Texas hemp operators mounted a fierce defense against proposed legislation on Monday that would drastically restrict the state’s hemp industry, and potentially eliminate most of its consumable products. Bill would transfer the regulatory authority of hemp to the Alcohol regulators.
In a marathon session, the Texas House State Affairs Committee heard from dozens industry representatives during an extensive hearing about House Bill 28 as well as its Senate counterpart Senate Bill 3 These measures restrict hemp-based products to only beverages, while banning gummies and other hemp forms such as tinctures, smokable, and gummies.
Vast devastation
The industry argued that the bill would destroy a market which has flourished ever since the federal Farm Bill of 2018 legalized hemp (defined as cannabis with less than 0.3% of THC in dry weight) and after the State of California passed hemp laws for 2019 which, according to many, paved the road for a boom in the hemp market despite the lack of comprehensive guidance.
“If this bill passes, it will wipe out over 50,000 jobs across the state, mine included and my nine employees that I have built over the last five years,” said Stephen Gurkha III, co-owner of Elevated CBD Smoke, which operates two locations in the Bryan-College Station area.
Tara Littell is the director of franchise operation for CBD American Shaman. She described this bill as “not a regulation but devastation.”
Littell said that customers “with conditions where they are unable swallow” would be hurt by the ban.
Lukas Gilkey, CEO of Hometown Hero, testified that “SB3 is simply a venture capital-backed, state-sanctioned monopoly play that would disenfranchise and leave … people unemployed for one company that stands the benefit.” Gilkey added that “HB28” is the same. It would ban all categories except for beverages, which will be given to well-funded alcohol companies, and not those who have invested six years in building up the hemp industry in Texas.
Mark Bordas is the executive director of Texas Hemp Business Council. He questioned the logic that would limit products to only beverages.
Bordas stated that “in fact, many in the industry will be negatively impacted if they limit their product offering to THC liquids sold via a single route of distribution: package shops.”
He said that while hemp-infused beverages represent a growing sector – “currently valued at $400 million but forecasted to reach $8.7 billion in market valuation by 2033” – it’s unclear why liquids would be considered safer than other forms of consumable hemp.
Better enforcement
The Texas Alcoholic Beverage Commission would be responsible for overseeing the Texas Department of Health Services. Local industry representatives have criticized this move.
Colton Luther from Puff and Prosper explained that the TABC regulates alcohol, and not cannabis. “… They have different production methods, market dynamics and consumer safety concerns compared to each other. “Transferring hemp supervision to TABC will lead to regulations that are not tailored well to the unique properties of hemp-derived goods.”
Rebecca O’Neill of Hummingbird Hemp, Early, said that better enforcement would resolve many issues.
We have been frustrated by the absence of regulation. Texas does not have an age limit. There is no age limit in Texas. We enforce it. O’Neill says that DSHS never visited a retailer or a store on site.
Eddie Velez of Oak Cliff Cultivator based in Dallas, Texas Department of Agriculture figures show that 475 license holders are active producers of hemp, and around 70% of those grow it to be consumed. The rise in synthetics, he added, has also led to a “significant reduction” of Texas hemp farms.
John Harlow representing Village Farms general counsel urged legislators to seek guidance from other states.
Harlow explained that Texas is trying “to solve a very old problem” which was already solved to a large extent in other states like Colorado and Virginia.
Plusieurs witnesses voiced concerns regarding potential issues of interstate commerce which could result in prolonged litigation. Craig Katz, the government relations manager and compliance officer for CBD Kratom which has 11 shops in Texas, as part of a 60 store operation spread across five states warned against legal issues.
Katz stated that if Texas passed House Bill 28 that people would start buying online and sending items through the post, there would be many lawsuits against it. Texas could spend 10 years in court.
Both bills were left pending after the committee had heard for hours.