Where the Texas Hemp Market Currently Stands

When a consumer walks into a Texas hemp shop, chances are that the shelves look different than their last visit. And that’s not solely because products are flying out the door. Last year, Gov. Greg Abbott vetoed Senate Bill 3, legislation that would have banned hemp products containing THC, and instead ordered the Department of State Health Services to draft new rules to regulate the market. While the department made some alterations that industry members said they do encourage – including a 21-and-older policy, higher testing requirements, and more stringent packaging standards – other changes put the industry at risk: a major spike in licensing fees and the inability to sell THCA products that make up a large portion of the marketplace. Those rules took effect at the end of March 2026.

So the Texas Hemp Business Council, a nonprofit coalition of hemp business owners and advocates that fights to protect the industry, took charge in filing a lawsuit against multiple state agencies, claiming that the entities went beyond their legal authority by implementing the rules. Ten days after the changes went into effect, Travis County District Judge Maya Guerra Gamble granted the industry a temporary restraining order, blocking enforcement of some of the rules, followed by Travis County District Judge Daniella DeSeta Lyttle granting the industry a temporary injunction in May, with a trial date scheduled for July 27 to continue hashing out the issue.

For business owners, consumers, and pro-cannabis advocates, the puzzle pieces were clicking into place. But then the state appealed Judge DeSeta Lyttle’s ruling. The Texas 15th Court of Appeals then put those rules back into play in early June after denying the industry’s request to keep the temporary injunction in place. That July 27 trial date got thrown out as the case rests in the hands of the appellate court, and it’s currently unclear when a decision could be made.

On top of those rules being reinstated, the Texas Supreme Court issued a ruling in early May on a 2021 lawsuit regarding Delta-8 products, declaring that the DSHS has the ability to classify Delta-8 THC and other hemp-derived THC isomers as controlled substances. Starting July 31, hemp products containing Delta-8, Delta-10, THCP, and other cannabinoids outside of products with less than 0.3% Delta-9 THC will be wiped from shelves.

And these are just the changes happening at the state level. When the U.S. House passed the GOP-backed spending bill that opened the federal government after a nearly month-and-a-half-long shutdown late last year, there was a provision within the bill aimed at closing the loophole created by the 2018 Farm Bill that has allowed for widespread access to hemp products throughout the nation. In less than four months, most hemp products in the U.S. will be banned, pending potential intervention, which some industry experts believe is likely. 

“We actually called in to ask them about enforcing, and they told us they weren’t enforcing certain things or they weren’t planning on enforcing them until November, which is kind of weird.”

Lukas Gilkey, CEO of Hometown Hero

It’s fair to say that it has been a rocky eight months for the industry. “We started off 2026 on a super high note, and it’s kind of just been this super slow decline,” said João Mitchell, general manager at local hemp business ATX Organics and legislative director for the Texas Cannabis Collective, a nonprofit cannabis rights advocacy group. 

Despite the appellate court’s decision to put the DSHS’s rules back into effect, enforcement of the regulations still remains unclear. Mitchell told the Chronicle that he has heard from other business owners within a THBC member group chat that the department is not confiscating THCA products when conducting inspections, but rather looking for “controversial stuff that shows up in smoke shops.”

“The general consensus in that group chat is that all those shops that have been inspected since the THCA ban, the inspectors haven’t really given any attention to THCA,” he said. He mentioned that ATX Organics is continuing to sell the products until the department takes action.

Lukas Gilkey, CEO of local hemp company Hometown Hero, told the Chronicle that the DSHS informed him that the enforcement of THCA products is being delayed for months. “We actually called in to ask them about enforcing, and they told us they weren’t enforcing certain things or they weren’t planning on enforcing them until November, which is kind of weird,” he said. “Why would November be all of a sudden the time that you’re planning on enforcing?”

Mitchell pointed to the looming federal ban as a potential reason why the state is holding off on confiscating the now-illegal products, speculating that “they don’t want to create any kind of weird legal headaches or administrative headaches for themselves when a federal ban is imminent and that kind of takes care of the problem for them.”

Products at ATX Organics’ Airport Boulevard location Credit: Joe Ellett

At the moment, consumers still have access to the THCA products at select wholesalers throughout the state. But as far as the rule changes impacting other hemp products containing cannabinoids other than those with less than 0.3% Delta-9 THC, Mitchell believes that fight is over. “I definitely think that the July 31 ban on all the synthetic cannabinoids is a done deal,” he said. “I don’t foresee THBC really putting up any more legal challenges to that.”

Cynthia Cabrera, founder and president of the THBC, told the Chronicle that the DSHS has created a concerning dilemma by outlawing products that contain any cannabinoids outside of the 0.3% Delta-9 THC limit, explaining that it is “impossible” to create Delta-9 products that don’t also have trace amounts of other cannabinoids. “The only way that you can have pure Delta-9 is by subjecting the plant to multiple chemical processes to turn it into an isolate, which nobody wants,” she said.

All three of these industry members said that they are uncertain where the market will head from here. Gilkey said that Lt. Gov. Dan Patrick’s and Republican Sen. Charles Perry’s persistent push to ban hemp products is a “disservice” to the thousands of business owners and the countless consumers of the multibillion-dollar market. “They were elected to represent the people, and they are not doing it, and it’s really unfortunate,” he said.

“What remains to be seen in 2027,” Cabrera explained, “is if legislators actually start representing their constituents or if they keep bending to the will of the lieutenant governor.”

The DSHS did not respond to the Chronicle’s questions by press time.

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