Texas hemp businesses head to court to fight new state rules

AUSTIN, Texas - Texas hemp businesses are heading to court to fight new state rules that they say could cripple the entire industry.

The Texas Hemp Business Council and several other industry advocates are behind the massive 330-page lawsuit against the state.

The backstory:

A major legal battle is brewing over the future of the hemp industry in Texas. A coalition of business owners and advocacy groups are suing the state to block new administrative rules that took effect last week.

The lawsuit centers around two things: the definition and dollars. Plaintiffs allege that the state is overstepping its authority by unilaterally redefining the legal standard for hemp.

"People have created businesses over the past six years based on those definitions; and now they're being told that those definitions don't count," said Cynthia Cabrera, president of the Texas Hemp Business Council.

A 2019 law set a specific limit for delta-9 THC, but now the new rules use a different formula that counts other compounds, like THCA.

Industry leaders say this effectively bans products that lawmakers already made legal, meaning business owners can no longer sell certain inventory.

"For some people, flower constitutes 50% or even 90% of sales. So this is devastating and has a devastating effect on the revenue that is coming into their business," Cabrera said.

The state claims it needs to measure "total THC" to accurately capture a product's potency, arguing that overnight a billion-dollar industry appeared operating off a legal loophole it never agreed to.

The second core challenge comes down to dollars. The new regulations include heavy fines and penalties for stores caught selling non-compliant products. Retailers could have their licenses revoked and face up to $10,000 in violation fees for each day the items are sold. The suit also challenges massive fee hikes for manufacturers and retailers.

Business owners warn that if the rules aren't blocked, the state could see several thousand business closures and tens of thousands of job losses.

"This industry has been licensed, regulated and legal for six years. So to suddenly decide that people who invested their life savings and quit their jobs to start businesses don't deserve to keep their businesses is a terrible look for a state that claims to be as business-friendly as Texas does," Cabrera said.

One thing both sides can agree on is keeping these products out of the hands of children.

"No one argues against things that support consumer safety or limit access to adults. We want to make sure that adults are the ones that get these products, not anybody else. There's never been any pushback on that. I think child-resistant packaging is a good idea," Cabrera said.

What's next:

Rules regarding age verification and child-resistant packaging are not being challenged in the lawsuit.

The state has not yet filed a formal response, but the plaintiffs are asking a judge for an immediate temporary restraining order to halt the rules. That hearing is expected to take place Friday.