The Texas Department of State Health Services (“DSHS”) adopted and published its final rules governing the Texas consumable hemp program (the “DSHS Final Rules”) to the Texas Register. The DSHS Final Rules become effective on August 2, 2020. Any potential changes to the statute governing our hemp program will not occur until the Texas Legislature reconvenes in January of 2021.
To the detriment of many in the Texas hemp industry, the DSHS Final Rules only slightly diverge from the DSHS Proposed Rules. Our prior blog series on the DSHS Proposed Rules provided an in-depth analysis of the proposed DSHS rules. This blog focuses on the changes made by DSHS in the adopted Final Rules.
Changes to the DSHS Final Rules
Definitions: The following definitions from Title 25 TAC § 300.101 were struck from the DSHS Proposed Rules: § 300.101(16) Gas chromatography (GC); § 300.101(17) Good manufacturing practices; and § 300.101(19) High-performance liquid chromatography (HPLC). These definitions were not used within the body of the rules. The remaining definitions in § 300.101 of the DSHS Final Rules were renumbered accordingly.
Retail Ban on Smokables: A key provision under the DSHS Final Rules, § 300.104, bans the distribution or retail sale of consumable hemp products. According to DSHS, although 1,690 commenters objected to the proposed rule prohibiting the retail sale of smokable hemp contained in § 300.104, DSHS did not make changes to this rule in response to these comments. Notably, in the Preamble, DSHS states that “[p]roperly tested and labeled hemp flower, marketed for use other than smoking (e.g. as a tea or a food additive) does not fall under the retail ban contained in §300.104.”
Of note, DSHS’s ban on the retail sale of smokable hemp is directly contrary to Tex. Health & Safety Code § 443.204(4) (banning the manufacture and processing of hemp for smoking). Texas consumers can still purchase smokable hemp products out-of-state, but this finalized rule will be a huge detriment to in-state hemp businesses seeking to profit from these products.
Testing: DSHS only made slight modifications to its testing rules. The DSHS Proposed Rules required that the Certificate of Analysis (“COA”) documenting the accredited laboratory’s testing of a consumable hemp product must:
- (1) be made available to the department upon request in an electronic format before manufacture, processing, or distribution into commerce;
- (2) be in a format that documents presence and content of CBD, and levels of THC; and
- (3)include measurement of uncertainty analysis parameters. Title 25 TAC § 300.301(b).
Under the DSHS Final Rules, § 300.301(b)(2) was removed. This provision now only requires that the COA documented by an accredited laboratory, which can include an institution of higher education (see § 300.303(f)), must:
- (1) be made available to the department upon request in an electronic format before manufacture, processing, or distribution into commerce; and
- (2) include measurement of uncertainty analysis parameters. Title 25 TAC § 300.301(b).
Packaging and Labeling: DSHS made two changes to its packaging and labeling requirements. Under the DSHS Proposed Rules, DSHS mandated that “all consumable hemp products marketed as containing CBD” must comply with its labeling regulations. Under the DSHS Final Rules, DSHS now mandates that “[a]ll consumable hemp products marketed as containing more than trace amounts of cannabinoids” must be labeled with the following information:
- (1) lot number;
- (2) lot date;
- (3) product name;
- (4) the name of the product’s manufacturer;
- (5) telephone number and email address of manufacturer; and
- (6) a Certificate of Analysis that the delta-9 tetrahydrocannabinol content concentration level on a dry weight basis, that, when reported with the accredited laboratory’s measurement of uncertainty, produces a distribution or range that includes a result of 0.3 percent or less. Id. at § 300.402(a).
DSHS expanded the scope of its packaging and labeling requirements to encompass not only CBD, but also the marketing of consumable hemp products containing any amount of cannabinoids. Therefore, manufacturers and retailers need to make sure all of their consumable hemp products are in compliance with the packaging and labeling requirements imposed under the DSHS Final Rules. Lastly, the language of § 300.402(a)(1) was changed from “lot identification number” to “lot number” for consistency purposes.
Prohibited Acts: DSHS modified the language of § 300.602, but no substantive changes were made. Under the DSHS Proposed Rules, this provision stated that the following acts, and the causing of the following acts, that occur in Texas are illegal:
- (1) the distribution in commerce of a consumable hemp product, if such consumable hemp product is contained in a package, or if there is affixed to that consumable hemp product a label that does not conform to the provisions of this chapter; and
- (2) the engagement in the packaging or labeling of such consumable hemp products. Id. at § 300.602.
Now, under the DSHS Final Rules, this provision states that the following acts, and the causing of the following acts, that occur in Texas are illegal:
- (1) the distribution in commerce of a packaged consumable hemp product, if there is affixed to that consumable hemp product a label that does not conform to the provisions of this chapter; and
- (2) engaging in the packaging or labeling of packaged consumable hemp products if there is affixed to the consumable hemp product a label that does not conform to the provisions of this chapter. Id. at § 300.602.
This change to § 300.602 appears to have only been made for purposes of clarification.
Adulterated Articles: DSHS entirely struck § 300.603 from the DSHS Proposed Rules. This provision provided that if DSHS finds or has probable cause to believe an article that is a food, drug, device, cosmetic, or consumer commodity is adulterated, misbranded so that the article is dangerous or fraudulent, or in violation of the Texas Health and Safety Code (§431.084, §431.114, or §431.115), then DSHS shall affix to that article a tag or other appropriate marking that gives notice of the adulteration or misbranding and that the article has been detained or embargoed. See id. at § 300.603. The deletion of this provision from the DSHS Final Rules removes potentially excessive regulatory oversight and enforcement by DSHS in regard to adulterated or misbranded consumable hemp products. DSHS must follow the procedures of § 300.604, which provides more discretion to the court more control in determining whether destruction of adulterated or misbranded consumable hemp products is warranted.
DSHS further struck § 300.605 from the DSHS Proposed Rules. This provision provided an alternative to the methods of destruction of adulterated or misbranded consumable hemp products promulgated in § 300.604. Specifically, § 300.605 stated that if the court finds an article to be adulterated or misbranded, the court may order the delivery of that article to the claimant of the article for labeling or processing under DSHS supervision (paid for by the claimant) if all of the following criteria are met:
- (1) the decree has been entered in the suit;
- (2) the costs, fees, and expenses of the suit have been paid;
- (3) the adulteration or misbranding can be corrected by proper labeling or processing; and
- (4) a good and sufficient bond, conditioned on the correction of the adulteration or misbranding by proper labeling or processing, has been executed. Id. at § 300.605(a).
DSHS most likely removed this provision as a way of simplifying what should be done if a claimant’s consumable hemp product is adulterated or misbranded. DSHS has essentially established that the only acceptable process for the destruction of an adulterated or misbranded article is through the procedures outlined in § 300.604 of the DSHS Final Rules.
We hope you have enjoyed, as well as learned from, the information presented in our DSHS Final Rules blog. Keeping in mind the changes made by DSHS mentioned above, an in-depth analysis of the DSHS rules are available in our blog series: DSHS Proposed Rules.
Paul Stevenson is an associate attorney with Ritter Spencer PLLC based in the Dallas office, who represents all sectors of the hemp industry, including manufacturers, distributors, and retailers of consumable hemp products. As cannabis and hemp lawyers, the lawyers at Ritter Spencer are prepared to advise your hemp or cannabis business in all facets of the industry, including formation and transactional issues and in cannabis litigation. Contact Ritter Spencer or give us a call at 214.295.5070 for more information.