Texas hemp industry braces for special session on THC regulation

Since Gov. Greg Abbott’s veto gave them a reprieve from a law that would have outlawed their role in an $8 billion Texas industry, hemp shopkeepers, their customers and other proponents have been bracing for the next round.

That battle begins Monday, when lawmakers return to the Capitol to take another shot at regulating intoxicating hemp products.

The special session follows the veto of Senate Bill 3, which would have banned the sale of hemp products containing any level of THC, effectively shutting down a rapidly growing industry that has become a source of relief for Texans and a livelihood for thousands of retailers and farmers across the state.

RELATED: Abbott vetoes bill banning THC products, but calls special session to revisit the issue

“We were relieved. Governor Abbott’s veto gives us, at least for now, the ability to keep our doors open and continue serving Texans who rely on us for wellness and relief,” said Estella Castro, owner of Austinites Cannabis Co., a dispensary on East Cesar Chavez Street. “Our customers are patients, parents, veterans, caregivers. And this decision gives them continued access to legal, safe, plant-based products that help them live fuller lives.”

What happens next could change how — or if — she does that.

In a proclamation issued with his veto, Abbott urged lawmakers to pursue a regulatory approach to hemp products similar to the way the state oversees alcohol. He recommended banning sales and marketing of THC products to minors, requiring testing throughout production and manufacturing, allowing local governments to prohibit sales, and giving law enforcement more funding to enforce restrictions.

That would be just fine with Castro. She said she has always supported regulation for public safety, particularly when it comes to selling hemp-derived products at liquor stores, convenience stores and vending machines — where there’s often no one to educate the consumer and keep such products from minors.

“One of my strongest positions is that alcohol and hemp products should not be sold under the same roof,” Castro said. “Also I believe in (the age 21 purchase) requirement. We do that and have been doing that for the last five years.”

Patrick vs. Abbott

Such regulation would be a far cry from the outright ban Lt. Gov. Dan Patrick pushed in the regular session. Calling it “a life and death issue,” he said a ban would save “an entire generation from being hooked on drugs.” He claimed THC is driving young people to suicide and altering user’s brains.

The bill would have banned consumable hemp products like vapes, gummies and drinks in products that have lower levels of THC but provide a high similar to marijuana.

Abbott’s veto elicited a heated response from Patrick the next day in a news conference in which he accused the governor of wanting to “legalize recreational marijuana.”

“Even if his proposed bill passed as he suggests, it would take a lot of time for them to get up to speed, to have manufacturing testing, to test it at all levels,” Patrick said. “During that time, they would still be operating as they are.”

He made clear he still wants a ban and, presumably, will be pushing that position in the special session.

In his proclamation, Abbott acknowledged disagreement over the proper response to the booming industry and laid out his concerns about SB3. Among them were his belief that it would not stand up to constitutional challenges and would create confusion for Texas farmers he said could face “criminal entrapment” for cultivating hemp, which is allowed under federal law.

RELATED: Gov. Greg Abbott vetoes THC ban bill. Is marijuana legal in Texas?

“But one thing is clear,” he wrote, “to ensure the highest level of safety for minors, as well as for adults, who obtain a product more dangerous than what they expected, Texas must strongly regulate hemp, and it must do so immediately.”

Business impacted

Ann Galadzhyan is among those Texans.

Browsing the offerings at the Happy Cactus dispensary on East Seventh Street, she said the calming, stress-reducing effects of edibles and other products — all within the legal 0.3% THC limit — have helped her stop taking Adderall and antidepressants, including Lexapro and Wellbutrin.

“I’m not rushing, I’m not stressing,” she said. “It has grounded me, it lifted me. It keeps me authentic, genuine.”

Todd Harris, who owns The Happy Cactus with his brother, Mickey, said the pair prioritize education and safety for customers. Those customers include his parents, both in their 70s, who use Delta 8 THC to help with sleep, anxiety and pain.

The store has two locations, including one that made news when the lieutenant governor was carded in it, and is opening a third shop in the Southpark Meadows shopping center in South Austin.

Harris said the Happy Cactus paid about $200,000 in sales taxes for its two stores last year. And without Abbott’s veto, he said, some 60,000 people across Texas would be out of a job come September, when the ban was to take effect.

Sarah Kerver, owner of Austin Custom Botanical Dispensary, said the situation already has impacted the business, with some plans put on hold to see what happens next.

“We slowed down ordering and coming up with new ideas and bringing on new people,” she said. “Our regulars were and still are concerned if they won’t be able to buy what they need in the future.”

While biding her time, she expressed optimism about the session.

“I don’t think our governor wants to be part of a nanny state,” she said.

‘Quality of life’

At Austinites Cannabis, Castro said her customers “are everyday Texans” such as veterans, nurses, teachers, moms, caregivers and small business owners.

“Many come to us after exhausting traditional options,” she said. “They’re looking for something that helps without the harsh side effects of pharmaceuticals.”

The products her store and other dispensaries sell help customers manage conditions ranging from anxiety, PTSD and chronic pain to insomnia, autoimmune disorders, and everyday stress, she said.

“For many, it’s about improving their quality of life in a natural, non-intoxicating way,” Castro said. “We hear it every day: ‘I finally slept through the night.’ ‘I haven’t had a panic attack in months.’ ‘This is the only thing that calms my nerves without making me feel numb.’ ”

Castro said her hope is that the special session opens the door for thoughtful collaboration, with store owners included in the conversation.

“We’ve been doing the work, and we want to help shape a safe, sustainable future for hemp in Texas,” she said. “I think we’re going to come up with some reasonable guidelines.”

RELATED: Major bills Greg Abbott vetoed, from Texas' THC ban to summer food programs

At Happy Cactus, Harris said relief over Abbott’s veto soon turned to action.

“All of our energy and sights are set on this session now,” he said. “We are taking a moment to celebrate a huge win, but we are prepared and ready to continue fighting for this industry and for common sense regulations.”

That includes a 21-year age limit, packaging requirements that keep companies from making products that look like children’s snacks, and adding limits on milligrams per package.

“We think the proposed 10 milligram per piece and 1 gram per package makes a lot of sense,” Harris said.

Edson Enrique, CEO of Dope Daughters ATX, said he was confident the industry would survive whatever happens.

“We have been doing this dance for many years,” he said. “The industry and capitalism always finds a way to keep making money. The industry is now too big to fail. We are not going to passively stop doing business. The fight is certainly on.”