What’s Next for Texas Hemp?

By Shawn Hauser

May 19, 2020

With 127 million acres of farmland, Texas is the third largest agricultural producing state in the U.S., yet was one of the last states to legalize hemp when it finally reformed its outdated laws in 2019.

Although growing hemp seemed like a no-brainer for Texas—the state has the most farms in the country, a growing consumer market, and some of the top agricultural research institutions—the state lost out on 6 years of research and production that other states now have under their belts since the passage of the 2014 Farm Bill. Now, with the benefit of hindsight gained from watching other states go through the process, Texas is coming in strong as it enters its first year of hemp production. The state issued its first hemp production licenses in March of 2020 and has already licensed hundreds of growers. Leading agricultural research institution, Texas A&M AgriLife, is all-in on industry research and development through initiatives such as planting hemp variety trials to ensure the industry is positioned for success with reliable, science-based assessment of varietal performance in the state.

Proposed Hemp Rules

On April 23, Texas’s Department of State Health and Human Services (DSHS) issued proposed rules regulating the manufacture and sale of consumable hemp products, including “products containing hemp cannabidiol (CBD).” The rules include robust quality control and licensure requirements for manufacturers and retailers of hemp products. Texas’s rules are the latest example of the type of regulation, quality, and safety controls that many states feel are necessary to ensure public safety and a regulated marketplace while the FDA fails to police the growing market as it determines how it will ultimately regulate these products. Notable takeaways from the Texas rules include:

  • The law currently prohibits the manufacture and sale of smokable hemp. This may prove to be a battle in Texas, as it has in other states like North Carolina and Indiana. This could also mean that consumers will look to out-of-state businesses to satisfy the growing market demand for smokable hemp.

  • All manufacturers, processors, retailers, and distributors of consumable hemp products (any consumable hemp product that is not Generally Recognized as Safe by the FDA) must obtain a license for each of its locations. To be eligible for a license, the business’s owners must not have any felony drug conviction in the last 10 years.

  • Any hemp or hemp derivative manufactured or sold in Texas must be tested by an accredited lab to determine that the THC content is less than 0.3%, and to test for the presence and concentration of cannabinoids, residual solvents, heavy metals, pesticides, and harmful pathogens.

  • Facilities across the supply chain will be inspected like other food production facilities.

  • All products sold in Texas marketed as containing CBD must be labeled with the lot identification number, lot date, product name, the name of the product's manufacturer, telephone number and email address of manufacturer, and a Certificate of Analysis that the delta-9 tetrahydrocannabinol content concentration level on a dry weight basis— when reported with the accredited laboratory's measurement of uncertainty—produces a distribution or range that includes a result of 0.3% or less. The required label may be in the form of a URL or QR/barcode that leads to the required information.

  • Hemp manufacturers, processors, distributors, and retailers must comply with all relevant laws and rules applicable to the manufacture, processing, distribution, and sale of standard consumable products, such as good manufacturing practices.

So, what’s next for hemp in Texas?

DSHS is currently accepting comments on the new rules in order to finalize them and issue licenses for manufacturing and retail by this summer. The public comment period is open through June 8, 2020. Once rules are in place and licenses are issued, operators must obtain proper licensure and comply with labeling and other applicable requirements. We will likely see an increase in state enforcement against non-compliant products.

Throughout 2020, the state will go through its first year of planting and will be an important testing ground for the practicality and viability of the USDA’s restrictive hemp production regulations, which contain onerous provisions for testing, disposal, and sampling that create significant risks for farmers having to destroy their crops. Texas is one of 17 states with hemp production plans approved by the USDA and operating under the restrictive federal rules.

As the program develops, we will begin to learn what cultivars grow best in the state and will likely see innovative research and development coming out of Texas state universities and research institutions. In addition, we will look into the potential of hemp animal feed, the growth of the industrial hemp industry and its potential to replace plastics, biofuels, concrete, and other materials, and—if things go well—see the growth of a major new Texas industry in the next few years.

Although the state was a late adopter, Texas had the benefit of lessons learned from other states who have legalized hemp and studied its cultivation for years. With this benefit, it did a lot of things right. Texas has treated hemp like other agricultural commodities, included robust quality and safety controls on the manufacturing and retail side, and did not try to ban CBD products like some other states—which has proven to be a completely impracticable prohibition adverse to the interest of public safety.

This is undoubtedly the time for the Texas hemp industry to shine. As this promising industry has its beginning embedded in a pandemic and recession, its importance as a commodity-producing, job-creating, farmer-supporting industry cannot be understated. Texas, with its incredible farming communities, over 100 million acres of farmland, and large manufacturing and research infrastructure, has the power to make it happen.

For any business growing, manufacturing, or selling hemp products into Texas, it is important to read and understand the new rules and provide comment. Please contact our Texas office for more information on providing your public comment.

Texas Resources

This article is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. This material may be considered attorney advertising under certain rules of professional conduct.