Hemp in Texas: Regulation—not THC prohibition—is the sensible path forward   

Texas Gov. Greg Abbott’s veto of Senate Bill 3 is a notable win for pragmatism in government. The bill aimed to outlaw nearly all consumable hemp products—even those unlikely to cause intoxication—and would have hurt farmers, small businesses, and patients, all without meaningfully improving public safety. A well-regulated market for hemp products—including those that cause intoxication—with clear rules on safe manufacturing, accurate labeling, and age-gated sales would make Texans significantly safer than the unregulated market prohibition tends to stimulate. It appears Abbott agrees.   

Rather than yielding to Lt. Gov. Dan Patrick’s demand for an outright ban, Abbott has called for a special session in July to develop a regulatory framework that protects consumers while preserving the thriving legal industry. This is the right move, and the Texas legislature should seize the opportunity to implement policies that balance public safety, personal choice, and economic freedom.  

SB 3 was a classic example of politics being led by moral panic rhetoric rather than sound policy and public welfare. Proponents, led by Patrick, sold the measure on fears about hemp with tetrahydrocannabinol (THC)–the chemical that gives marijuana its intoxicating effects—and framed prohibition as necessary to protect schoolchildren. In reality, the bill would have not only banned those hemp products with any detectable amount of THC, but also those with any other cannabinoid except cannabidiol (CBD) and cannabigerol (CBG). But, since even non-intoxicating CBD products typically contain trace amounts of THC and other cannabinoids, even these would not have escaped SB 3’s prohibitions.   

History has repeatedly shown that the prohibition of substances doesn’t eliminate demand; it simply drives the market underground, where unregulated producers are not held accountable for safe manufacturing practices, accurate labeling, and ensuring intoxicating products are only sold to adults. Instead, prohibition puts consumers at even greater risk while also increasing the effort and resources needed to enforce the law. Texans already experience this firsthand with cannabis, where prohibition has merely resulted in mass arrests and a thriving illicit market worth an estimated $6 billion.   

A ban on hemp-derived THC would have done the same, forcing consumers toward unregulated products, stimulating illicit and cross-border sales, and actually increasing youth access through these unregulated and age-unrestricted channels. Pediatric patients and veterans who rely on hemp products for therapeutic purposes would have been particularly harmed by the ban, forced to rely on unregulated products or turn to potentially more dangerous substances, like opioids. On top of that, it would have devastated a burgeoning market that supports around 50,000 jobs and generates $8 billion in tax revenue for the state annually, according to industry data.   

In his veto statement, Abbott agreed with SB 3 proponents on the need for immediate and strong regulation of consumer hemp products. However, he also rightly acknowledged that SB 3 would have clashed with federal law—the 2018 Farm Bill, which legalized hemp and its derivatives. If approved, the measure would have faced immediate legal challenge, as it constituted an uncompensated taking of private property and business investments. Abbott warned that it would also inadvertently “make felons of other innocent Texans, like pharmacists stocking health supplements, veterans treating PTSD, and parents caring for epileptic children with FDA-approved medications.”   

Instead of SB 3’s prohibitionist approach, Abbot wants lawmakers to use the July special session to craft sensible regulations. Similar to Reason Foundation’s recommended framework for state regulation of hemp products, he suggests that lawmakers approach regulating these products similarly to alcoholic beverages. He also detailed specific provisions he’d like to see lawmakers adopt, including limiting sales to retailers that restrict access to minors, imposing testing and labeling requirements, outlawing public consumption, restricting permissible THC levels in products, limiting individual purchases, and allowing local governments to ban or limit retail hemp sales.   

To strike the right balance, there are several key issues that the Texas legislature will need to carefully negotiate.   

Issue 1: Potency limits  

The first and perhaps most complex of these issues will be how limits on THC potency are set and determined. Currently, Texas—like many other states—follows federal law, which limits hemp products to no more than 0.3% THC by dry weight. Because THC is measured based only on the dry portion of products, this standard allows companies to produce hemp products—particularly in beverage and edible form, since their weight is primarily comprised of water or gelatin—with as much THC as marijuana products while still adhering to THC thresholds for legal hemp.   

In its final form, SB 3’s prohibition on hemp products with cannabinoids other than CBD or GBG was a draconian standard that would have effectively outlawed most hemp products. The House committee substitute for SB 3 (CSSB 3), on the other hand, abandoned this approach in favor of THC limits based on milligrams per serving and package. This milligram-based limit is far more accurate in terms of gauging products’ potential for intoxication and is an increasingly popular approach among states to close the “dry weight loophole.”    

Under the House substitute version of the bill, hemp products would have been limited to no more than 10 mg of THC per serving and 100 mg per package (with stricter limits for certain products). While this is both more practical and sensible than the original bill, it still fails to distinguish between high-THC and very low-THC hemp products—treating them all the same despite vast differences in psychoactive risk.   

Some states, like Minnesota, have adopted a two-tiered system for hemp products, imposing lighter regulations on products with minimal THC (e.g., less than 5 mg per package) that are extremely unlikely to cause intoxication even if consumed in full. Reason Foundation encourages Texas lawmakers to consider a similar approach in order to ensure that low-THC hemp products—particularly those used for therapeutic purposes—will remain accessible and affordable without unnecessarily burdensome restrictions.   

Issue 2: Purchasing limits and privacy concerns  

Another contentious issue will likely be if—and how—the legislature should impose purchasing limits on individuals. In his veto proclamation, Abbott explicitly endorsed such limiting purchases “in a given period,” though he did not specify exactly what those limits ought to be. While some states, like Washington and Oregon, track cannabis purchases through state-run databases to enforce daily limits, this will likely raise concerns in Texas about government overreach, surveillance, and data security. For example, thousands of cannabis consumers across the U.S. had personal data leaked—including photographs of their government-issued photo IDs—after a point-of-sale system used throughout the cannabis industry was breached. Moreover, a person’s presence on a state purchasing database could endanger their rights to possess a firearm or could be used as evidence against them in a family court proceeding.  

Fears over data privacy and surveillance can deter customers, potentially pushing some to opt for purchasing hemp through unregulated channels. This would not only put those consumers at greater risk from unregulated products but would also thwart the underlying goal of regulatory oversight. If Texas lawmakers opt to impose limits on individual purchases, they should do so in a way that protects the rights and privacy of consumers.   

The easiest way to do this would be to impose such restrictions only on shops, not individuals. This would be similar to Michigan’s rules, which impose limits on how much recreational cannabis can be sold per transaction but do not require tracking of individual consumers. Oregon, which also imposes per-transaction limits on cannabis sales, explicitly bars dispensaries from collecting or retaining this sort of customer data over privacy concerns.   

While these approaches would allow customers to work around purchasing limits by visiting multiple shops, it would still be more effective at deterring large purchases than would be achieved in the illicit market. In their special session, Texas lawmakers will have to decide if strict enforcement of purchasing limits is worth the trade-offs when it comes to protecting consumer privacy and encouraging compliance.   

Issue 3: Local bans and market fragmentation  

Another recommendation Abbott suggested is giving local governments the option to prohibit or limit hemp sales. While this might sound like a reasonable concession, it could lead to access issues that would undermine the regulated market. California cannabis law, for example, includes a similar provision that has led to around half of the counties in the state banning cannabis sales. As a result, nearly half the state’s population lives in “pot deserts” where the closest legal dispensaries might be more than 60 miles away. Unsurprisingly, this has continued to fuel illicit sales with consumers searching for more convenient, if unregulated, options. If Texas enshrines local bans, it may stifle industry growth and undermine enforcement by encouraging similar illicit activity. However, if legislatures deem such provisions as necessary, they should be careful to include safeguards to avoid or address access deserts if they arise, such as by allowing the state to preempt local bans in underserved areas.   

Issue 4: Licensing fees   

While the House committee substitute version of SB 3 established a relatively reasonable fee structure for licensing hemp businesses, such details were conspicuously absent from the bill’s final form. Had it been enacted, this version of the law would have given the regulatory agency the power to dictate licensing fees through rulemaking without additional feedback from the legislature. How much or how little to charge hemp businesses for the privilege of operating within Texas will likely be a major subject of the July special session, and for good reason. Fees that are too high can artificially restrict the market in ways the legislature didn’t anticipate or desire. In particular, exorbitant licensing cost can price out small businesses and consolidate the market in the hands of those companies with deep pockets or political connections.   

In addition to contradicting Texas’s business-friendly stance, market consolidation poses a threat to the state’s ability to enforce its laws, as would-be entrepreneurs and customers opt to stay in the illicit market for the simple fact that they cannot afford licensure. To avoid this outcome, Texas should avoid excessively high licensing fees and create a tiered fee structure with cheaper options for small or micro-businesses. Several states, including California, New York, and Michigan, have adopted this sort of tiered licensing fees based on business scale. This approach not only encourages greater participation in the legal market but also reduces consolidation and increases competition, keeping consumer prices low.   

Issue 5: Interstate commerce and out-of-state products  

Yet another issue legislators ought to weigh carefully during their special session is how Texas should regulate out-of-state hemp products. This is a critical issue both in terms of complying with constitutionally protected interstate commerce—and avoiding legal challenge—as well as establishing a market which encourages compliance and consumer safety. Even if hemp products were not federally legal and states were thereby prevented from entirely blocking interstate commerce, law enforcement simply does not have the ability to stop the flow of products across state borders. Without a viable path for legitimate products to legally enter Texas’ market, consumers would have no way to verify whether those products are sanctioned by the state and meet Texas’ safety standards.      

While all versions of SB 3 made some allowance for out-of-state hemp products, all failed to adequately address the issue. In its original and final form, SB 3 would have allowed the sale of out-of-state hemp products so long as they were produced, processed, and tested in compliance with Texas law. Yet, that would have applied to such a small segment of the hemp market—those products with no detectable THC—that it would have done little to curtail cross-border distribution, leaving consumers of these other hemp products without clarity. The House committee substitute version of SB 3 set out a robust pathway for out-of-state hemp products to become certified for sale in Texas but included a “Texas origin” requirement for hemp flower, essentially limiting legal hemp flower to hemp grown within the state. This would have almost certainly been successfully challenged as a violation of the U.S. Constitution’s dormant commerce clause by creating a bias against out-of-state economic interests.   

A better option for Texas would be to follow Kentucky’s approach, where out-of-state products can be sold in the state so long as they register with regulators and meet baseline testing, labeling, and quality rules. This streamlined path to interstate commerce allows Kentucky consumers to trust that products available to them are free of contaminants, accurately labeled, and regulated by their state, regardless of their origin. Texas should seriously consider doing the same.   

Issue 6: Protecting civil liberties and avoiding overcriminalization  

The last issue likely to generate debate in the legislature’s special session is how violations of the law ought to be treated. Past versions of SB 3 included needlessly punitive enforcement measures—such as criminal penalties and jail time for possession of unsanctioned hemp products—that risked turning minor infractions into criminal offenses and trampling Texans’ civil liberties.   

A glaring omission from all versions of SB 3 was any safeguard against warrantless searches or seizures based solely on the odor of hemp or possession of legal hemp products. This loophole would perpetuate the same types of discriminatory policing practices state-level marijuana legalization hoped to address—where the odor of marijuana served as a pretext for searches and seizures. Even with federal legalization of hemp, law enforcement unable to distinguish hemp from marijuana by sight or smell, continue the same sort of unjustified stops and searches. To protect Texans’ civil rights, legislators should incorporate explicit language into any proposal that protects people from being stopped, searched, detained, or arrested solely on the basis of law enforcement seeing or smelling hemp—or marijuana since their scent is the same—unless they have probable cause to believe a crime has been committed.   

Iterations of SB 3 also treated minor violations—like small-scale possession, minor breaches on THC limits, and open containers in vehicles or minor THC breaches—as criminal misdemeanors rather than civil infractions. This ignores the reality that many violations can stem from unintentional errors (e.g., lab testing variances) and lack of consumer awareness. Lawmakers can address this by reserving harsh criminal penalties for willful violations of the law’s most serious provisions, such as falsifying lab reports or large-scale illegal distribution, while treating minor or accidental violations as civil infractions. Not only would this protect consumers from unnecessary policing, it would also ensure law enforcement resources are being used efficiently and focused on major violations rather than policing people’s hemp use.   

A conservative approach to drug legalization  

In addition to infuriating Patrick, Abbott’s veto of SB 3 has exposed the growing rift between prohibitionist hardliners and those conservatives who acknowledge the failure of the War on Drugs. Even prominent right-wing voices, like former National Rifle Association spokesperson Dana Loesch, criticized SB 3 for “idiotically expanding government” while ignoring parental responsibility.   

The upcoming special session offers Texas lawmakers an opportunity to bridge this divide and gives Texas a chance to demonstrate how conservative states can responsibly regulate adult-use substances without resorting to big-government overreach and freedom-stomping bans. To succeed, legislators must carefully listen to stakeholders, reject fear-driven narratives, and prioritize consumer welfare. Crafting a light-touch regulatory framework—one that fosters compliance, promotes agency coordination, and affords both businesses and regulators sufficient clarity and flexibility—can ensure public safety without sacrificing economic opportunity or personal freedom.   

The governor made the right call. Now it’s time for the legislature to follow through with a regulatory system that keeps Texans safe and free.  

The post Hemp in Texas: Regulation—not THC prohibition—is the sensible path forward    appeared first on Reason Foundation.

Source: https://reason.org/commentary/hemp-in-texas-regulation-not-thc-prohibition-is-the-sensible-path-forward/