SB3 is Personal, Part 3: Hemp is Going to be Really Hard to Find.
If you’ve been following this blog, you know the 2025 Texas Legislature’s near miss at hemp criminalization hits close to home (you also know I love pictures of my kids). I lived with undiagnosed epilepsy for years, and while I can manage it with prescription meds, thousands of Texans rely on affordable, hemp-derived CBD to manage their epilepsy.
Governor Abbott’s Executive Order 56 prohibits the sale of consumable hemp products (CHP) to minors by instructing the Department of State Health Services (DSHS) and the Texas Alcoholic Beverage Commission (TABC – my former client) to adopt emergency rules followed by permanent rules to prohibit CHP sales to kids. Both agencies have since passed their emergency rules and have published permanent rules for adoption.
TABC’s proposed rules stay narrowly focused on sales to minors at TABC-licensed businesses. DSHS’s proposals, however, go far beyond the prohibition on sales to minors.
Exponential Increases in Licensing Fees.
Current licensing fees under the DSHS Consumable Hemp Program are modest:
- $250 annually per manufacturing facility
- $150 annually per retailer location
The proposed rules would raise the fees to:
- $25,000 annually for manufacturers ($15,000 higher than SB 3’s manufacturer fee)
- $20,000 annually for retailers (same as SB 3’s retailer fee)
Those aren’t typos – it’s a 100x increase for manufacturers and 130x increase for retailers. For context, TABC sets its highest licensing fee to $10,000 for a biennial license, and that’s for the Consumer Delivery Permit, which is geared towards Amazon, DoorDash, Favor, et al.
GA-56 instructed DSHS to set fees at an amount commensurate “to reflect the full regulatory and enforcement costs incurred by the State.” Yet DSHS’s own fiscal note projects dramatically lopsided revenue versus enforcement costs:
| Fiscal Year | Projected Revenue Increase | Projected Enforcement Cost |
| 2026 | ~$202 million | ~$69,000 |
| 2027 | ~$202 million | ~$5,600 |
| 2028 | ~$202 million | ~$5,600 |
| 2029 | ~$202 million | ~$5,600 |
| 2030 | ~$202 million | ~$5,600 |
| 5-Year Total | ~$1.01 billion | ~$92,000 |
This is bonkers and has nothing to do with covering new enforcement costs. For some perspective, consider that in 2025 the Legislature appropriated TABC just over $121 million – for the upcoming biennium.
With these fee increases, Texas will be the outlier among not just red states but California too:
- Georgia retailers — $250 annually.
- Tennessee retailers — $250 annually.
- Oklahoma retailers — Tiered up to $5,000 based on annual sales.
- California — Tiered, with fees lower than $20,000 until ~$2 million in annual sales.
Texas startup retailers will be paying 4x what an established, profitable Oklahoma business apays, and an even worse deal compared to a California business.
Other Provisions. When I first saw the proposed DSHS rules, I planned on blogging in more detail about the non-financial aspects that are on the table. But once I crunched the financials, I couldn’t bring myself to focus on the rest.
- Tightened Testing Standards. Hemp labs must now test for “total THC” (including THCA conversion to delta-9 THC), not just delta-9. Products whose total THC exceeds 0.3% will be illegal under the proposed rules.
- Enhanced Labeling and Packaging. Hemp products will require tamper-evident, child-resistant packaging “non-attractive to children,” with detailed labels on cannabinoid content, serving sizes, health warnings, and QR codes linking to certificates of analysis.
- Operational and Inspection Requirements. New recall procedures, three-year record retention, and consent requirements for allowing TABC personnel to inspect licensed locations even without holding a TABC permit.
- Transport and Destruction Protocols. Ban on transporting products over 0.3% THC into Texas for processing; updated rules for destroying non-compliant items without bonds for correction.
- Penalties and Violations. Clarified administrative penalties, with revocation for repeated sales to minors or other serious infractions. Prohibits sales to minors.
DSHS is responding to legitimate concerns about youth access and pernicious effects that come with it. Maybe that’s the actual goal of imposing prohibitive fees – reduce legitimate outlets, reduce underage sales. Most provisions aim at reasonable consumer protection. But the testing shift will eliminate hundreds of products currently legal and available to the public, directly affecting patients relying on them for conditions like epilepsy.