Retailers say Texas’ “devastating” THC ban will force them to close shop

Sign up for The Brief, The Texas Tribune’s daily newsletter that keeps readers up to speed on the most essential Texas news.

---

Sydney Torabi, co-founder of Austin-based Restart CBD, could only watch in disbelief late Wednesday night as the Texas House delivered a key vote to push through a ban on all products containing THC, essentially stripping her of a significant piece of her livelihood by this fall.

“My jaw dropped. I didn’t understand the outcome,” said Torabi, who started her business with her sister seven years ago.

Senate Bill 3 by Sen. Charles Perry, a Lubbock Republican who also carried the 2019 hemp legalization bill that created the THC proliferation, would penalize violators who knowingly possess hemp products with any amount of THC with a misdemeanor that can carry up to a year in jail. Those who manufacture or sell these products would face up to 10 years in prison. The measure is a few procedural steps away from going to Gov. Greg Abbott’s desk.

As of April 2024, Texas had over 7,000 registered hemp sellers. The state’s hemp industry is estimated to employ more than 50,000 people and generate $7 billion in tax revenue annually, according to a study done by Whitney Economics. However, with THC-containing hemp products, like gummies, drinks, lotions, clothing, coffee, and much more, slated to be criminalized by Sept. 1, retailers are telling The Texas Tribune they plan to close shop, ship their product out in mass, or stay open and be declared a drug dealer by the state while they fight the issue in the courts.

“It’s devastating,” Torabi said, adding that she was disheartened that other bills had been held hostage until Senate Bill 3 was passed. “That is the saddest part. [Lt. Gov. Dan Patrick] used people against people and surprised everyone.”

This session, Patrick, who oversees the Senate, has led the charge to ban THC, accusing retailers of preying on susceptible minors by setting up stores near schools and marketing products to children.

“We cannot in good conscience leave Austin without banning THC, which is harming our children, and destroying Texans’ lives and families,” Patrick said in a social media post before Senate Bill 3 passed.

The GOP-controlled Legislature authorized the sale of consumable hemp a year after it was legalized nationwide to boost Texas agriculture by allowing the commercialization of hemp containing trace amounts of delta-9 THC.

What ensued was a proliferation of hemp products sold at dispensaries and convenience stores across the state.

“We are deeply disappointed by the Texas House’s passage of SB 3, a bill that dismantles the legal hemp industry and ignores the voices of small businesses, farmers, veterans and consumers across the state who rely on hemp-derived products for their livelihoods and well-being,” according to a statement from the Texas Hemp Business Council on Thursday. “We urge Governor Abbott to reject SB 3 and protect the tens of thousands of hardworking Texans.”

Hemp manufacturers and retailers had championed to House lawmakers their willingness to adopt stricter oversight and licensing requirements. Lawmakers in the lower chamber initially seemed willing to adopt regulations despite an outright ban, which makes the sequence of events this week feel like a betrayal to many business owners.

“I know there are some people in the House who care. It’s just unfortunate,” Torabi said.

What the future holds for hemp retailers and their customers in Texas now looks different

For Nick Mortillaro, a managing partner at Lazy Daze, a Central Texas-based cannabis coffee shop chain, the ban means moving his business to another state.

“We are looking at potentially closing stores and consolidating and moving staff and inventory to other states like New Mexico, Maryland, and Florida,” he said. “We will, unfortunately, have to retool a lot of shops to different products.”

When California implemented a hemp ban, it led to a rush of retailers holding flash sales to get rid of inventory and customers buying items in bulk. Customers from the state’s robust medical marijuana program helped buy up the product.

Torabi said she doesn’t think her store will try to dump merchandise. There’s not a large enough medical marijuana customer base in Texas to do so.

“They have made small steps to fix the medical marijuana program in Texas, and we need large leaps,” Torabi said. “Medical marijuana is still in its infancy stage and isn’t accessible to many Texans. California had the infrastructure we don’t, so where are we supposed to push our customers who depend on us to?”

Torabi said if the full ban goes through, she would lose “a grand majority” of the products she can legally sell, including gummies, drinks, hemp flower to smoke and delta 8 vape pens. She said it’s almost impossible to have a product without THC in a store like hers.

Some of the most vigorous opposition to the all-out ban on hemp products has come from those who use it for medical purposes. Veterans, parents of kids with mental health or physical disabilities, and the elderly spoke to lawmakers this year about the importance of having easy access to hemp products, not the medical marijuana program.

The Legislature is considering plans to expand the state’s medical marijuana program by April 2026. Even so, some users have said they would strongly prefer to continue buying products at smoke shops, because doing so is cheaper, more accessible, and does not require an expensive and sometimes far-away visit to a medical professional.

Shortly after Wednesday's House vote, Lukas Gilkey, chief executive of Hometown Hero, a manufacturer of hemp-derived products, said industry leaders would immediately begin preparing a lawsuit to challenge the expected ban, likely on the grounds that it disrupts interstate commerce, similar to arguments made in other court cases across the country.

“This fight is not over, and we’ll keep fighting to ensure that your businesses, your livelihoods, and this community survive,” he said in a social media post.

This strategy might buy retailers some time. A Tennessee judge allowed hemp products to remain on the shelves earlier this year as she worked on arriving on a decision on whether to allow the state to regulate the industry there.

Torabi said she and her sisters are already passing around petitions and speaking with various business councils about how to fight back against the ban, including asking Abbott to veto the bill.

“This will recreate the illicit market as people will be timid or scared,” she said.

Mortillaro is more skeptical and is focused on the future of his employees and customers who rely on them.

“I don’t think the governor will veto. We have signed the petition and support the industry groups, but we are focused on getting to our customers while it’s still legal, helping them stock up, and educating them as long as we are open,” Mortillaro said.

---

First round of TribFest speakers announced! Pulitzer Prize-winning columnist Maureen Dowd; U.S. Rep. Tony Gonzales, R-San Antonio; Fort Worth Mayor Mattie Parker; U.S. Sen. Adam Schiff, D-California; and U.S. Rep. Jasmine Crockett, D-Dallas are taking the stage Nov. 13–15 in Austin. Get your tickets today!