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Tag: Legislation of Texas HEMP

The Possible Fate of Delta-8 in Texas

Texas advocates and business owners should be prepared at minimum to fight like hell if needed.

Texans turned out to the polls late October and early November to show who they favored to be stewards of Texas for the next two to four years.

The results are a largely unchanged Texas legislative landscape. Republicans still have a majority, a few new faces will appear, and statewide incumbents that ran kept their seats.

Last year, I chimed in on delta-8 in Texas. I noted that in this next legislative session we can expect to see varied interests coming out on all sides, including medical marijuana groups that are going to have input about this, and the hemp industry needs to be ready with answers and be ready to fight for their products. We are all in this together and we all need to push the industry forward together in a healthy and responsible fashion if we want this to work.

I think those words are still true today. With what everyone saw transpire in the 2021 legislative session, people should be ready for a war on the hemp front overall. Delta-8 is not the only thing on the line.

We watched as several bills moved over to the senate, to include one that dealt with penalty reduction measures for concentrates of marijuana. The hemp clean-up bill was involved in the mess that resulted in the death of both bills.

Take a look at the current planks for the Republican Party of Texas and you’ll notice that they mention hemp. That the party wishes to reduce the regulation of hemp in the state. How would that even be done in a state where the state is looking for its program to meet just the minimum federal requirements to stay as open as possible?

The program gets more restrictive is what takes place. How can removing regulation make things more restrictive you may be asking. Currently the state of Texas has a regulation as part of the law for the hemp program that keeps a county from banning hemp as a whole or in part. They cannot ban the transportation through their county, per federal law, but when has that stopped Texas from still arresting for the transportation of hemp and confiscating the plant?

Deregulating in that area would allow places like Montgomery County, Navarro County, and counties across the panhandle to explicitly ban the substance. It could be flower they ban, it could be oils that they ban. Edibles could go away, so could industrial hemp if they so desire. They could just say that hemp as a plant is banned there.

Delta-8 was the obvious target last session. It was setup in a way to cause factions between the hemp industry. Farmers vs shops was the dichotomy that was evident in the end. Both should be on the same team though. The farmers make money from their product currently being sold by shops as the industrial side is still getting set up to process mass product. Ending either side of that equation in the next few years will cripple the Texas hemp market even further.

Federally a court has ruled that delta-8 is a legal item on that level. That if congress intended for it to not be an item of legal availability, the body could have done something about it by now. There is nothing that explicitly states though that a state has to keep a specific isomer.

This should be expected in the upcoming legislative session. And it must be said as a big picture item that hemp bills are not the only place where hemp can get torn apart. The industry will have to pay attention to all of the cannabis bills put forward this session. Delta-8 could face issues in any number of bills.

Pay attention to the advocacy organizations in the state and when they are releasing updates about legislative items. If you’re a consumer, be ready to write letters and show up to hand out information or be available when a mass lobby day is announced. For business owners and consumers alike, be ready to testify at committee hearings that could be scheduled for 8am one morning and not have the bill heard until 9-10pm at night or possibly later.

If you are a business owner in this space, this is part of running your business from the start of the legislative session, until the end of said session in 2023. Your business is on the line, your farm is on the line, your processing facilities are on the line. If you are a consumer, your favorite products are on the line. Do not let this slip away without a massive push to keep it in place at a minimum.

Up in Smoke: How Texas Burned Its Smokable Hemp Industry

Texas became the 43rd state to pursue a hemp production program when, on June 10, 2019, Governor Greg Abbott signed HB 1325, a bill relating to the production and regulation of hemp, into law. Currently, Texas law prohibits “the processing or manufacturing of a consumable hemp product for smoking.” Tex. Health & Safety Code § 443.204 (4). “Smoking” is defined as “burning or igniting a substance and inhaling the smoke or heating a substance and inhaling the resulting vapor or aerosol.” Id. at § 443.001 (11).

Interestingly, the original version of HB 1325, introduced by Representative Tracy King, contained no mention of smoking or smokable hemp. The first instance of the terms appearing occurred on April 15, 2019, in the Committee Substitute. Of note, the Committee Substitute contained no mention of inhaling “vapor or aerosol,” language later adopted that was intended to encompass vaping products.

The Texas Legislature granted regulatory authority to the Texas Department of State Health Services (“DSHS”) to draft and implement the rules that will govern the consumable hemp product program. On May 8, 2020, DSHS published its Proposed Rules in the Texas Register, which include the following prohibition: “[t]he manufacture, processing, distribution, or retail sale of consumable hemp products for smoking is prohibited.” § 300.104. Though it was no surprise that DSHS intended to ban retail sale of smokables, as a previous draft version of the rules released in December of 2019 included the retail ban, the rule has been expanded to include distribution of smokable hemp products as well.

The smokable hemp market is one of the fast-growing sectors in the hemp industry. In 2019 alone, flower and pre-roll sales were estimated to constitute $70.6 million dollars of the hemp market share. Hemp flower is the most lucrative portion of the hemp plant in today’s markets, for both farmers and retailers. So why has Texas, a state that touts itself for its agricultural prowess and favorable agricultural policies, elected to kill its smokable hemp market? While law enforcement may aver that no roadside testing mechanisms exist to differentiate hemp from marijuana, at least 40 other states currently operate hemp programs, and have for many years, with permissive flower sales, despite the lack of available quantitative field testing for law enforcement. Across the United States, hemp remains a highly regulated substance, subject to a hodge-podge of packaging and labeling laws, many of which, including Texas, require a URL link or QR code linking to a certificate of analysis, which demonstrates that the product contains less than .3% tetrahydrocannabinol.

WROCLAW, POLAND – FEBRUARY 04, 2020: Texas State Flag and word LEGALIZATION made of small wooden letters. Drug policy. Legalization of marijuana.

The statutory prohibition on the manufacturing and processing of smokable hemp products has already forced existing Texas companies to move their businesses out of state. Where Texas could have a taxable, job-generating business base, it has instead forced companies to abscond from its borders, taking other permissible factory operations, such as edible products, with them. As if that were not dire enough, DSHS now intends to override the Texas Legislature and ban the retail and distribution of smokable hemp – a move that will kill the entire smokable hemp market in Texas.

Unless DSHS removes the retail and distribution ban from its Final Rules, it is likely that a legal challenge will arise. As an agency, DSHS does not have the authority to adopt a rule contrary to the statute. Many in the hemp industry believe that a legal challenge based on the federal commerce clause would be an assured success and cite to an Indiana case, C.Y. Wholesale Inc., et. al. v. Holcomb, et. al., cause no 1:19-cv-02659 (S.D. Ind. 2019), as a final adjudication on the merits. However, an Indiana federal district court decision is not binding on the state of Texas. The Indiana decision was not a final disposition of the case. Instead, the order which is frequently cited was an order granting a preliminary injunction, which the state of Indiana promptly appealed to the Seventh Circuit, another forum where a decision will not bind the state of Texas. Lastly, Indiana’s challenge differed substantially from what a potential federal commerce clause challenge in Texas would look like because the Indiana law criminalized the possession of smokable hemp by an individual. A Virginia resident simply driving through Indiana could be arrested for possession of a smokable hemp product and charged with a Class A Misdemeanor. Texas law currently does not criminalize possession of a smokable hemp product by an individual.

So what can be done to fuel the flame for a smokable hemp market in Texas? First and foremost, you can submit public comment on the DSHS Proposed Rules until June 7, 2020, by emailing [email protected], with “Comments on Proposed Rule 19R074 Hemp Program” noted in the subject line of the email. Because the ban on manufacturing and processing is statutory, DSHS has no authority to rescind this prohibition. To end the prohibition on manufacturing and processing, you need to contact your Texas Representatives and Senators now – our legislative session gears back up in January of 2021, and if resolution is not obtained in 2021, the Texas Legislature will not meet again for regular session until 2023.

Chelsie Spencer is a cannabis and hemp attorney at Ritter Spencer PLLC who represents clients in all facets of the cannabis and hemp industries, including dispensaries, growers, processors, manufacturers, retailers, and more. Forbes Magazine dubbed Chelsie the “rare friendly face in the midst of a cutthroat CBD hurricane, the person you want on speed dial when things turn sour.”