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Texas Hemp Rules Finalized: What It Means for Your Business and Your Wallet

Key Takeaways

  • TABC finalized rules require age 21 for consumable hemp sales and mandatory ID checks for its 60,000 license holders.
  • The new rules remove a strict "one strike" license cancellation policy, replacing it with temporary suspensions for less severe violations.
  • DSHS is also creating rules for non-TABC licensed retailers, proposing a 13,000% increase in licensing fees for oversight.
  • Governor Abbott issued an executive order for regulation after legislative attempts to ban consumable hemp failed.
  • A federal ban on most consumable hemp products, effective November, could preempt current state regulations, creating significant legal uncertainty.
So, you've heard about all the talk around hemp products in Texas, right? For a while, things felt a bit up in the air, but the Texas Alcoholic Beverage Commission (TABC) just wrapped up its part in creating some solid rules for consumable hemp. They approved these new regulations, which means about a year's worth of agency effort to get this industry more organized is mostly done. You'll want to know how this affects you and local businesses. Now, if you're thinking these new rules are a complete shake-up for the $5 billion hemp market, they aren't. They mostly just make permanent the temporary rules that have been around since last September. The big things? If you're buying or selling these products, you need to be 21 or older, and businesses have to check your ID. It's a lot like how alcohol sales work, and TABC's chair, Robert Eckels, made that comparison directly. He mentioned concerns about developmental problems and the need for maturity when using these products, saying they can be harmful to younger folks and the community. These rules hit about 60,000 TABC license holders – that includes your local convenience store, restaurants, and liquor shops, many of which sell hemp products. But here's a bit of good news for businesses: the TABC pulled back on one really strict measure. The emergency rules had a "one strike" policy, meaning if a store sold to a minor or didn't check an ID, they could lose their license completely. That's a huge deal, potentially putting a business out of action over a single mistake. Industry groups, like those representing convenience stores, voiced concerns during the public comment period, saying it was just too harsh. The new, permanent rules are more flexible; they allow for temporary license suspensions instead of outright cancellations for less serious slip-ups. That’s a pretty big win for small businesses, giving them a bit of breathing room. TABC's General Counsel, James Person, explained that his agency is now the main enforcer for these rules, thanks to an agreement with the Department of State Health Services (DSHS). They're ironing out a contract to make that official. This clarifies who's in charge, which is a common point of confusion when new regulations come out. Not everyone is happy, though. Some folks spoke up during the public comment period, pushing for an outright ban on consumable hemp or at least raising the age limit even higher, like to 25 or 30. They argue these products are addictive and harmful, no matter your age. TABC Commissioner Deborah Gray Marino acknowledged those concerns, calling them "heartbreaking conversations." But Eckels, who's been around Texas politics for a while, isn't calling this the final word. He expects the Texas Legislature will try to pass more laws about hemp when they meet again in 2027. It's a policy debate that's clearly not going away anytime soon. And it's not just TABC doing the regulating. The DSHS is also working on its own set of rules. Their rules will cover places not under TABC's umbrella, like smoke shops and online retailers that don't sell liquor. DSHS also plans to ban sales to anyone under 21. Here's something that will definitely catch your eye: DSHS is looking to hike its licensing fees for selling these products by a massive 13,000%! They say it's necessary to fund their new oversight efforts. Good to know this fee increase doesn't apply to those TABC-licensed businesses we talked about earlier. Both TABC and DSHS started this rule-making process last fall because Governor Greg Abbott issued an executive order. He did this after the Legislature couldn't agree on what to do. Lawmakers debated a total ban, and both the House and Senate actually voted for one. But Governor Abbott vetoed it last summer. He then tried to get the Legislature to regulate THC during two special sessions, but they just couldn't find a middle ground. So, he took matters into his own hands with that executive order, which put him at odds with Lieutenant Governor Dan Patrick, who really pushed for a ban. Here’s a plot twist that could change everything: a federal ban on most consumable hemp products was approved last year and is set to kick in this November. If that happens, a lot of the state-level work TABC and DSHS are doing could become pointless. The industry is already planning to lobby hard to get that federal provision repealed. It’s a classic example of federal law potentially preempting state law, creating a complicated legal situation for businesses and consumers. Ultimately, while these new state rules bring some clarity, the legal and policy battle over hemp in Texas—and nationally—is far from over. You can expect more debates, more legislative attempts, and likely more legal challenges in the months and years ahead. It’s a dynamic and evolving area of law and public policy.