For the first time in months, the U.S. hemp industry has reason for cautious optimism.
Just days after Texas enacted sweeping restrictions on hemp-derived THC products, lawmakers in Washington have signaled they may not be ready to pull the trigger on a nationwide federal ban. The U.S. Senate has included language in its version of a federal spending bill that would delay the implementation of proposed restrictions on intoxicating hemp products, buying the industry valuable time while Congress debates a longer-term solution.
It is not a victory—but it is a lifeline.
A Dramatic Shift in Washington
Earlier this year, congressional proposals threatened to effectively eliminate much of the hemp-derived cannabinoid market by redefining legal hemp and restricting products containing intoxicating cannabinoids such as Delta-8 THC and many hemp-derived Delta-9 formulations.
The Senate’s latest appropriations language pauses that effort instead of allowing it to move forward immediately. If ultimately adopted in the final spending package, the delay would give lawmakers additional time to craft permanent regulations instead of imposing an immediate nationwide prohibition.
For thousands of retailers, processors, farmers, distributors, and manufacturers, that breathing room could prove invaluable.
Texas Faces a Different Reality
While Congress appears willing to slow down at the federal level, Texas businesses continue navigating one of the most significant regulatory shifts in state history.
Following recent legislative changes and evolving enforcement by state agencies, many hemp retailers across Texas are reassessing their inventories, consulting attorneys, and determining which products can continue to be sold under the new legal landscape.
The contrast is striking.
Washington is discussing a pause.
Texas businesses are already adapting to immediate changes.
For retailers operating in both Texas and other states, the differing approaches create additional uncertainty as companies attempt to comply with multiple regulatory systems.
Why This Matters
A delay is far more than a procedural move.
It gives the hemp industry another opportunity to demonstrate that responsible regulation can protect consumers without destroying legitimate businesses.
Over the past several years, hemp has evolved into a multi-billion-dollar industry supporting American agriculture, manufacturing, distribution, retail, laboratories, logistics companies, and thousands of small businesses. Industry advocates argue that clear manufacturing standards, testing requirements, age restrictions, labeling rules, and enforcement against bad actors represent a better solution than broad prohibitions.
Whether Congress ultimately agrees remains to be seen.
The Road Ahead
The Senate language is only one step in the legislative process.
The House and Senate must still reconcile their spending bills before any language becomes law. During negotiations, provisions can be modified, removed, or strengthened. Until a final appropriations package is approved by Congress and signed by the President, the proposed delay remains exactly that—a proposal.
Nevertheless, the Senate’s action changes the conversation.
Instead of an immediate federal ban appearing inevitable, lawmakers are once again debating how hemp should be regulated rather than whether it should exist at all.
What Texas Hemp Reporter Will Be Watching
As negotiations continue, Our Team will closely monitor:
Whether the Senate delay language survives conference negotiations.
Any changes to the federal definition of hemp.
Guidance from federal agencies on hemp-derived cannabinoids.
How Texas enforcement develops under the state’s new laws.
Industry and legal challenges that may affect retailers.
For an industry that has endured months of uncertainty, the Senate’s move offers something it has been lacking:
Time.
Whether that time leads to meaningful reform—or simply delays another showdown—will likely define the future of the American hemp industry for years to come.
How the Lone Star State Went From Hemp Leader to Hemp Prohibition
For a brief moment, Texas stood at the forefront of the hemp revolution.
When House Bill 1325 became law in 2019, thousands of entrepreneurs, farmers, manufacturers, distributors, and retailers invested millions of dollars into a legal hemp marketplace built around federal law. Consumers embraced CBD, Delta-8, THCA flower, hemp-derived concentrates, beverages, gummies, and smokable products. What emerged was one of the nation’s largest hemp industries—supporting thousands of Texas jobs and generating significant tax revenue.
Fast forward to today, and much of that industry has been turned upside down.
As of July 31, 2026, enforcement of new Texas Department of State Health Services (DSHS) rules, backed by the Texas Supreme Court’s decision earlier this year, has dramatically changed the legal landscape for hemp-derived cannabinoids. Products that many retailers openly sold for years—including Delta-8, Delta-10, THCA flower, numerous concentrates, and many smokable hemp products—are now prohibited or subject to criminal enforcement under state law. Law enforcement agencies across Texas have already begun enforcing these changes.
The Great Hemp Reversal
Ironically, Governor Greg Abbott’s veto of Senate Bill 3 last year gave many Texans hope.
The governor argued that an outright legislative ban was too broad and instead called for a regulatory framework focused on testing, age restrictions, licensing, and consumer safety rather than prohibition. Many in the hemp industry believed a compromise was still possible.
Instead, the end result has been that many of the products Texans had legally purchased for years have effectively disappeared from store shelves through court decisions and administrative rulemaking.
For retailers, the distinction hardly matters.
The outcome is the same.
Retailers Left Holding the Bag
Across Texas, smoke shops, CBD stores, wellness boutiques, and independent retailers invested heavily in inventory, equipment, marketing, and employees based upon laws they believed allowed hemp-derived products.
Now many of those same business owners face difficult decisions.
Some have removed entire product categories overnight.
Others have closed locations.
Many have laid off employees.
Consumers who relied on hemp-derived products for relaxation, sleep, discomfort, or as alternatives to higher-risk substances suddenly have far fewer legal options.
Sorry Texas…
Want THCA flower?
Sorry Texas. This bud’s not for you.
Looking for Delta-8 gummies?
Sorry Texas.
Need a hemp vape?
Not anymore.
Concentrates?
Forget it.
Smokable hemp flower?
Gone.
What was once one of America’s fastest-growing hemp markets has rapidly become one of its most restrictive.
A Growing Divide
The timing is especially striking.
While Texas tightens restrictions, numerous other states continue expanding regulated cannabis and hemp markets, generating billions in economic activity, creating jobs, and collecting tax revenue.
Texas, meanwhile, has chosen a different path.
Supporters of the new restrictions argue the changes protect public health, prevent youth access, and close loopholes that allowed intoxicating hemp products to flourish.
Critics counter that prohibition rarely eliminates demand. Instead, they argue, it pushes consumers toward illicit markets while hurting legitimate businesses that followed the law as it existed.
That debate is unlikely to end anytime soon.
What’s Next?
The story isn’t over.
The federal hemp landscape will continue to evolve, Congress faces additional decisions regarding hemp policy, and legal challenges and legislative proposals are expected to continue.
For now, however, one thing is clear:
Thousands of Texas hemp businesses are navigating one of the most significant regulatory shifts since hemp was legalized in 2019.
Whether this represents the beginning of a safer marketplace—or the dismantling of an entire Texas industry—will be debated for years to come.
But for many retailers and consumers walking into their favorite hemp shop today, the message feels painfully simple:
Sorry Texas… This Bud’s NOT for You.
Editor’s Note: This article reflects the current regulatory environment following the July 31, 2026 implementation of DSHS rules and subsequent enforcement. It is intended as news analysis and does not constitute legal advice. Retailers and consumers should consult qualified legal counsel regarding the application of Texas law to specific products or circumstances.
For thirteen years, Kevin Sabet has built a career on a single, endlessly serviceable exhortation: follow the money. Smart Approaches to Marijuana — the organization he co-founded with former Congressman Patrick Kennedy in Denver in January 2013, in the raw aftermath of Colorado’s legalization vote — has made “Big Marijuana” its bogeyman and financial transparency its cudgel. The industry, SAM tells legislators from Tallahassee to Austin, is addiction-for-profit, awash in dark money and cynical lobbyists.
It is advice worth taking. So The THC Report took it. We pulled the network’s newest federal tax filings from the IRS e-file record and ran the complete 2025 and 2026 lobby registration databases published by the Texas Ethics Commission. What emerges is a portrait Sabet himself might have sketched, had the subject been anyone else: a $23 million war chest assembled almost entirely in the dark, a disclosed charity quietly starved while its unaccountable political twin balloons, a founder whose salary migrated into invoices from his own consulting firms — and a Texas influence operation that runs not through any registered SAM lobbyist, of which there are none, but through the multistate marijuana corporations whose commercial interests in prohibition happen to rhyme perfectly with SAM’s ideological ones.
Three heads, one address
The SAM operation is legally three creatures sharing a single suite at 107 S. West Street in Alexandria, Virginia: SAM Inc., a 501(c)(3) charity (EIN 47-2400657); SAM Action Inc., its 501(c)(4) political arm (EIN 47-3688463); and the Foundation for Drug Policy Solutions (EIN 88-1041205), a smaller c3 vehicle. Donations to the first and third are tax-deductible and their donors face at least the theoretical discipline of charitable norms. The c4 is where politics lives — and where, under federal law, donors may remain forever anonymous.
The 2024 returns, the most recent available, tell the story in the divergence between the twins. SAM Action reported revenue of $15,865,551 — including $8,601,743 in contributions, a five-and-a-half-fold leap from the $1,576,210 it raised the year before, supplemented by $6.46 million in securities sales and $800,316 in investment income. Against that torrent, it spent a mere $1,166,233. It banked the rest, closing the year with net assets of $23,035,823.
Schedule B of the return, where contributors would be listed, is entirely restricted. Names, amounts, dates: all dark. The largest cash infusion in the organization’s history arrived precisely as the federal campaign against hemp-derived cannabinoids crested, from parties the public is not permitted to know.
The timing of the filing itself deserves a footnote in the annals of bureaucratic poetry. SAM Action’s return was submitted to the IRS on November 13, 2025 — one day after the President signed H.R. 5371, the shutdown-ending appropriations package whose Section 781 redefines federal hemp to a 0.4-milligram total-THC ceiling per container, effective November 12, 2026. The Senate had voted 76–24 just days earlier to preserve that language. Sabet told The Hill the provision was, in his words, “the biggest change in marijuana policy, I would say, in a generation,” and that his organization was proud of it. The generation-defining victory was announced on a Tuesday; the filing showing who had quietly amassed $23 million to help pay for the fight arrived, unreadable in all the ways that matter, on a Thursday.
Meanwhile the disclosed charity withered. SAM Inc.’s contributions collapsed in 2024 from $3,052,344 to $692,684. It spent $2,264,970 against $1,202,541 in revenue — a deficit of more than a million dollars — and reported $1.86 million in new liabilities. The money did not vanish from the movement. It migrated, as money in such architectures reliably does, toward the arm with no donor disclosure and the longest political leash.
The president’s invoices
Both entities’ 2024 filings check the box that nonprofit accountants least enjoy checking: Schedule L, transactions with interested persons. SAM Action’s version spells it out. Kevin A. Sabet-Sharghi — the founder’s full legal name — is the owner of two consulting firms, LUA Partners and Policy Solutions Group, Inc., which billed the organization a combined $121,322 in 2024 ($66,322 and $55,000 respectively). The disclosed scope of services: serving as the public and media contact for all three charitable organizations, communicating with advocacy consultants and key policymakers, and helping design a comprehensive plan of action.
Set beside the compensation tables, the arrangement acquires a certain elegance. Sabet’s reported W-2 compensation from SAM Inc. was $154,224 in 2021. It fell to $104,941 in 2022, then $78,927 in 2023, and finally to $6,668 in 2024 — budget dust in an organization whose executive vice president, Luke Niforatos, drew $231,946 plus benefits the same year. The founder’s compensation did not so much shrink as change costumes: from a salary line that watchdogs and reporters scrutinize into consulting invoices from companies he owns, disclosed in a schedule most readers never reach. All of it is lawful; all of it is reported; none of it is the posture of an organization whose stock-in-trade is lecturing others about financial hygiene.
Where the war chest points
Schedule I shows where SAM Action’s money went when it went anywhere at all. The organization granted $128,600 to the Coalition for Safe Communities in Beverly, Massachusetts, and $100,000 to Keep Florida Clean Inc. in Tallahassee — each grant explicitly designated, in the filing’s own words, to support state ballot initiatives against legalization — plus $10,000 to Protect Our Kids in Colorado. This is the model SAM has run for a decade, from California in 2016 to Michigan in 2018: national money, raised centrally and often anonymously, deployed into state fights under locally wholesome letterhead. The $23 million now sitting in Alexandria is a promissory note against every state campaign to come. Texas legislators convening in January 2027 might reasonably wonder how much of it has their names on it.
The Texas registry: absence, and presence
Here is what the Texas Ethics Commission’s complete lobby databases for 2025 and 2026 show about Smart Approaches to Marijuana: nothing. No SAM entity appears as a client. Neither Sabet nor Niforatos nor any officer of the network holds a Texas lobby registration. The organization whose rhetoric echoes through Senator Charles Perry’s committee hearings and the Lieutenant Governor’s press conferences maintains no registered presence in Austin whatsoever. The nearest ideological kin on the registry is Texans for Safe and Drug-Free Youth, represented both years by lobbyist Shelton Green.
What the registry does show is who else has been arming up — and when. Green Thumb Industries, freshly minted as a Texas Compassionate Use conditional licensee, registered three Austin lobbyists on October 8, 2025, weeks after the HB 46 license awards. Verano Holdings carries a four-lobbyist team into 2026, led by Robert Miller. And Trulieve, the largest of the multistate operators, has assembled something closer to a phalanx: Lara Keel’s registration jumped two prospective compensation bands between 2025 and 2026, into the $100,000-to-$149,999 range; Will Yarnell registered for Trulieve Texas on April 10, 2026; Allison Billodeau for Trulieve Holdings on June 26.
Friday, tucked between a scratch-ticket rulebook and a batch of wastewater fines in the back pages of the Texas Register, the Department of State Health Services quietly finished a fight it started five years ago. The notice — 51 TexReg 4597, filed June 25, signed out by DSHS General Counsel Cynthia Hernandez under interim Commissioner Imelda Garcia — reinstates the agency’s 2021 modifications to two entries in the state’s Schedule I: tetrahydrocannabinols and marihuana extract.
If that sounds like administrative housekeeping, understand what the housekeeping accomplishes. Since November of 2021, when Judge Jan Soifer enjoined those definitions in the Sky Marketing case, the entire Texas delta-8 market has operated under the protection of that injunction. On May 1, the Texas Supreme Court took it away, reversing the courts below and siding with the agency. The mandate issued June 5. Friday’s notice is DSHS closing the loop — republishing the definitions exactly as they stood before the injunction, as though the intervening five years were a rounding error.
They were not a rounding error. They were the years this industry was built in.
What the Definitions Actually Say
The reinstated tetrahydrocannabinols entry sweeps in every THC naturally contained in the cannabis plant except one thing: up to 0.3 percent delta-9 in hemp as defined by the Agriculture Code. It then reaches further, to synthetic equivalents, derivatives, and isomers with similar chemical structure and pharmacological activity, and it names the cis and trans variants at multiple positions before adding the kicker — because chemical nomenclature isn’t internationally standardized, compounds of these structures are covered regardless of the numerical designation of atomic positions. That last clause exists for one reason: so nobody can renumber their way out of Schedule I.
The marihuana extract entry does parallel work on the processing side. An extract containing any cannabinoid from any cannabis plant is Schedule I unless it’s derived from hemp and holds under 0.3 percent delta-9 on a dry weight basis — and even then, separated resin, crude or purified, gets no exemption at all.
Read the two entries together and the state’s position is stark. Naturally occurring hemp material and genuinely hemp-derived extracts under the delta-9 threshold remain outside the schedule. Everything else in the family — delta-8, delta-10, THC-O, THCP, HHC, and above all anything converted or synthesized, which as a matter of practical chemistry describes most of the commercial delta-8 ever sold in this state — now sits inside it.
This Is an Enforcement Story, Not a Paperwork Story
Here is the part that needs saying without any softening: this notice will be read by police chiefs, sheriffs, and district attorneys as a permission slip.
Five days before it published, the Senate Health and Human Services Committee staged its interim hearing on THC, and I use the word staged advisedly. The witness table was cast like a morality play: the Allen police chief who ran the North Texas raids, a sheriff, a DA, a traveling anti-THC activist who called the products a weapon of mass destruction, and a committee vice-chair who invoked Nancy Reagan by name, promised a new ban bill for January, and expressed his hope — out loud, on the record — that the state’s new fees would put most of the industry out of business. That was the season premiere of Reefer Madness, Texas edition. Friday’s notice is the prop department handing the cast real ammunition.
An officer who wanted to seize delta-8 in 2023 had to reckon with an injunction and a genuinely murky legal landscape. That officer now has a published Schedule I listing, a Supreme Court opinion behind it, and a political climate in which raids make careers rather than end them. Chief Steve Dye told the committee his labs found seized products testing far above their labels; expect that playbook — seize, test, charge — to travel. There remain real defense arguments about how the schedules interact with the Health and Safety Code’s penalty groups and the hemp statutes, and good lawyers will make them. But an argument made from a defense table is a categorically worse position than an argument never made at all. Retailers and distributors should plan for enforcement and let the lawyers’ arguments be their parachute rather than their plan.
Look at Your Shelves This Week
For anyone holding inventory, the practical assignment is an unsentimental review, done promptly and documented as you go. Walk the warehouse with the definitions in hand. Anything containing or marketed as containing delta-8, delta-10, THC-O, THCP, HHC, or any other THC isomer or analogue belongs in the flagged column. So does anything produced by chemical conversion — delta-8 made from CBD is the textbook case. So does any extract, distillate, or concentrate whose paperwork can’t actually demonstrate hemp origin and sub-threshold delta-9 on a dry weight basis, and any separated resin product, which the exemption pointedly declines to cover. THCA flower and pre-rolls were already casualties of the March 31 total-THC rules and belong on the same list.
For everything flagged, pull the certificates of analysis and read them skeptically: is the lab accredited, does the method measure total THC post-decarboxylation, does the supplier’s story hold up. Where the chemistry is synthetic or the paper trail is thin, quarantine the product and get advice from qualified counsel — and I’ll offer the standing caveat, with affection: I’m a strategist, not a lawyer, and nothing here substitutes for the real thing.
A word, too, for the kratom and mushroom sectors, who may be feeling like spectators: you’re not. Nothing in Friday’s notice touches mitragynine or amanita. But anyone who watched the July 7 hearing noticed its shape — a committee that has learned it can prosecute an entire product category through interim charges, curated witness lists, and administrative reclassification, without ever passing a bill. Hemp is the test case. The machinery being assembled will not be dismantled when it finishes with THC.
The Case We Get to Make
Now the better news, because there is some, and it isn’t decorative.
Prohibitions born of administrative maneuver are less durable than prohibitions born of statute, and this one arrives wearing its weaknesses openly. The Governor vetoed the ban the Legislature passed and asked for regulation instead — that veto message remains the most authoritative statement of Texas policy on this subject. The committee’s own invited expert, Baker Institute drug policy fellow Katharine Neill Harris, told the senators to their faces that they were conflating cannabis with mental illness and homelessness. The sheriff they called, Chambers County’s Brian Hawthorne, testified that what rural Texas actually needs is mental health deputies and telehealth, not a ban. And Senator Charles Perry’s confession that the fee structure is designed to bankrupt registrants — “the cost of doing business is going to get so high that most of them will go out of business, I hope” — is the kind of quote that wins lawsuits and editorial boards alike.
That is raw material, and the interim is when it gets shaped. The committee accepts written testimony, and the record being built right now is the record the 2027 session will legislate from. Businesses that can walk into that fight with clean inventories, accredited lab results, and documented compliance are the living rebuttal to the claim that this industry can’t be regulated because it can’t be trusted. The argument that wins this — the only one that ever has — is that regulation demonstrably works and prohibition demonstrably doesn’t: it forfeits the testing, the labeling, the age-gating, and the tax revenue, and hands the market to people who don’t return phone calls from the state.
The next six months decide whether these products return to Texas shelves as legal, regulated items or disappear into the same gray market the state claims to fear. Get your houses in order, and get your stories on the record — preferably before someone with a badge asks for them.
Sources: Texas Register, Vol. 51, July 10, 2026, at 4597–4604 (TRD-202602610); Sky Marketing Corp. v. Texas Dep’t of State Health Servs. (Tex., opinion May 1, 2026; mandate June 5, 2026); Texas Senate Committee on Health & Human Services interim hearing, July 7, 2026.
Ken Paxton Faces Fresh Scrutiny After Reported Iceland Trip During Heated Senate Campaign
AUSTIN, Texas — Texas Attorney General and Republican U.S. Senate candidate Ken Paxton is once again at the center of political controversy after reports and video surfaced showing him traveling to Iceland with a woman identified in multiple media reports as Christian author and influencer Tracy Duhon.
The footage, first reported by British tabloid The Daily Mail and later covered by several Texas news outlets, reportedly shows Paxton and Duhon boarding a flight from Washington Dulles International Airport to Reykjavik, Iceland. The two were also reportedly seen together after arriving in Iceland.
The trip comes as Paxton continues his campaign for the U.S. Senate and while divorce proceedings with his wife, Texas State Sen. Angela Paxton, remain ongoing. Angela Paxton filed for divorce in 2025, citing “biblical grounds” following reports of her husband’s alleged relationship with Duhon.
The timing of the vacation has quickly become campaign ammunition for Paxton’s political opponents. Democratic leaders criticized the attorney general for leaving the country ahead of Independence Day celebrations, arguing that the trip sends the wrong message while many Texans continue to struggle with inflation and rising living costs.
Paxton has not publicly commented on the travel reports.
The controversy adds to a long list of legal and political challenges that have followed the attorney general throughout his career. Over the past several years, Paxton has faced a securities fraud indictment, an impeachment by the Texas House, whistleblower allegations, and multiple ethics-related investigations. Although he survived impeachment and continues to deny wrongdoing, those controversies remain a central issue in his statewide campaigns.
The Iceland trip also arrives as polling suggests Texas’ U.S. Senate race is becoming increasingly competitive. With both parties investing heavily in the race, personal controversies are likely to remain part of the campaign conversation in the months leading up to Election Day.
Whether the latest headlines ultimately affect voters remains to be seen, but the incident has once again placed one of Texas’ most polarizing political figures under an intense media spotlight.
For generations, cannabis opponents leaned heavily on one of prohibition’s most familiar
warnings: smoke enough marijuana, and your lungs would inevitably pay the price much like
cigarettes.
But one of the most significant long-term pulmonary studies ever conducted tells a far more
nuanced story.
Published in the Journal of the American Medical Association, the federally funded CARDIA
study followed more than 5,000 young adults over a 20-year period, examining how both
tobacco and cannabis impacted respiratory health over time. Researchers entered the study
expecting cannabis smokers to show a similar pattern of declining lung function seen in tobacco
users.
The data surprised them.
While cigarette smokers experienced the expected progressive reduction in pulmonary
performance, moderate cannabis users largely did not. In fact, many cannabis consumers
maintained normal lung function, and some even demonstrated slightly increased forced vital
capacity, a key measurement of how much air the lungs can hold, compared to both non-smokers
and tobacco smokers.
This finding became one of the more controversial outcomes in cannabis respiratory research,
largely because it challenged decades of public assumptions.
Dr. Donald Tashkin, a UCLA pulmonologist and one of the most respected researchers in
cannabis lung studies, spent years investigating whether marijuana smoke carried the same long-
term dangers as tobacco. His work consistently found that while heavy cannabis smoking could
contribute to airway irritation and bronchitis-like symptoms, it did not produce the same strong
link to emphysema, severe lung damage, or lung cancer that tobacco smoking clearly
demonstrated.
That distinction is critical.
For decades, anti-cannabis messaging often blurred the line between tobacco and marijuana
smoke, implying similar health outcomes despite mounting evidence that their long-term
physiological effects may differ substantially.
Researchers have proposed multiple reasons for the disparity. Cannabis users generally smoke
less frequently than tobacco users, often consume fewer total inhalations per day, and
cannabinoids themselves may interact differently with inflammation and respiratory pathways.
Some experts have even suggested that the deep inhalation techniques common among cannabis
consumers could contribute to stronger respiratory muscle conditioning, though this remains an
area requiring further study.
To be clear, none of this means smoking cannabis is harmless.
Combusting plant material of any kind introduces irritants and toxins into the lungs. Heavy
cannabis use can still trigger chronic cough, increased phlegm production, and airway
inflammation. Alternative consumption methods such as vaporization, edibles, tinctures, or
beverages may ultimately offer safer long-term respiratory options.
But the larger takeaway remains important: cannabis does not appear to fit neatly into the same
respiratory risk profile as tobacco, despite years of political rhetoric suggesting otherwise.
For the modern cannabis movement, these findings reinforce an increasingly familiar theme:
much of what society was taught about cannabis during the height of prohibition was often
exaggerated, incomplete, or filtered through ideological agendas rather than objective science.
As legalization expands and research barriers continue to fall, studies like CARDIA help reshape
the conversation from fear-based assumptions to evidence-based understanding.
Cannabis is not a miracle substance, nor is it entirely without risk.
But when one of America’s largest long-term respiratory studies found that moderate cannabis
users often maintained healthier lung function than expected, it became clear that the plant’s
health profile is far more complex than decades of propaganda ever allowed.
In the end, perhaps the most dangerous thing about cannabis was never the smoke itself.
It may have been the misinformation surrounding it.
There are moments in public policy when the mask slips.
According to a motion filed Sunday in the Fifteenth Court of Appeals, representatives of the Texas Department of State Health Services have allegedly been telling licensed hemp businesses not to worry about complying with some of the agency’s most controversial new hemp regulations because those provisions are not currently being enforced—and may not be enforced until after November.
Yes, November.
If true, the implications are staggering. Not merely because regulators would be quietly suspending enforcement of rules they spent months promulgating and defending in court, but because the explanation allegedly offered by agency personnel raises an even more troubling possibility: that politically inconvenient enforcement actions are being deferred until voters have cast their ballots.
The allegation appears in a Motion for Rehearing filed by the Texas Hemp Business Council and other plaintiffs challenging DSHS’s new hemp rules. The filing includes sworn affidavits from industry figures Lukas Gilkey and Kevin Salganik describing recorded conversations with a senior DSHS inspector. According to the motion, the inspector stated that DSHS legal staff and supervisors had instructed personnel not to enforce the agency’s new “total THC” standard and to revert licensing fees to their previous levels.
More remarkably, the inspector allegedly told one caller that “November” represented the likely timeline because “midterms and a lot of other stuff comes open.”
One need not be especially cynical to understand why such a statement might attract attention.
A Curious Change of Heart
Only weeks ago, Texas argued to the Court of Appeals that maintaining an injunction against the new rules would substantially harm the state by preventing DSHS from enforcing its revised regulatory framework. The state vigorously opposed temporary relief, insisting that the agency needed the ability to immediately implement its new total THC standard and dramatically increased licensing fees.
Yet, according to the newly filed motion, once the appellate court dissolved the injunction, DSHS personnel allegedly began telling industry participants the exact opposite.
“Don’t worry about total THC,” one inspector allegedly told a caller. “We’re not going to enforce anything with total THC.”
Another statement attributed to the same inspector is even more direct: “Something has changed. We’re not doing total.”
If these statements accurately reflect agency policy, the obvious question is simple: what changed?
Neither DSHS nor the Attorney General’s office has publicly announced any suspension of enforcement. No emergency guidance appears to have been issued. No formal rulemaking has been initiated. Instead, according to multiple industry participants, the agency has apparently been communicating this information privately, one telephone call at a time.
Regulation by whisper campaign is an unusual administrative model.
Government by Ambiguity
The immediate casualty of such an approach is legal certainty.
Texas hemp operators occupy one of the most heavily scrutinized and politically contentious regulatory environments in the state. Licenses, inventory, contracts, supply chains, laboratory testing, insurance coverage, and financing decisions all depend upon businesses understanding what the rules are and, equally important, whether those rules will actually be enforced.
At present, industry participants appear to be confronting an impossible dilemma.
Should they comply with the newly adopted total THC standard—potentially destroying existing inventories, disrupting supply chains, and imposing massive costs—or should they rely on verbal assurances from DSHS personnel that the rules are not presently being enforced?
Neither option is attractive.
Businesses that continue operating under preexisting standards risk future enforcement actions if the agency reverses course. Businesses that voluntarily comply with rules the agency itself is allegedly declining to enforce may simply put themselves out of business unnecessarily.
This is not regulatory oversight. It is regulatory roulette.
The Election Question
The most explosive aspect of the filing is, unsurprisingly, political.
The hemp plaintiffs suggest that DSHS’s alleged enforcement pause may reflect an effort to avoid public backlash before the November elections. The evidence offered for this proposition is limited principally to the inspector’s reported comments regarding “November,” elections, and future enforcement.
Whether a court ultimately finds such allegations persuasive is another matter entirely. Judges are generally reluctant to infer political motives absent substantial evidence, and state officials would undoubtedly deny that electoral considerations play any role in enforcement decisions.
Nevertheless, the allegation itself highlights an uncomfortable reality facing Texas policymakers.
For the last two legislative sessions, elected officials have repeatedly portrayed the hemp industry as an urgent public health threat requiring immediate and aggressive intervention. If that characterization is accurate, delaying enforcement until after an election would be difficult to justify. Legitimate public dangers, after all, do not customarily observe campaign calendars.
Conversely, if the agency truly believes enforcement can safely wait until November—or beyond—it inevitably raises questions regarding the urgency and necessity of the regulations in the first place.
Those are questions legislators and regulators may eventually have to answer.
The Larger Problem
Whatever happens in the litigation, the episode illustrates a deeper pathology in Texas cannabis policy.
The state has spent years attempting to maintain an increasingly implausible distinction between a tightly controlled medical marijuana program serving a relatively small patient population and a broadly accessible hemp marketplace that millions of Texans have embraced.
The resulting contradictions have produced exactly what one would expect: lawsuits, inconsistent enforcement, market instability, and administrative confusion.
Businesses are left attempting to divine regulatory intent from hallway conversations and telephone calls. Agencies are forced to reconcile statutory language with political demands. Consumers are left uncertain about which products are lawful today and which may become contraband tomorrow.
No industry—least of all one employing tens of thousands of Texans—can operate indefinitely under those conditions. Which perhaps is the point.
If the allegations contained in the hemp plaintiffs’ latest filing are accurate, the state’s regulators may have inadvertently demonstrated precisely why the Court of Appeals should restore the injunction pending appeal: because when the agency itself cannot clearly articulate what rules are in force, regulated parties cannot reasonably be expected to comply with them.
DEA’s June 29 Hearing Could Reshape the Future of Cannabis Capital Market
The cannabis industry is once again approaching a historic crossroads.
On June 29, 2026, the U.S. Drug Enforcement Administration (DEA) will begin a new administrative hearing to determine whether marijuana should broadly move from Schedule I to Schedule III under the Controlled Substances Act.
For decades, cannabis businesses have operated inside a bizarre legal contradiction: legal under state law in much of America, but still treated federally as a Schedule I narcotic alongside heroin. That classification has kept the industry trapped outside traditional banking, institutional investing, senior stock exchanges, and mainstream capital markets.
Now the federal government appears to be reconsidering that position.
In April, the Department of Justice and DEA already issued a major shift by moving state-licensed medical marijuana operations and certain FDA-approved cannabis products into Schedule III classifications under federal law.
But the June 29 hearing is potentially much bigger.
The key question now becomes:
Will the DEA finally abandon the long-held federal position that all marijuana commerce constitutes “drug trafficking” under federal law?
If that wall begins to crack, the financial consequences could be enormous.
Today, many major financial institutions remain cautious because cannabis businesses still trigger anti-money laundering compliance issues, Suspicious Activity Reports (SARs), and federal criminal exposure. Even publicly traded cannabis companies face limitations with institutional banking, lending, custody services, and access to major exchanges.
A broader Schedule III framework could begin changing that.
Industry analysts believe the biggest immediate impact may come through the removal of IRS Code 280E penalties, which currently prevent cannabis operators from deducting ordinary business expenses.
But beyond taxes lies the real long-term prize:
institutional capital.
If federal agencies such as FinCEN, Treasury, and banking regulators begin treating licensed cannabis businesses more like regulated industries instead of criminal enterprises, Wall Street may finally enter the sector in force.
That could eventually open the door for:
Senior exchange listings
Traditional lending
Institutional banking
Expanded venture capital access
Retirement and pension fund exposure
Broader custody and clearing support
Large-scale mergers and acquisitions
Interstate investment expansion
Some legal experts caution that Schedule III alone does not fully legalize recreational cannabis federally. Adult-use marijuana businesses would still exist in a gray zone unless Congress acts further.
Still, many insiders believe the June hearing represents the first serious federal discussion about collapsing the distinction between state medical and recreational cannabis markets.
If federally recognized medical cannabis becomes normalized inside regulated state systems, pressure will grow rapidly to treat licensed recreational operators similarly — especially in states where the same companies operate both systems side-by-side.
That possibility has investors watching closely.
For years, cannabis entrepreneurs have argued that the industry cannot mature while federal regulators continue labeling licensed operators as traffickers despite billions in state tax revenue and legal commerce.
The June 29 DEA hearing may determine whether Washington is finally ready to move cannabis from the shadows of prohibition into the framework of regulated American capitalism.
And if that happens, cannabis may stop being viewed as an underground industry — and start being treated like a legitimate American commodity market.
When the Texas Department of Public Safety announced its corrected tabulation methodology for the Compassionate Use Program expansion on May 8, 2026—more than a month after the original awards—it did so with the bureaucratic understatement for which government agencies are justly famous. A “correction” to the “tabulation methodology,” the agency explained, had required a recalculation of conditional license awards. Three companies previously selected would lose their provisional awards. Three companies previously excluded would gain them. The department assured everyone that nothing of substance had changed—only the math.
This is either deeply reassuring or deeply troubling, depending on whether you’re among the winners or losers in this particular reshuffling. For anyone paying attention to the trajectory of cannabis regulation in Texas, however, it should feel grimly familiar.
The Architecture of Error
Let’s stipulate the technical facts first, because they matter. In August 2025, DPS published a document indicating that four scoring categories in the TCUP expansion process would each receive equal weighting—25 percent of the total score. Applicants reviewed this document. Presumably, they structured their proposals accordingly. The department took applications through mid-September 2025, then began the laborious process of evaluation.
On December 1, 2025, DPS announced nine conditional Phase I licenses. On April 1, 2026, it announced three additional Phase II licenses, bringing the total to twelve. By all public appearances, the matter was settled. Licensed operators began the compliance infrastructure necessary for eventual dispensing. Unlicensed companies digested their rejection and explored alternatives. The cannabis industry, accustomed to regulatory volatility, moved on.
Then, after the score sheets became public, DPS identified what it called a “tabulation error.” The methodology used to calculate final scores, it explained, had not actually applied the 25-percent equal weighting published in the August document. Instead, someone had been weighting individual line items differently. The department had, in other words, scored applicants against criteria fundamentally different from those it had publicly promised—and then only noticed the discrepancy after the awards were announced and publicized…
The biggest day in federal cannabis policy in decades arrived this morning — and the fine print is doing a lot of work.
For years, cannabis advocates, industry operators, and policy watchers have dreamed of the day the federal government would move marijuana off Schedule I — off the shelf it shares with heroin, away from the company of substances deemed to have no accepted medical use and a high potential for abuse. Today, April 23, 2026, that day arrived. Acting Attorney General Todd Blanche signed the order. The DEA made it official. Cannabis, in limited form, is now a Schedule III controlled substance under federal law.
Savor the moment for a breath, and then read the fine print.
What moved to Schedule III is not cannabis as a category. It is not hemp-derived THC. It is not the THCA flower sitting in the case at your neighborhood smoke shop. It is not recreational marijuana, not CBD gummies, not delta-8 cartridges, not a single product in the vast and inventive gray market that has operated under the protective ambiguity of the 2018 Farm Bill. What moved to Schedule III is a carefully circumscribed set of products: FDA-approved drug formulations containing delta-9-THC derived from Cannabis sativa L., and marijuana subject to a qualifying state-issued medical marijuana license.
That’s it. That’s the win.
Everything else — and there is a great deal of everything else — remains Schedule I. Any marijuana product that is neither FDA-approved nor covered by a state medical license is still, under federal law, as illegal today as it was yesterday. The DOJ press release phrases this with lawyerly precision: the order applies to products “subject to a qualifying state-issued license authorizing the licensee to manufacture, distribute, and/or dispense marijuana or products containing marijuana for medical purposes.” The recreational market in legal states? Still Schedule I. The hemp-derived THC products that have carved out a multi-billion dollar niche in the regulatory gray zone? Still Schedule I. Still, potentially, federal felonies.
This distinction is not incidental. It is the architecture.
To understand why, you have to appreciate who benefits from today’s order and who does not. The clear winners are the multi-state operators — the MSOs that have spent years building licensed, regulated, vertically integrated cannabis businesses in states that permit medical use. These companies have labored under Section 280E of the Internal Revenue Code, a provision that denies standard business deductions to enterprises trafficking in Schedule I or II substances. Moving to Schedule III eliminates that burden, potentially freeing up tens of millions of dollars in annual tax liability for the larger operators. It also accelerates federally permitted research, clears a path for banking relationships long denied to Schedule I businesses, and, less tangibly but not insignificantly, removes some portion of the stigma that has clung to the industry like smoke to fabric.
The losers are the hemp-derived THC operators — the manufacturers, distributors, and retailers who have built businesses on the premise that Farm Bill hemp, with its permissive treatment of cannabinoids other than delta-9, created a lawful pathway to the intoxicating cannabis market. Today’s order does not validate their business model. If anything, it sharpens the line of demarcation between the licensed, legitimate cannabis industry and what the MSOs have long called the gray market — and have more recently started calling an unlawful competitor.
Consider the sequence. For the past two years, multi-state operators have been suing smoke shops and distributors across the country — in Missouri, Pennsylvania, and Texas among other states — arguing that hemp-derived THCA products are functionally marijuana and should never have been sold under Farm Bill cover. Today’s rescheduling order hands those operators a cleaner rhetorical weapon. If you want the protection of federal tolerance, get a state medical license. If you don’t have one, the federal government has just made its position more explicit, not less.
The order was signed by Todd Blanche, the acting attorney general, and it comes roughly four months after President Trump’s executive order directing the administration to move forward on rescheduling — a process that had languished through years of NPRM proceedings, administrative hearings, and public comment periods under the previous administration. That the Trump DOJ completed the move, however narrowly scoped, is genuinely notable. It is not the comprehensive reform that advocates sought, but it is a real policy change with real economic consequences for a real industry.
The next inflection point is June 29, 2026, when the DEA has announced it will convene an expedited hearing to consider whether marijuana as a category — not just the FDA-approved and state-licensed subset — should be reclassified to Schedule III as well. That hearing is where the broader argument will be fought. It is where the hemp industry will have to confront the question it has largely avoided: if marijuana moves to Schedule III wholesale, does the Farm Bill gray zone collapse entirely, or does it survive through a different legal theory?
No one has a clean answer to that question yet, which is precisely why it’s the most important question in cannabis policy right now.
What we know today is this: the federal government drew a line, and it drew that line around the licensed medical market. THCA is on the wrong side of it. Hemp-derived intoxicants are on the wrong side of it. The gray market — creative, entrepreneurial, constitutionally interesting, and genuinely beloved by the consumers it serves — just got a clearer target on its back.
That’s not a reason to despair. It’s a reason to pay very close attention to what happens on June 29.
Jay Maguire covers cannabis policy, hemp industry litigation, and the politics of drug reform. He is political editor of a cannabis industry trade publication and an investigator working on behalf of hemp retailers and distributors in regulatory and legal proceedings.
A Plant on the Rise—While Science and Law Race to Catch Up
Kratom (Mitragyna speciosa) continues to gain traction across Texas, appearing in smoke shops, wellness stores, and increasingly in functional beverages like lemonades and relaxation drinks.
Used for centuries in Southeast Asia, kratom is now part of a fast-growing U.S. market. But as demand rises, so does attention from regulators—and Texas is now at the center of that conversation.
Why Texans Are Turning to Kratom across the state, consumers report using kratom for:
Energy and focus
Stress relief and relaxation
Pain management
Alternatives to alcohol or opioids
At lower doses, kratom is often described as stimulating. At higher doses, it may promote calmness and relief, according to ongoing research referenced by federal health agencies.
And what does science says so far? Actually, federal researchers, including the National Institute on Drug Abuse (NIDA), say kratom can interacts with opioid receptors in a variety of unique ways.
It can produce both stimulant and relaxing effects, yet still has no FDA-approved medical use—yet
The Bottom line is that Kratom is not only promising, widely used—but also still being studied.
TEXAS LAW: LEGAL—BUT UNDER THE MICROSCOPE
Kratom is currently legal in Texas, but it is not a free-for-all. In 2023, lawmakers passed the Texas Kratom Consumer Health and Safety Protection Act. This law
limits certain alkaloid concentrations (including 7-OH), while bans synthetic additives, also aims to protect consumers from adulterated products.
This is a key point. Texas is not banning kratom—it’s trying to regulate it.
The Ken Paxton Lawsuit Targets “Bad Actors”—Not the Industry
Recently, Texas Attorney General Ken Paxton filed lawsuits against out-of-state companies accused of selling adulterated and synthetic kratom products into Texas.
According to the Attorney General’s office:
Some products allegedly contained extremely high levels of 7-hydroxymitragynine (7-OH) , others included synthetic compounds banned under Texas law
Lab testing reportedly found levels far exceeding the state’s legal limits; while Paxton stated his office is focused on stopping “potentially dangerous” and illegal products from entering Texas.
What This REALLY Means for the Industry?
This is the important distinction—and where the story changes, the lawsuit is not against kratom itself; it’s against companies violating Texas safety standards.
In fact, actions like this can strengthen the legitimacy of responsible brands, remove unsafe or synthetic products from the market, and build consumer confidence in compliant companies
like 1836 Kratom and Steading & Sons Mercantile can benefit. Because for Texas-based companies that follow potency limits, avoid synthetic additives, & focus on quality and transparency; it is this kind of self-enforcement that actually levels-up the playing field. It reinforces a simple message; “clean, compliant kratom has a place in Texas.”
The Bigger Picture . . . . Texas isn’t shutting Kratom down—it’s drawing lines around what’s acceptable.
There is a particular kind of regulatory failure that does not arrive with subpoenas or headlines. It slips in quietly, dressed up in spreadsheets and procedural language, hiding in a denominator that nobody bothers to question. It looks clean, professional, even defensible—right up until someone actually runs the numbers.
That is precisely what has happened in the Texas Compassionate Use Program expansion under House Bill 46. The Department of Public Safety published a scoring rubric that promised a simple, balanced framework: four categories, each carrying equal weight. What the State implemented was not that framework. It was something materially different, and the difference is not philosophical or interpretive. It is mathematical, and it changed who won.
The Rule the State Published
DPS told applicants, in plain English, that four categories would each account for 25 percent of the final score. Those categories—Security and Infrastructure, Accountability, Financial Responsibility, and Technical and Technological Ability—were presented as equal partners in the evaluation process.
There was nothing subtle about that promise. It was repeated in the rubric, relied upon in applicant preparation, and understood as the governing structure of the competition. Four equal slices of the pie, adding cleanly to one hundred percent. That is the rule applicants were told they were competing under.
The Structure Beneath the Rule
Beneath that clean promise, however, sat a more complicated reality. Each category contained a different number of scoring items. Security and Infrastructure included fourteen separate elements. Accountability included twelve. Financial Responsibility included eight. Technical and Technological Ability, the category that speaks most directly to whether an operator can actually run a compliant medical cannabis program, included just four.
Each of those items was scored by three evaluators on a scale of zero to five hundred. That structure produces dramatically different raw scoring ceilings. A perfect score in Security and Infrastructure reaches twenty-one thousand points, while a perfect score in Technical and Technological Ability tops out at six thousand.
There is nothing inherently improper about uneven category sizes. Any seasoned regulator or procurement officer has seen rubrics where some sections are more granular than others. The critical requirement, and the one that determines whether the system is fair, is normalization. If the State promises equal weighting, then each category must be scaled to ensure it actually contributes equally, regardless of how many individual items it contains.
What Equal Weighting Actually Requires
If you want four categories to count equally, the math is straightforward. You do not sum raw totals. You convert each category into a percentage of its own maximum possible score. Once each category is expressed as a percentage, you then apply equal weighting across those percentages.
In practical terms, that means taking an applicant’s score in each exhibit, dividing it by that exhibit’s maximum possible score, and then weighting each result at twenty-five percent. When you add those four weighted values together, you get a final score that reflects the rule the State said it would follow.
This is not exotic mathematics. It is standard practice across regulated industries, procurement systems, and competitive licensing frameworks. It is how you translate unequal components into equal influence.
What the State Actually Did
Instead of normalizing each category to its own maximum, DPS applied a single divisor across all four exhibits. Every raw score, regardless of whether it came from a category with fourteen items or one with four, was divided by twelve.
At first glance, that may look like a harmless simplification. It is not. When you divide unequal totals by the same number, you do not equalize them. You preserve their imbalance and carry it forward into the final score.
The result is a set of “Applicant Scores” that look standardized but are anything but. Security and Infrastructure retains a ceiling of 1,750 points, while Technical and Technological Ability is capped at just 500. When those numbers are combined, the weighting shifts dramatically. Security and Infrastructure ends up driving roughly thirty-seven percent of the final score. Accountability contributes about thirty-two percent. Financial Responsibility falls to roughly twenty-one percent. Technical and Technological Ability, the category that should stand shoulder to shoulder with the others, is reduced to just over ten percent.
That is not a rounding discrepancy or a clerical oversight. That is a complete reweighting of the system the State said it was using.
Why This Is Not a Close Call
There is no gray area here. Dividing unequal numbers by the same constant does not normalize them. It preserves their proportional differences. A category with a maximum score of twenty-one thousand will remain three and a half times more influential than a category capped at six thousand if both are subjected to the same divisor.
This is arithmetic, not interpretation. Once the method is set, the outcome follows automatically. The State did not accidentally drift away from equal weighting. It implemented a formula that could never produce equal weighting.
The result is that the rule applicants relied upon and the method used to evaluate them are not the same.
This Was Not an Isolated Mistake
If this were a one-off inconsistency buried in a single application, it might be dismissed as a transcription error. It is not. A review of virtually every scoring entry across both phases of the licensing process shows the same method applied without exception. Raw totals were divided by twelve, and those results were summed to produce final rankings.
This was the system. It was applied consistently. It was just not the system the State said it would use.
What Happens When You Fix the Math
When the applications are recalculated using the correct method—normalizing each category to its own maximum and then weighting them equally—the rankings change in ways that matter.
The very top of the list remains relatively stable. Companies that performed well across the board continue to perform well. The disruption occurs in the middle tier, where licenses are actually awarded.
Under the corrected calculation, three companies that received conditional licenses fall out of the top twelve. In their place, three different applicants move into winning position. Those new entrants are Texas-based operators who performed exceptionally well in Technical and Technological Ability, the very category that was most heavily discounted under the State’s method.
What emerges is not randomness or noise. It is a clear pattern. The flawed formula elevated categories with more scoring items—primarily infrastructure—and suppressed the influence of technical competence. When you restore the intended weighting, applicants who excelled in technical execution rise accordingly.
Why This Matters Beyond the Applicants
It is tempting to treat this as a dispute between competing companies, but that framing misses the point. Every license issued under this system determines where dispensaries are built, which companies invest capital in Texas, and how patients access medical cannabis.
For nearly a decade, Texas operated with just three dispensing organizations serving a vast and geographically dispersed patient population. House Bill 46 was supposed to correct that imbalance and bring the program into alignment with the needs of the state.
If the licensing process that governs that expansion is built on a misapplied formula, the consequences are not abstract. They are felt in the placement of facilities, the availability of products, and the ability of patients to obtain treatment without driving across half the state.
This is not a paperwork problem. It is a capacity allocation problem with real-world effects.
The State’s Position and Its Exposure
The State represented to applicants that each category would carry equal weight. Applicants relied on that representation in structuring their submissions. That reliance is not incidental; it is the foundation of the competitive process.
When the implemented methodology diverges from the published rule, the issue moves beyond process into legitimacy. The State is no longer simply defending a policy choice. It is defending a result that does not align with the rule it set.
That is a difficult position to maintain, particularly in a regulated industry where credibility is currency. Every future licensing decision, every enforcement action, and every legislative hearing will be measured against whether the State followed its own rules here.
The Path to Fixing It
The practical reality is that this problem is easier to fix than most regulatory failures. No one is asking the State to revisit subjective scoring decisions. The evaluators’ judgments on individual items are not in dispute, and the underlying data has already been recorded.
The correction is purely mathematical. Each exhibit score can be normalized to its maximum, weighted equally, and recombined into a final score that reflects the rule as written. From there, the State can determine how to align the licensing outcomes with the corrected rankings.
There are several paths available. They are known to DPS and the state leadership. The data is already in hand. The question is whether the State is willing to apply it correctly.
Final Consideration
This is not a partisan dispute or an ideological fight over cannabis policy. It is a question of whether a rule that was clearly stated was actually followed.
The State said each category would count equally. It used a formula that made them unequal. That is the entire issue, stripped of rhetoric.
Arithmetic has a way of cutting through arguments. It does not respond to intent or justification. It reflects only what was done. In this case, what was done does not match what was promised.
Texas now has a choice. It can defend the result as it stands, or it can correct the calculation and bring the outcome into alignment with the rule. The former invites challenge and erodes confidence. The latter restores both.
The calculator is indifferent. It will produce the same answer every time. The question is whether the State is prepared to accept it.
Author’s Note:
This article has been revised to more clearly present the scoring calculations underlying the Texas Compassionate Use Program licensing process. The updates expand the mathematical explanation and align the analysis with the methodology described in the State’s published rubric.
A new lawsuit alleges Ohio used definitional trickery, interstate discrimination, and possibly an invalid veto process to hand a lawful hemp market to in-state marijuana licensees.
There are only so many ways a government can say, with a straight face, that it supports “regulation” while using the machinery of the state to crush lawful competition and reward politically favored insiders.
Ohio may have just found a new one.
A newly filed lawsuit by North Fork Distribution I, LLC, which does business as Cycling Frog, alleges that Ohio Senate Bill 56 does not merely regulate hemp. It effectively converts federally lawful hemp products into “marijuana” under Ohio law unless they are cultivated, processed, and sold through Ohio’s licensed marijuana system. In plain English, the complaint says Ohio tried to use state law to wall off its market, criminalize ordinary interstate commerce, and give the spoils to existing in-state marijuana operators.
That is not sound policymaking. That is market allocation with a badge and a press release.
The central allegation is straightforward. Congress legalized hemp in the 2018 Farm Bill and protected its interstate transportation. Ohio, according to the complaint, responded by narrowing the state definition of “hemp” so aggressively that many federally lawful hemp-derived products would be treated as “marijuana” once they enter Ohio. The result, the plaintiff argues, is that out-of-state hemp businesses face potential criminal exposure while Ohio’s licensed marijuana businesses receive an exclusive commercial advantage.
And the most revealing evidence may not be in the rhetoric of the complaint at all. It is in the state’s own legislative paper trail.
An attachment to the filing includes the Ohio Legislative Service Commission’s “Synopsis of Conference Committee Amendments,” which states that products falling outside the narrowed hemp definition “will be considered marijuana and sold exclusively in marijuana dispensaries.” That language is politically devastating because it strips away the usual camouflage. This was not merely about labeling, testing, or age gates. According to the complaint and the attached synopsis, Ohio structured the law so that products excluded from the new hemp definition would not disappear from commerce altogether. They would be redirected into a protected channel: licensed marijuana dispensaries.
That is the kind of detail that matters. It tells you what the law does, who it benefits, and who gets shoved overboard.
The lawsuit raises two major constitutional claims. First, it argues that S.B. 56 violates the Dormant Commerce Clause by discriminating against interstate commerce and favoring Ohio’s in-state marijuana industry over out-of-state hemp operators. Second, it argues that the law is preempted by federal law because Congress expressly protected the interstate transportation of hemp and removed hemp from the federal controlled-substances framework. Ohio, the complaint says, cannot simply relabel federally lawful hemp as “marijuana” at the border and pretend the Supremacy Clause does not exist.
That alone would make this an important case. But the complaint goes further.
It also alleges that S.B. 56 was never validly enacted in the first place because Governor Mike DeWine purportedly used the line-item veto in a manner forbidden by the Ohio Constitution. The filing contends that the governor did not merely veto appropriations items. He instead struck substantive policy language and tried to condition approval of the bill on that basis. If true, that is not a hemp technicality. That is a separation-of-powers problem. It means the case is not just about cannabinoid policy. It is about whether a governor can rewrite legislation under the guise of veto authority.
The complaint also does what strong injunction pleadings are supposed to do: it ties the constitutional injury to real-world harm. Cycling Frog’s verification affidavit says the company has substantial Ohio sales, inventory, contracts, retail relationships, and sunk investment tied to the market, and that it stands to lose a significant share of its business if the law takes effect. The company alleges that it cannot practically continue operating in Ohio without risking prosecution once federally lawful products are reclassified by Ohio as “marijuana.”
That matters because this is where many state officials and industry opportunists play games. They talk as though hemp operators are abstract villains and every product is a policy thought experiment. But companies are making payroll, signing leases, building supply chains, and operating in reliance on federal law and existing state frameworks. When a state abruptly rewrites definitions to favor a politically connected channel, the damage is not theoretical. It is immediate, concrete, and often irreversible.
This is why stakeholders in Texas should pay very close attention.
The tactic on display in Ohio will look familiar to anyone who has watched the hemp wars in other states. First comes the moral panic. Then the selective outrage. Then the carefully staged media narrative about “intoxicating hemp” destroying civilization. Then, once the public is softened up, comes the real play: not a neutral safety framework applied evenly across markets, but a commercial carve-up that favors incumbent interests and punishes disfavored ones.
That is what makes this case larger than Ohio.
If a state can redefine lawful hemp into contraband whenever the category becomes economically inconvenient, then the 2018 Farm Bill means whatever a hostile bureaucracy says it means that week. If a state can criminalize out-of-state products while granting in-state licensees exclusive control of the same market, then “regulation” has become a euphemism for economic protectionism. And if governors can carve up substantive law with an improvised theory of veto power, then the constitutional structure itself becomes just another casualty of the culture war.
There is also a political lesson here that the hemp industry needs to learn, and learn fast.
The people trying to destroy this market are rarely content with honest argument. They do not merely say they prefer a different regulatory structure. They inflate, smear, panic, and posture. They wrap commercial self-interest in the language of safety and then dare anyone to notice the transfer of wealth and power underneath. That game works only as long as no one reads the bill language, the committee synopsis, the enforcement hooks, and the market consequences together.
This lawsuit does exactly that.
It forces the question that every honest regulator should have to answer: if your concern is truly public safety, why are the products not banned across the board? Why are they being shifted into a preferred in-state system? Why do existing licensees get protection while interstate competitors get prosecution risk? Why does the law read less like a neutral regulatory framework and more like a franchise agreement for politically approved sellers?
Those are not rhetorical flourishes. They are the questions at the center of the case.
Ohio will, of course, say this is about health and safety. States always do when they are caught red-handed building a moat around favored economic actors. Courts will have to decide whether that explanation survives scrutiny. But on the face of the complaint, this is not a frivolous challenge or a performative filing. It is a serious constitutional case backed by a legislative paper trail and a concrete injury record.
National operators, retailers, compliance professionals, litigators, and investors should watch this closely. So should every Texas stakeholder who still thinks these state fights are isolated skirmishes. They are not. They are part of a coordinated pattern in which lawful hemp is tolerated when it is politically weak, demonized when it grows, and targeted for absorption or elimination when entrenched interests decide the market has become too valuable to leave alone.
That is the broader truth.
The fight is no longer just over cannabinoids. It is over whether law means what it says, whether interstate commerce still exists when a hostile state dislikes the product category, and whether politically disfavored businesses have any protection against governments that rewrite definitions to achieve outcomes they cannot defend openly.
Medicare just became the nation’s first large-scale, reliable buyer of hemp — provided you are old enough, sick enough, and compliant enough to qualify. Everyone else — the twenty-something vaping a delta-8 cart in Austin, the Hill Country soccer mom with a bag of sleep gummies — is staring down a federal crackdown capable of erasing most of the existing retail market within a year. That split screen is the essential fact of American drug policy in 2026: Grandma’s CBD has received its federal blessing, while corner-store delta-8 is being fitted for the gallows.
The $500 Olive Branch, and What It Actually Means
On April 1, the Centers for Medicare & Medicaid Services quietly activated a pilot program allowing certain seniors to receive up to $500 annually in hemp-derived products through participating provider groups. Don’t mistake this for a subsidy program or a reward card you swipe at the Buc-ee’s hemp counter. Beneficiaries cannot walk into their local shop, save the receipt, and bill Washington. Instead, CMS will reimburse organizations operating inside select Innovation Center models — ACO REACH, Enhancing Oncology, and LEAD — up to $500 per eligible patient, with those organizations controlling which products are furnished as part of clinician-guided care plans. The federal government is not subsidizing brands. It is commissioning a tightly controlled cannabinoid experiment on its own terms.
The strings attached are considerable. Products must be hemp-derived and remain within the 0.3 percent delta-9 THC limit established by the 2018 Farm Bill, along with a hard cap of only a few milligrams of total THC per serving. Inhalables, synthetics, and anything with obvious intoxicating potential are excluded. Certain patients — those with disqualifying conditions including some substance use disorders and serious pulmonary disease — are carved out entirely. Dollars flow to accountable care organizations and similar entities, not to beneficiaries directly, which means clinicians and administrators control the tap. For Texas seniors, particularly in rural communities, “legal hemp” is about to acquire a respectable institutional twin: doctor-approved, chart-notated, dispensed through credentialed intermediaries rather than the shop on the frontage road.
FDA’s Wink and Nod — and Who It Leaves Out
To prevent the pilot from colliding with existing law on its first day, the Food and Drug Administration issued a new enforcement memorandum focused on Medicare-linked hemp products. The agency has spent years insisting that CBD in food and supplements occupies an unresolved regulatory gray zone. Now it is signaling a narrow pocket of “enforcement discretion” — an official look-the-other-way — when CBD is dispensed under clinician guidance inside CMS models and meets strict safety, labeling, and potency standards.
That carve-out does not extend to the broader Texas hemp marketplace. Retail tinctures, gummies, beverages, and vapes sold directly to consumers remain burdened by the same unresolved FDA questions, patchwork state rules, and ever-present risk that a compliance misstep converts inventory into contraband. Even brands that have invested seriously in rigorous testing, GMP-style production, and responsible labeling gain no special status from the fact that CMS is quietly paying for distant cousins of their products. Washington has blessed cannabinoid use in a narrow, medicalized lane — and left the general market precisely where it was, except for one item buried in a shutdown bill that threatens to blow everything else up.
The 0.4mg Time Bomb
While the Medicare pilot is launching, a separate piece of federal policy is counting down. Buried in last year’s government funding package to end a shutdown, Congress rewrote the federal definition of “hemp” to impose a hard ceiling of 0.4 milligrams of total THC per finished container — in addition to the already-familiar 0.3 percent delta-9 THC by dry weight. Any hemp-derived cannabinoid product exceeding that threshold will, once the law takes full effect, no longer qualify as hemp at all.
The numbers involved are not abstractions. Lawyers and analysts tracking the change warn that the cap would disqualify virtually all existing full-spectrum and intoxicating hemp products, along with a meaningful share of mainstream CBD items that contain trace THC exceeding the 0.4mg floor across a full bottle. Trade groups and beverage-law specialists estimate that 95 percent or more of current ingestible hemp products are over the line. In Texas alone, estimates peg the hemp market at roughly $8 billion, supported by thousands of jobs in farming, processing, distribution, and retail — an industry that would be, in the words circulating through trade commentary, “effectively shut down” if the cap is enforced as written. What was packaged inside the Beltway as a fix to the “intoxicating hemp loophole” looks, from the I-35 corridor, like a controlled demolition of an industry Washington once invited people to build.
Texas: Fresh Off a Victory, Walking Into an Ambush
No state illustrates the whiplash more vividly than Texas. Earlier this year, a hard push to ban hemp-derived THC products — spearheaded by Lt. Gov. Dan Patrick, backed by substantial Republican leadership — ran headlong into a mobilized hemp industry and a governor who ultimately vetoed the ban. The fight was real: hearing rooms filled, phone lines lit up, and small business owners made the case that prohibition would gut a multi-billion-dollar market. When the veto ink dried, many Texas operators concluded they had bought themselves at least a few years of breathing room.
Then came the federal shutdown deal. Buried in that compromise is the 0.4mg cap that accomplishes, at the national level, almost exactly what the failed Texas ban would have accomplished within one state. Nearly all consumable hemp products with any meaningful THC content become unlawful — not just in Houston and Lubbock but in Boise and Buffalo. The same operators who spent months fighting Austin now find themselves on the receiving end of a Washington decision they had virtually no hand in shaping. The sense of ambush is not rhetorical. It is palpable in every industry conversation and in local coverage from San Antonio to Dallas.
A Split Screen Made for Political Conflict
The juxtaposition is difficult to ignore. On one side of the screen, Medicare dips a cautious institutional toe into hemp, allowing clinicians in select models to furnish carefully constrained CBD and low-THC products as part of structured care plans. On the other, Congress and federal agencies have redefined hemp in a way that treats nearly anything beyond a trace as beyond the pale. One program recognizes cannabinoids as legitimate tools for managing pain, sleep, and chronic conditions — provided they arrive small, boring, and physician-mediated. The other treats any cannabinoid product that people actually choose to buy as a loophole to be sealed.
For Texas officeholders, this creates a set of choices that will not stay quiet. Supporting the federal 0.4mg cap means endorsing a Washington compromise that threatens to dismantle an $8 billion in-state industry that their own voters just finished defending against a home-grown ban. Backing the Medicare pilot, on the other hand, means conceding that cannabinoids are legitimate medicine for the very population most likely to appear in Republican primary elections — which undercuts a good deal of the rhetoric used to justify state-level crackdowns. Trying to ignore the contradiction does not make it disappear. Washington is now setting the terms for a sector that Texas policymakers thought they had partially tamed on their own.
Two Experiments, One State on the Line
From a policy standpoint, the United States is running two concurrent experiments. In the Medicare pilot, CMS and its partners will gather data on whether clinician-guided hemp products reduce pain, improve sleep, or lower downstream costs in selected patient populations, using the $500 annual ceiling as both incentive and constraint. In the broader economy, the new hemp definition and 0.4mg cap will test how resilient an industry can be when its core products are redefined into illegality by a few lines in a funding bill nobody was watching closely enough.
For Texas, which embraced hemp as a politically viable middle ground when broader cannabis reform remained a bridge too far, the stakes of both experiments are anything but theoretical. Producers, processors, and retailers were told the rules: test your products, get licensed, pay your taxes, and you can build a durable business under state and federal law. Now they are learning that the most important rule was always subject to renegotiation in a distant capital, with local investment and livelihoods treated as acceptable collateral. Whether Texas responds to that reality with the same ferocity it brought to Austin, or accepts it as the price of playing in a federally defined market, will say a great deal about whose experiment this actually is — and who gets to survive it.
Why the New DSHS Rules Demand Immediate Legal Challenge
The Department of State Health Services has finalized sweeping amendments to 25 Texas Administrative Code Chapter 300, the regulatory framework governing the manufacture, distribution, and retail sale of consumable hemp products in Texas. These revisions, adopted by the Texas Health and Human Services Commission, represent the most aggressive regulatory intervention in the hemp market since HB 1325 legalized the industry in 2019.
The agency presents these changes as a routine response to Executive Order GA-56 issued by Governor Greg Abbott on September 10, 2025, which directed regulators to strengthen age restrictions, testing standards, and compliance requirements within the hemp marketplace. What has emerged, however, is not a modest regulatory update. It is a sweeping administrative rewrite of the legal framework governing hemp commerce in Texas.
The record of the rulemaking itself reveals the depth of concern surrounding these changes. During the public comment period, DSHS received 1,421 comments from retailers, manufacturers, trade associations, advocacy groups, and individual citizens. The overwhelming majority opposed the proposed rules, warning that the measures would exceed statutory authority, impose crushing costs on lawful businesses, and destabilize a market that the Texas Legislature deliberately created. DSHS acknowledged these objections but largely dismissed them, adopting most of the rules substantially as proposed.
The final result is a regulatory package that raises serious constitutional, statutory, and administrative law concerns.
Administrative Overreach Masquerading as Regulation
HB 1325 was enacted with a clear and limited purpose: to establish a lawful marketplace for hemp products consistent with federal law. The statute authorized DSHS to regulate manufacturing, distribution, and retail sale of consumable hemp products. It did not authorize the agency to extinguish the industry through administrative maneuver.
Yet the newly adopted rules risk doing exactly that.
The amendments impose annual licensing fees of $10,000 per facility for manufacturers and $5,000 per location for retailers, dramatically increasing the cost of participating in the hemp marketplace. DSHS justified these increases as necessary to fund inspections, laboratory testing, administrative enforcement proceedings, and cooperative enforcement activities with the Texas Alcoholic Beverage Commission and the Department of Public Safety.
These are not minor adjustments. They represent a structural shift toward an enforcement-heavy regime that treats hemp businesses less like ordinary retailers and more like regulated vice industries. For small operators, particularly independent shops serving rural communities, the new fee structure alone may prove unsustainable.
The THCA Redefinition: A Regulatory End-Run Around the Legislature
The most consequential change lies in the agency’s redefinition of how THC content is calculated.
Under the amended rules, laboratories must calculate “total THC” by including tetrahydrocannabinolic acid (THCA) along with delta-9 THC, accounting for the chemical conversion of THCA into THC during heating.
At first glance, the change appears technical. In reality, it carries sweeping consequences for the marketplace.
Many hemp flower products sold lawfully in Texas contain THCA levels that exceed the 0.3 percent delta-9 THC threshold once conversion is taken into account. By redefining THC to include the theoretical conversion of THCA, regulators have effectively rendered large segments of the hemp flower market unlawful without any vote by the Texas Legislature.
This maneuver illustrates a classic form of administrative overreach. Agencies possess authority to interpret statutes and implement regulations. They do not possess authority to rewrite legislative policy decisions through regulatory interpretation.
A Compliance Structure Designed to Break the Market
The amended rules also impose an expansive network of compliance obligations across the entire hemp supply chain.
Manufacturers must conduct extensive testing for cannabinoid content, residual solvents, pesticides, heavy metals, and microbiological contaminants. Retailers must verify packaging compliance, maintain documentation, and ensure that every product meets detailed labeling requirements derived from federal food regulations.
The rules further authorize unannounced inspections by DSHS and the Texas Alcoholic Beverage Commission, and businesses must consent to these inspections as a condition of obtaining or maintaining licensure.
Taken individually, many of these provisions might appear manageable. Taken together, they create a dense regulatory architecture that will strain even well-capitalized operators. Smaller businesses, which form the backbone of the Texas hemp retail sector, may find the cumulative burden impossible to sustain.
The Political Context Behind the Rulemaking
These regulatory changes did not arise in a political vacuum.
For several years, prohibition-minded officials have attempted to frame hemp as a public safety crisis, despite the absence of credible evidence supporting such claims. Legislative attempts to impose sweeping bans have repeatedly encountered resistance from industry stakeholders and lawmakers who recognize the economic importance of the hemp market.
Faced with those obstacles, policymakers have increasingly turned to administrative rulemaking as an alternative route to impose restrictions that could not easily pass through the legislative process.
This approach carries an undeniable political logic. Regulations can accomplish quietly what legislation struggles to achieve publicly. But that strategy also carries legal risks, because administrative agencies remain bound by the limits of statutory authority.
When those limits are exceeded, the courts provide the proper forum for correction.
Why a Lawsuit Should Be Filed Immediately
The Texas hemp industry now faces a pivotal decision. Businesses can attempt to comply with a regulatory regime that threatens their economic survival, or they can challenge the legality of these rules in court.
A legal challenge is not merely justified. It is essential.
Several fundamental legal questions demand judicial review. One concerns whether DSHS exceeded the authority granted under Texas Health and Safety Code Chapter 443 by effectively redefining hemp through the inclusion of THCA conversion in total THC calculations. Another concerns whether the agency imposed regulatory burdens, particularly licensing fees and compliance requirements, that are disproportionate or unsupported by legislative authorization. A third concerns whether the rulemaking process itself complied with the procedural requirements of the Texas Administrative Procedure Act, which obligates agencies to provide meaningful justification for regulatory changes and to engage seriously with public objections.
These are precisely the kinds of disputes that courts exist to resolve.
The Industry’s Moment of Decision
Texas now stands at a crossroads.
One path leads toward a tightly restricted hemp market dominated by a small number of large operators capable of navigating an increasingly complex regulatory system. The other preserves the open, entrepreneurial marketplace that HB 1325 was intended to create when the Legislature legalized hemp production and commerce.
Moments like this test whether the rule of law remains meaningful in the face of administrative power. The courts exist precisely to address such questions.
For the Texas hemp industry, the moment for hesitation has passed. The rules have been written. Their consequences are already visible.
What remains is the willingness to challenge them.
While out-of-state vendors are not directly bound by the Texas Department of State Health Services (DSHS) retail ban, ordering THCA flower into Texas after
March 31, 2026, carries significant legal and practical risks.
Retail Ban Scope: The new DSHS rules specifically prohibit the manufacture, distribution, and retail sale of smokable hemp products (like THCA flower) within the state of Texas.
Out-of-State Loophole: Because DSHS regulations primarily govern Texas-licensed businesses, some out-of-state operators may continue to ship to Texas. However, Texas law requires any business selling consumable hemp products to Texas residents to register with the state, which may lead many reputable vendors to stop shipping to avoid legal conflict.
Confiscation Risk: Law enforcement can seize packages they suspect contain illegal substances. Under the new “total THC” calculation effective March 31, most THCA flower will test above the 0.3% limit, allowing the state to classify it as illegal marijuana.
State vs. Federal Conflict: While THCA flower may be federally compliant under the 2018 Farm Bill (based on Delta-9 levels), Texas’s stricter “total THC” standard means these products can be treated as controlled substances once they enter the state.
Possession Status: Current DSHS rules target the sale and distribution, not the possession by individuals. However, since THCA flower is physically indistinguishable from illegal marijuana without lab testing, possession still carries a high risk of “legal scrutiny” or arrest.
The direct answer is a qualified yes, but with significant risks and requirements. The new DSHS rules primarily govern the manufacture, distribution, and retail sale of hemp products within the state of Texas.
Here is how out-of-state vendors are impacted:
DSHS Registration Requirement: Any online retailer based outside of Texas that sells consumable hemp products to Texas residents is still required to register with the DSHS.
Retail Sale Loophole: The Texas Supreme Court has previously upheld that while Texas can ban the manufacturing of smokable hemp in-state, it cannot necessarily ban the retail sale of smokable products manufactured elsewhere, provided they meet state testing and labeling standards.
The “Total THC” Conflict: The new rule changes the state’s calculation to Total THC (THCA + Delta-9). While an out-of-state vendor might be legal in their home state, once the product enters Texas, it may be classified as illegal marijuana if it exceeds the 0.3% Total THC limit.
Vendor Risks and Compliance Out-of-state vendors will likely fall into two categories:
Risk-Averse Vendors: Many major out-of-state brands are already announcing they will stop shipping THCA flower to Texas to avoid potential legal conflict with state authorities or to prevent their products from being seized by law enforcement.
Gray Market Vendors: Some smaller or less cautious vendors may continue shipping, relying on the fact that DSHS rules target businesses rather than consumer possession.
