Texas hemp businesses fight back, suing state agencies. They claim new restrictive rules overstep authority, disrupting commerce and their livelihoods.
A pair of industry organizations, the Texas Hemp Business Council and Hemp Industry Farmers of America, along with several in-state hemp manufacturers and retailers, have filed a lawsuit challenging new rules adopted by the Texas Department of State Health Services (DSHS) and the Texas Health and Human Services Commission (HHSC) governing consumable hemp products.
Filed in Travis County District Court in Austin, the lawsuit alleges that the state agencies exceeded their legal authority by adopting hemp regulations that conflict with state law and the state constitution. Plaintiffs are seeking a temporary restraining order to block enforcement of the rules, which went into effect on March 31. They are also seeking more permanent injunctive relief, as well as challenging hefty fee increases for hemp product manufacturers and retailers.
"An administrative agency may not substitute its own policy judgment for the outcome produced by the constitutional lawmaking process," the lawsuit states. "The Texas Constitution vests legislative power in the Legislature, not administrative agencies."
After federal hemp legalization in 2018, the state legislature passed House Bill 1325 the following year, creating a comprehensive framework for legalizing and regulating hemp and hemp products. That bill defined hemp as cannabis containing less than 0.3 percent delta-9 THC. As the sale and use of intoxicating cannabinoid products spread across the state, the legislature revisited the issue with an eye toward tightening the regulations, and passed restrictive legislation, Senate Bill 3.
That measure would have banned "synthetic" cannabinoids and created criminal penalties for possession or sale of non-compliant hemp products but was vetoed by Gov. Greg Abbott (R). In two later legislative special sessions called by the governor, the legislature was unable to agree on any new hemp legislation. Abbott then issued an executive order ordering relevant state agencies to adopt limited public safety measures within the existing hemp law while preserving lawmakers' ability to make substantive policy changes.
DSHS and HHSC then adopted new rules that went into effect at the end of last month. Those new rules replaced the state's delta-9 THC standard with a non-statutory "total THC" standard that includes all cannabinoids in the formula, making many lawful products unlawful. The new rules also bar the transport of hemp into the state for processing, disrupting interstate commerce. And they jack up licensing fees from $250 to $10,000 per manufacturing facility and from $150 to $5,000 per retail outlet.
"This case is about protecting the integrity of Texas law," said Cynthia Cabrera, president of the Texas Hemp Business Council. "Lawmakers carefully debated hemp policy and chose not to change the statutory THC standard during the 89th Legislature in 2025. State agencies cannot override the decision by regulation. Our members support reasonable, lawful regulation, but regulation must follow the Constitution and the statutes the Legislature enacted."
Plaintiffs contend that the new regulations exceed the agencies' rulemaking authority, violate due process protections, impose unconstitutional taxes, and lack the economic analysis required by the state's Administrative Procedure Act. They are seeking an immediate freeze on enforcement of the rules, a declaration that unlawful portions of the rules are invalid and unenforceable, and the restoration of the regulatory framework adopted by lawmakers in 2019.
"Texas farmers and processors built their businesses around the law as written," said Brian Swenson of the Hemp Industry Farmers of America. "These rules upend that framework by substituting an agency-created THC standard and blocking the lawful movement of hemp for processing. When agencies cut off the farm-to-market pipeline without legislative approval, it puts entire operations at risk."
It is the fee increases that especially irk hemp retailer Todd Harris, who is a plaintiff in the lawsuit.
"These fees are not about regulation, they are barriers to entry," said Harris. "Raising licensing and registration fees by forty- or fifty-fold overnight goes far beyond cost recovery and threatens the survival of small, compliant businesses across Texas. Products that were previously legal under state law are now subject to new regulatory requirements, and supply and transport restrictions make it more difficult to stock and sell these products effectively."