Texas hemp businesses can keep selling cannabis flower and concentrates for now after a Travis County judge blocked key parts of the state's new hemp regulations while a lawsuit plays out.
Judge Daniella DeSeta Lyttle granted a temporary injunction Friday, stopping Texas health officials from enforcing a new "total delta-9 THC" standard that counted THCA toward the legal THC limit for consumable hemp products. THCA is a naturally occuring compound in cannabis that converts into Delta-9 when heated or smoked.
Delta-9 THC is the main psychoactive ingredient in cannabis. Under Texas law, hemp is a legal category of cannabis with no more than 0.3% Delta-9 by dry weight.
The judge also blocked certain restrictions on transporting hemp, sharply higher fees charged to businesses and a penalty structure that would have treated each day of some violations as a separate violation.
"We are obviously excited about this ruling," said Jason Snell, an attorney for the hemp businesses suing. "[Judge DeSeta Lyttle] issued a statewide injunction which prohibits what we believe are illegal rules from going into effect, which would cripple the hemp industry statewide and deprive consumers and everyday Texans from access to legal products."
Hemp business owners and their customers had been facing a Friday deadline. A temporary restraining order that allowed stores to keep selling THCA flower and concentrate was set to expire at 5 p.m. This new order extends that protection and expands the scope of relief.
"It honestly feels like my team just won the Super Bowl but even better than that, because I get to stay in business," said Casey Newlin, one of the co-owners of Terp Haus in South Austin. "If we wouldn't have won, this would have been devastating, to the point I was trying not to even think about it."
The order applies broadly across the state's consumable hemp industry, not just to the businesses that sued.
Judge DeSeta Lyttle gave three reasons for that statewide reach. She found it would be impossible to provide complete relief to the plaintiffs if only they could operate under the previous rules. DeSeta Lyttle also said enforcement would cause an "indivisible injury" across the industry. And she said limiting the order to the named plaintiffs would likely lead to a "multiplicity of suits" which could weigh down the court system.
The order prevents the Department of State Health Services (DSHS) from enforcing the new THC calculation to restrict the transport of hemp plants or materials intended for further processing.
The ruling also prevents the state from charging higher fees. The DSHS rules enacted March 31 increased annual retail registration fees from $150 to $5,000 per location. Manufacturer licensing fees rose from $250 per year to $10,000 annually.
Finally, the temporary injunction stops the state from enforcing escalating daily penalties. The order specifically blocks a section of the new rules that says "each day a violation continues or occurs counts as a separate violation when calculating an administrative penalty."
The injunction doesn't freeze all of the new hemp regulations. The judge wrote that unchallenged provisions, including requirements for child-resistant packaging, a minimum purchase age of 21 and other consumer-safety regulations remain in effect.
The state is expected to appeal the temporary injunction.
The temporary injunction remains in effect until a trial set for July 27, during which the plaintiffs will seek a permanent block of the rules.
The plaintiffs are two industry groups and seven businesses: Texas Hemp Business Council, Hemp Industry and Farmers of America, Alchemy TX Consulting, A to Z Investments and Wholesale, Serenity Organics, TexaKana Organics, Elevate Wellness Dispensary, Texas High Council and Salganik Services.
The ruling came the same morning as a separate Texas Supreme Court decision involving Delta-8 THC, which is generally considered to be slightly less psychoactive than Delta-9.
In that case, the high court ruled the state can treat manufactured Delta-8 products made from hemp-derived CBD as controlled substances, reversing an injunction that had protected those products from enforcement.
But the Texas Supreme Court also allowed hemp businesses to continue challenging the state in court, finding they had standing to sue. Naturally-occurring trace amounts of Delta-8 in hemp remain legal.
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