Texas court weighs whether smokable hemp can stay on shelves after Friday

From KUT News:

A court fight in Austin this week could determine whether Texans can keep buying cannabis flower, pre-rolls and concentrates sold under the state’s hemp laws.

The products are back on store shelves for now because of a temporary court order set to expire Friday at 5 p.m.

But Texas hemp businesses are asking Travis County’s 261st Civil District Court to issue a longer-lasting injunction that would keep parts of the state’s new hemp rules on hold while their lawsuit against state health regulators plays out. The lawsuit could take years to resolve.

The plaintiffs, seven Texas businesses and two trade associations, say the rules would upend a multibillion-dollar market and force small shops to close.

The defendants, represented by lawyers from the Texas Attorney General’s Office, say state regulators are not banning hemp, but clarifying how THC should be measured so businesses cannot sell products that become far more mind-altering when smoked, vaped or heated.

State asks judge to stop KUT News from recording

At the start of the of the three-day hearing that began Tuesday, the Attorney General’s Office asked the judge to deny a formal request from KUT News to record the hearing, claiming such reporting would “would unduly distract participants.”

Judge Daniella DeSeta Lyttle rejected the state’s request.

“What transpires in a courtroom is public property, and a trial proceeding is public information,” Judge Deseta Lyttle said. “To disallow a media request to record this public event … would be equivalent to conducting this hearing in private.”

Delta-9 vs THCA

The hearing then turned to a central question: Did Texas health regulators clarify the state’s hemp rules or effectively rewrite state law?

Amanda Taylor, an attorney for the hemp industry, framed the case as a separation of powers fight.

“We have a situation where the state defendants, the administrative officials, have overreached their delegated rulemaking authority into the territory of the legislature,” Taylor said.

Under Texas law, hemp and marijuana are legal categories for cannabis. The difference is the amount of Delta-9 THC, the main psychoactive compound in the plant. Hemp has no more than 0.3% Delta-9 THC by dry weight.

But hemp flower and concentrates can contain THCA, a naturally occurring compound that is not psychoactive in the same way, but converts to Delta-9 when smoked, vaped or heated.

That distinction helped create a large retail market for cannabis flower and concentrates in Texas and other states that have not legalized recreational marijuana.

The new Department of State Health Services rules, which took effect March 31, count THCA toward a “total Delta-9 THC” calculation, effectively prohibiting the sale of the most popular consumable hemp products.

Smokable products account for well over half of the market in Texas, according to Robin Goldstein, director of the Cannabis Economics Group at UC Davis.

Lawyers for the Attorney General’s Office said the rules are consistent with existing state and federal agricultural regulations governing the cultivation of hemp, which require a “total Delta-9 THC” test 30 days before harvest.

“When these goods are used in the manner intended by the manufacturer, it is not uncommon for the user to consume a cannabis product that now contains 100 times the legal amount of Delta-9 THC,” argued Zachary Berg, a lawyer with the Texas Attorney General’s Office.

Hemp businesses call rules ‘devastating’

The hemp industry also challenged sharply higher fees included in the new rules. Retail license fees increased from $150 to $5,000 per location per year. The annual cost of manufacturing licenses rose from $250 to $10,000 per facility.

The state argued higher fees are needed because DSHS can’t inspect businesses often enough under the current fee structure.

But Beau Whitney, chief economist at Whitney Economics, testified for the hemp businesses that DSHS failed to meaningfully analyze how the rules would affect businesses, workers and local economies.

“I found it surface level and incomplete, to be quite frank,” Whitney said of the state’s economic analysis. “There was lots of data available to them, and they just didn’t leverage it.”

Whitney estimated the Texas hemp market supports nearly 49,000 jobs and has a total economic impact of almost $10 billion. The state challenged his methodology, noting that he relied partly on earlier survey data and didn’t conduct a new survey specifically for the lawsuit

Business owners testified the rules would reach beyond flower and concentrates.

Cosmetologist Lauren Bridges, a salon owner who also founded Alchemy TX in Longview, said she developed a hair growth serum that includes THCA. Bridges said if the regulations take effect, it could be economically “devastating.”

“It’s what sustains me and my family of four,” Bridges testified, adding she had kids ages 2 and 16.

Medical marijuana company sides with state

One state-licensed medical marijuana company has also urged the court to reject the hemp businesses’ request. In a court filing supporting the state’s position, Texas Original Compassionate Cultivation said it is one of the original licenses in the state’s limited medical marijuana program.

The company argued hemp businesses are using THCA products to compete with the more tightly regulated medical marijuana system.

Texas Original said it commissioned independent testing of more than 200 products sold in Texas and claimed the results showed “the vast majority” were not legal hemp, but high-potency marijuana products being marketed as hemp.

What’s next?

The hearing is expected to wrap up Thursday after the state brings in a witness and lawyers for both sides make closing arguments.

Judge Deseta Lyttle must then decide whether to issue a temporary injunction. Either side could appeal if they disagree with the outcome.

Either way, the ruling will have sweeping consequences for the Texas hemp industry and for consumers who have become accustomed to having easy access to cannabis products.

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