qualify for a TCUP license? And out of the thousands of operators currently selling CBD and hemp-derived cannabinoid products, who is going to qualify for one of the limited available licenses under the current program and rules?

Look, I am hopeful like the rest of you, but I also live in reality, and to ignore these facts is to willingly walk into a wall.

I recently saw the Texas DPS announce they were considering opening up TCUP licenses, which would be a step in the direction towards adult use recreation because I believe we need a more advanced Medical Marijuana/ TCUP program before you see adult use/ recreation legalized in Texas.

TCUP is currently limited to a 1% THC cap, and the broadest qualifying condition is PTSD as expanded during the 87th Texas Legislative session. Our 88th legislative session kicks off in January 2022 and I anticipate whatever movement we get will be an indication of how much that program will advance, leading us to infer the progression of the legalization of cannabis in the state.

On top of all of this, hemp is currently capped at .3% Delta 9 THC on a dry weight basis, the language of “dry weight basis” has made a massive loophole not just for Texas hemp brands but really nationally we’re now seeing a wave of hemp derived delta 9 THC hit the market.

A rolled marijuana joint half burnt, isolated on white.

So from my perspective, on one hand, we already have legalization of THC in Texas to some extent, and on the other hand, how in the hell does this all get regulated, and who will it affect?

Some speculate Delta 8 and hemp-derived Delta 9 will be taken away, others argue how can they “put the cat back in the bag” so to speak. And personally, I’m not really sure what this legislative session will hold, but I can tell you I’m gonna roll up my sleeves and advocate and influence policy however I can.

But don’t say I didn’t warn you!

New episodes of To Be Blunt air every Monday at tobebluntpod.com