Update:Â Texas Senate passed SB3 on 20 March with 24-7 votes.
The Texas Senate voted on Friday to pass a controversial law that will effectively ban the majority of hemp-derived goods in the state. Industry stakeholders are now focusing their attention in the House where they expect to encounter more opposition to the plan to eliminate thousands of companies and lose the state millions of dollars in revenue.
Senate Bill 3 – spearheaded by Charles Perry (a Republican senator from Lubbock), a Republican, was approved late last week in the Senate State Affairs Committee with only 6 senators voting. This updated law prohibits the use of all cannabinoids derived from hemp, with the exception of CBD and CBG. It also imposes annual fees for retailers and manufacturers in excess $10,000.
Cynthia Cabrera is the Chief Strategy Officer at Hometown Hero. “(The committee) made a bad bill worse. That’s something I couldn’t have imagined.”
It is the economic impact of this bill that has caused so much controversy. The state’s financial note indicates that only 10% of companies would be impacted, but industry representatives say this number is grossly underestimated.
Cabrera stated that the loss of sales tax revenues and unemployment benefits would cost at least $760,000,000 to the state. “You are talking about 50,000 unemployment cases.”
Cabrera noted that despite the fact they used what she called understated estimates of economic impact, even the conservative Texas Policy Research Institute had urged legislators to vote no on the bill. Cabrera said that the conservative Texas Policy Research Institute urged lawmakers to vote against the bill, despite using what she called understated economic projections. The impact is 10 times greater. “Yet they said to vote against this.”
Whitney Economics shares an upcoming report with you. Green Market Report The evidence supports the claim that hemp-based products have not been identified as a safety issue by federal authorities.
The report says that while a handful of cannabinoids are making headlines, many cannabinoids from hemp have proven to be commercially viable. The FDA publicly stated that intoxicating cannabis cannabinoids are not a public health crisis. However, other cannabinoids, such as Delta-8, have been maligned by the media.
Cabrera says it even better: “The FDA has publicly declared that cannabinoids do not pose a public health crisis that would require their intervention.”
Questions regarding enforcement abilities add a new dimension to this debate. Katharine Neill Harris is a Rice University Baker Institute fellow who pointed out the Department of State Health Services had conducted minimal supervision under current regulations.
Harris noted that only 471 products had been tested in the five-and a-half years since Harris’s appointment. “This is incredibly low,” Harris added. It’s anyone’s guess what the enforcement looks like in the real world.
Even so, hemp’s industry strategy is still aimed at the House, not the Senate. They believe that they will find more allies there.
Cabrera stated that there are a number of members of the House of Representatives who do not want to be responsible for creating tens and thousands of jobs or shutting down an entire industry with a value of billions.
HB4242 is a House alternative bill that industry advocates support. They describe it as a bill of “reasonable regulations” which would not eliminate the hemp market. Rep. Briscoe CAIN’s bill, which is a different approach to the current hemp legislation and safety regulations, was authored by Rep. Cain. This measure requires product testing and child-resistant packaging. It also prohibits marketing to minors.
In the midst of this legislative debate, there are competing interests. Separately, HB 28 in the House, would allow hemp drinks to be sold while prohibiting other products. This bill reveals divisions between different commercial sectors.
Cabrera said that a bill had already been passed that banned all other drinks except for alcoholic beverages. This would benefit the established beverage industry at the expense smaller companies.
Cabrera added that this likely also includes established, politically-connected marijuana MSOs who are believed to work behind the scenes in order to suppress the hemp industry, which is more egalitarian, in Texas.
Senate Bill 1505, which was intended to modestly extend Texas’s restrictive medical marijuana law, also advanced with no amendments. The bill allows for the expansion of Texas’ medical marijuana program from 3 to 6 dispensaries and satellite locations.
Next week, Whitney’s economic impact report will be released in its entirety. This could provide ammunition to House opponents who are opposed to the ban.