HB 1325 (or, the “Bill”) began as a great draft of hemp legislation covering Texas hemp regulations. It aimed to establish a hemp growth program here in Texas and to amend some of our state criminal statutes that have led to arrests of individuals for possession of cannabidiol (CBD). Yes, the original draft Bill needed polishing and refinement to further expound on how the program would be implemented, what the regulations would be, and how it would work on a day-to-day basis. However, as the Bill has progressed through both the House and Senate committees, we have seen revisions included that provide unnecessary and onerous regulations for the Texas hemp industry. This over regulation will not benefit Texas and it certainly will not benefit hemp cultivators, processors, manufacturers, retailers, or consumers. Today, we cover some of the largest problems we have noted with the new text.
Retail Permit Required
One of the recent additions to the Bill regarding Texas hemp regulation includes a requirement that any person selling a consumable hemp product, which includes CBD intended for consumption, must obtain a permit issued by the Texas Department of State Health Services (“SHS”). Consumable hemp product is defined as “a food, a drug, a device, or a cosmetic … that contains hemp or one or more hemp-derived cannabinoids, including cannabidiol.” Retailers with multiple store locations are not required to hold multiple permits, but must provide a list of all affiliate locations owned or controlled by the permit holder to SHS. Clearly, this provision was a last-minute addition because this is currently all the Bill has to say on the matter, aside from noting that SHS will be responsible for adopting rules and implementing a permit fee. It is unclear why the Legislature believes that a retail permit should be necessary for a person or business engaged in the sale of a consumable hemp product.
Smokeable Product Ban
We first saw the ban on combustible or ignitable products appear in the House Committee version, but it has now been expanded to include vaping products. The Bill provides that state agencies “may not authorize a person to manufacture a product containing hemp for smoking…” and prohibits “processing and manufacturing of a consumable hemp product for smoking.” Smoking is defined as “burning or igniting a substance and inhaling the smoke or heating a substance and inhaling the resulting vapor or aerosol.” This will include hemp pre-rolls, hemp cigarettes, hemp flower intended for smoking, vaping liquids, and more. Considering that Texas is home to some very large hemp cigarette and vaping product manufacturers, this hemp regulation will hurt Texas economically, as these large corporations will be required to move their operations out of state.
Frankly, this hemp regulation may be open for constitutional challenge, as the legislation provides no compelling reason for treating a smokeable hemp product any differently than any other hemp product.
Probable Cause Issues
The Bill provides that a peace officer may not seize hemp or arrest the person transporting hemp unless the officer has probable cause. Currently, there is no field-testing mechanism that can differentiate hemp from marijuana on a roadside test. A field test or a drug dog sniff will always result in a positive presumptive if the product contains THC, thus providing probable cause in every circumstance to seize the material or to arrest the driver. Considering that the Bill contains shipping and cargo certificate and manifest requirements, this provision is unnecessary and is going to lead to further arrests for compliant hemp products.
The Bill has a caveat that if the required cargo or shipping documentation is produced, the officer must immediately release the hemp; however, the Bill text then goes on to state that if the officer has probable cause that the driver is transporting marijuana, the officer can seize and impound the shipment. Again, every single field test will provide a positive presumptive result for marijuana if the hemp contains .3% THC or less. We can certainly see this leading to supply chain interruptions for processors and manufacturers here in Texas. We hope that if these provisions remain, that the state agencies will implement officer training programs as well.
State Law Prevails
At least one positive inclusion is the restriction on regulations by local cities and municipalities. Under the current draft, local jurisdictions are prohibited from implementing any rule, ordinance, or regulation that would prevent cultivation, handling, transportation, or sale of hemp within that local jurisdiction. In sum, this provision places the program under the authority of state, and not local, agencies.
While the hemp lawyers at Ritter Spencer Cheng look forward to a Texas hemp growth program, we certainly have concerns about the coming hemp regulations. Stay tuned as we continue our series on HB 1325.