DALLAS, Texas — Texas THC businesses are facing major changes as new state regulations take effect on March 31, potentially reshaping the $5.5 billion hemp-derived THC industry.
The rules come after Gov. Greg Abbott vetoed Senate Bill 3 last year, which would have heavily restricted or banned hemp-derived THC products, leaving regulatory oversight to state agencies such as the Texas Department of State Health Services (DSHS). Federal lawmakers are also considering broader THC restrictions, adding pressure on the state market.
Under the new DSHS regulations, smokable cannabis products, including flower and extracts, will effectively be banned due to a shift in how THC content is calculated. Previously, products were evaluated based on delta-9 THC, the primary psychoactive compound in cannabis, with anything under 0.3% by dry weight considered legal under the 2019 hemp law.
The updated rules now account for total THC content, which includes THCa, a non-psychoactive cannabinoid that converts to delta-9 when heated. Experts warn that this change could push legal hemp flower off the market.
“Effectively, this is going to ban hemp flower from the legal marketplace,” said Heather Fazio, director of the Texas Cannabis Policy Center. “Changing to these unreasonably restrictive testing standards would push this marketplace underground, handing it over to illicit operators because legitimate businesses can no longer sell it. That means that products are going to be untested.”
The regulation also imposes higher fees for THC business licenses: $5,000 annually for retailers and $10,000 for manufacturers. While lower than earlier proposals exceeding $20,000, Fazio called the fees “punitive” and warned they could disproportionately impact small businesses.
With over 9,100 stores licensed to sell consumable hemp in Texas, the industry is watching closely to see if legal challenges will be mounted against the new rules, which could dramatically alter how Texas consumers access hemp-derived products.
The DSHS says the regulations aim to strengthen consumer protections, set age limits, and enforce safety standards, but critics argue the approach could push sales into unregulated, unsafe channels.