Texas Proposes Stricter Hemp THC Regulations Threatening $5.5 Billion Market

Texas' $5.5 billion hemp industry faces major upheaval as the state Department of State Health Services (DSHS) considers redefining how THC levels are calculated in hemp products. The proposed rules would count tetrahydrocannabinolic acid (THCA) — which converts to psychoactive delta-9 THC when heated — toward the legal THC threshold, effectively banning many popular hemp-derived products like smokable flower. This regulatory shift comes in response to Governor Greg Abbott's September executive order seeking tighter oversight, rather than a complete ban, on hemp products in the state

The draft regulations also introduce a staggering increase in licensing fees for hemp businesses. If enacted, annual fees for manufacturers would soar from $250 to $25,000 per facility, while retail locations would see registration costs jump from $150 to $20,000 each. The rules further mandate stricter packaging standards, expanded product testing, and required recall procedures, placing additional burdens on operators. According to MJBizDaily, these changes could take effect as soon as January 25, with significant implications for the industry’s thousands of small business owners

During a public hearing on January 9, business owners and advocates voiced strong opposition to the proposed regulations. Estella Castro, owner of Austinite Cannabis Co., warned, “These proposed fees don’t regulate small businesses; they eliminate them. This proposal would force me to close despite doing everything right.” Others argued that the state is exceeding its authority by redefining the legal scope of hemp. Jesse Mason, owner of Reggie & Dro in San Antonio, stated, “By counting THCA prior to heat, you are banning products the legislature legalized.”

Supporters of the new regulations, including some medical professionals and anti-THC activists, argue that stricter rules are necessary to protect public health. Dr. Lindy McGee, a Houston pediatrician, advocated for clear warning labels, saying, "[Label warnings] should be easily recognizable and large enough for a grandparent who is babysitting to be able to tell that the gummies are edibles and not something they should be giving their grandkids." Proponents want labels to include information about the potential for THC to be habit-forming and its delayed effects

While these proposed measures would not directly impact Texas's medical cannabis program, which is set to expand under new legislation, the changes could benefit the state’s three licensed medical cannabis oil providers if hemp THC products become less accessible. With more than 9,100 businesses currently licensed to sell hemp products in Texas, the regulatory overhaul could reshape the market landscape. DSHS has indicated that the rules may be revised based on public feedback, but the timeline for final implementation remains tight

From the OG Lab newsroom perspective, this regulatory push could signal a turning point for Texas’s hemp industry, testing the resilience of small businesses and altering consumer access to hemp-derived cannabinoids. Industry stakeholders should monitor the DSHS decision closely as it could set a precedent for other states grappling with the legal gray area between hemp and marijuana. The outcome will likely influence both market dynamics and regulatory strategies nationwide