The Agriculture Improvement Act of 2018 (2018 Farm Bill) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (CSA) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (USDA) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

On June 10, 2019, Texas enacted House Bill (HB) 1325, now codified at V.T.C.A., Health & Safety Code § 443.001 et seq., which legalized the production, manufacture, retail sale and inspection of hemp and of various hemp products, including “consumable hemp products.” “Consumable hemp product” means “food, a drug, a device, or a cosmetic […] that contains hemp or one or more hemp-derived cannabinoids, including cannabidiol.”

HB 1325 tasked the Texas Department of Agriculture (TDA) with overseeing the cultivation of hemp and the Department of State Health Services (DSHS) with regulating the manufacture, sale and distribution of “consumable hemp products.”

On January 27, 2020, USDA approved the state’s hemp production plan, which means the agencies are now free to implement HB 1325. TSA’s  final hemp rules went into effect on March 11, 2020; however, DSHS has yet to finalize and publicly release its rules, which must (1) establish a manufacturing licensure program for Hemp CBD products; (2) create a registration process for retailers selling these products; and (3) develop a procedure to randomly test these products at retail.

This means that DSHS has yet to issue licenses to state processors, manufacturers and distributors and to accept registrations from retailers. Nevertheless, Section 11 of HB 1325 allows for existing retailers to possess, transport or sell “consumable hemp products” in the retailers’ inventory before DSHS rules go into effect. These retailers’ activities are presently allowed, provided the retailers are licensed in accordance with current state law, ensure the Hemp CBD products found on their shelves contain no more than 0.3 percent THC, and are safe for consumption by being free of heavy metals, pesticides, harmful microorganisms or residual solvents.

So, as of the date of this post, the manufacture of “consumable hemp products” isn’t allowed in Texas. Nevertheless, the state authorizes the sale and marketing of these products if they are processed or manufactured in another state in compliance with:

1. that state or jurisdiction’s plan approved by the USDA;
2. in the absence of a state submitted plan, a plan established by the USDA; or,
3. the laws of that state or jurisdiction if the products are tested in compliance with, or similar to those set out in Section 443.151 of HB 1325.

It is worth noting that while the sale and marketing of Hemp CBD foods and cosmetics is allowed – so long as these products meet specific testing and labeling requirements, the definition of “consumable hemp product” does not include smokable products. Moreover, HB 1325 expressly prohibits the processing and manufacture of products “containing hemp 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.” Consequently, it is possible that once the DSHS rules go into effect, the sale and marketing of Hemp CBD e-cigarettes and other smokable products will also be banned. In light of this, manufacturers, distributors and retailers of Hemp CBD products should closely monitor the DSHS rule making process to ensure strict compliance with the latest set of rules.

Credit: Harris Bricken | Canna Law Blog

Read our legal disclaimer HERE. While we try to stay as up to date as possible on all state laws, you should do your own due diligence and work with a legal professional to ensure you are operating legally in your state or territory at all times.