[co-author: Daniel Molina]

With one of the largest consumable hemp markets in the country, Texas is a key state to watch in the ever-evolving world of hemp regulation. While many other states regulate or prohibit synthetics, establish THC mg limits on finished products, and establish advertising and marketing regulations including age gates, the Lone Star State’s Consumable Hemp Program (CHP) is more permissive. This has contributed to a booming hemp market.

In Texas, all agencies must review all adopted rules no later than four years after the effective date of the rule and every four years after that date. That review process is occurring now for the CHP. As businesses and consumers navigate the Texas commercial hemp landscape, understanding the meticulous rulemaking process, anticipating impending deadlines, and grasping the core tenets of the CHP become imperative.

In this blog post, we delve into the hemp regulations set forth by the Texas Department of State Health Services (DSHS), the rulemaking process, the significance of the current rule review, and how to make your voices heard.

Summary of Texas Consumable Hemp Program Rules

Texas’ Consumable Hemp Program falls under the purview of the DSHS. The CHP rules can be summed up as follows:

Licensed Activities: The Texas Department of Agriculture issues licenses for hemp producers, handler samplers, handlers, processors, and registers testing laboratories. DSHS issues consumable hemp manufacturers and distributors licenses. Retailers of consumable hemp products (including online operators) are also required to register with the DSHS.

Expressly Permitted or Prohibited Cannabinoid Products: Texas authorizes the sale of hemp-derived CBD products intended for human consumption subject to specified testing, manufacturing, and labeling requirements. The DSHS rules prohibit the processing, manufacture, and retail sales of smokable hemp products; however, a Texas Supreme Court ruling overturned the retail sales prohibition which in effect allows the retail sale and wholesale distribution of these products so long as they are manufactured outside of Texas and are tested and labeled in accordance with DSHS regulations (see additional considerations below).

Additional Considerations: Texas law provides that hemp-derived cannabinoids, including CBD, are not considered controlled substances or adulterants. On June 30, 2023, DSHS adopted amendments to the current consumable hemp rules to no longer prohibit the distribution and retail sale of smokable hemp products manufactured outside of Texas and it went into effect on July 5, 2023. Per DSHS, effective March 1, 2023, firms that manufacture or process consumable hemp products for smoking in Texas, including white labeling, are subject to enforcement action by DSHS.

The Rulemaking Process for Agencies in Texas

The Administrative Procedure Act (APA) governs procedures for state administrative agencies to propose and issue regulations and provides for judicial review of agency adjudications and other final decisions in Texas.

The process:

• State agencies must give at least 30 days' notice of their intention to adopt a rule before adopting it

• The notice must be filed with the secretary of state for publication in the Texas Register

• The Office of the Governor will review the Notice of Proposed Rule as well as the agency’s internal analysis of the rule

• State agencies must open a public comment period to give all interested persons a reasonable opportunity to submit data, opinions, or arguments either orally or in writing. And state agencies must fully consider all written and oral submissions concerning a proposed rule

• The proposed agency rule goes through legislative review in House and Senate committees

• The state agency must issue a final order adopting the rule

• A proposed rule will be withdrawn six months after the date of publication of notice of the proposed rule if a state agency has failed to substantially act on it by that time

The APA’s rulemaking procedures for agencies must be strictly adhered to when making regulatory changes or agencies could find themselves subjected to litigation from interested parties, as seen in the recent case against DSHS’s attempts to classify delta-8 THC as a Schedule I controlled substance.

Texas’ Four-Year Review Rule

In Texas, all agencies must review all adopted rules no later than four years after the effective date of the rule and every four years after that date. Agencies must then either readopt, readopt with amendments, or repeal the rule subject to review; as part of this review, agencies must assess whether the reasons for initially adopting a rule still exist.

Importantly, the same requirements for notice and comment for the original adoption of a rule apply to the review of a rule and to the resulting repeal, readoption, or readoption with amendments to the rule. This is applicable to the DSHS review of the CHP.

The Current Texas Consumable Hemp Rule Review

On March 13, 2024, the Texas Health and Human Services Commission (HHSC), on behalf of DSHS, proposed to review and consider for readoption, revision, or repeal the CHP rules.

In a response to an inquiry from Vicente LLP, DSHS stated: “We want to emphas[ize] there are no changes being proposed to the rules during the rule review.”

Make Your Voices Heard! How to Participate in the Rulemaking Process

Participating in this rulemaking provides an important opportunity to contribute valuable comments that can help shape effective hemp laws and policies in Texas, ensuring a prosperous and sustainable future for the industry.

HHSC is inviting comments on the review of the CHP rules to be submitted to HHSC Rule Coordination Office, Mail Code 4102, P.O. Box 13247, Austin, Texas 78711-3247, or by email to dshshempprogram@dshs.texas.gov. When emailing comments, indicate "Comments on Proposed Rule Review Chapter 300" in the subject line. The deadline for submitting comments is 5 p.m. on April 13, 2024.