On March 31, Texas’ roughly 9,000 licensed consumable hemp retailers will face sweeping new regulations, including thousands of dollars in annual fees and a ban on most smokable cannabis products.

The new rules, which also include age verification requirements, stricter packaging guidelines and more rounds of product testing, were originally proposed in December. After reviewing input from over 1,400 public commenters, the Texas Department of State Health Services, which regulates the state’s hemp industry, adopted the rules March 2.

Some experts said they were concerned about the rules taking effect March 31—about four weeks after they were approved—without a “grace period” for retailers to adapt to the changes and remove certain products from their shelves.

“Imagine being a business and finding out that not only are your registration fees going up significantly, … but also 50%—maybe even 70%—of the products that you sell now have to be taken off the shelves in a matter of weeks, and you’re going to have to figure out how to keep your business afloat,” said Heather Fazio, director of the Texas Cannabis Policy Center.

Supporters of the increased regulations previously said they hoped the changes would result in more comprehensive oversight of Texas’ hemp industry and improve consumer safety.

The overview

The state health department’s new rules:

Extend an existing prohibition on sales to customers under 21 years oldRequire retailers to check the IDs of all customers purchasing consumable hemp productsRaise annual licensing fees for manufacturers and retailersMandate product testing in the manufacturing process and before salesChange how the state classifies legal THC levelsTighten packaging and labeling rules for consumable hemp products sold in TexasRequire more detailed recordkeeping by manufacturers, distributors and retailersThe regulations stem from a September executive order by Gov. Greg Abbott, who at the time called for age restrictions on THC sales, tighter guardrails for the multibillion-dollar industry and enhanced law enforcement monitoring of consumable hemp businesses.

Abbott issued the order after state lawmakers spent more than half of 2025 debating whether to increase regulations on consumable THC products or ban them altogether. Lawmakers voted to ban all hemp-derived THC products last May, but Abbott later vetoed the legislation. After lawmakers did not strike a deal during special legislative sessions last summer, the governor directed state agencies to draft new regulations.

Zooming in

By changing how THC levels in consumable hemp products are measured and classified, the state is effectively banning most smokable cannabis, experts told Community Impact.

Under current law, products are considered legal hemp if they contain no more than 0.3% Delta-9 THC by dry weight. Delta-9 THC is the primary psychoactive ingredient in cannabis.

Starting March 31, products must be measured by total THC content, which includes tetrahydrocannabinolic acid, or THCA. Experts said that THCA, a naturally occurring cannabinoid, is not intoxicating until it is heated or smoked and converts to Delta-9 THC.

Hundreds of public commenters pushed back against counting THCA toward the 0.3% legal limit. During a January public hearing, some hemp industry advocates said the change would outlaw most products containing the natural hemp flower, which is more potent than some synthetic THC compounds.

“[The state is] effectively banning the natural hemp flower with naturally occurring levels of THC from the legal marketplace,” Fazio said. “That means consumers are going to be turning either to the illicit market or to out-of-state or out-of-country businesses that can ship directly to consumers through the mail. This is a big concern for us because our state is safer with effective regulation, rather than prohibiting legitimate businesses from selling these products that Texans clearly enjoy.”

Fazio said hemp flower products that are “super low in THC” will remain legal under the new rules, noting that “they are banning flower that people will want to buy.” Hemp beverages, edibles and tinctures will also still be sold in stores across Texas, as long as they do not exceed the legal limit for THC content and meet stricter packaging requirements.

Products must include “comprehensive warning statements” with tamper-evident, child-resistant and resalable packaging starting March 31, per the Texas Hemp Business Council, which advocates for hemp retailers.

Another perspective

At the January hearing, some Texans said increasing licensing fees and tightening other regulations would help the state protect consumers and ensure children cannot access consumable hemp products.

“Cannabis advocates say that this is a billion-dollar industry, so it’s fair and appropriate for the people who profit from selling a billion dollars of intoxicating and harmful products to pay fees that help cover the costs associated with the regulation and societal burden of the product’s harms,” Betsy Jones, the policy and strategy director at Texans for Safe and Drug-Free Youth, said Jan. 9. “In addition to the licensing fees, we must follow evidence-based deterrence theory to include swift, certain and severe penalties for rule violations, including unregulated products, kid-friendly products, sales to minors and unlicensed facilities.”

More details

The new regulations also raise the annual licensing fees that hemp retailers and manufacturers must pay to the state. Beginning March 31, retailers will pay $5,000 per retail location each time they renew their operating license, up from $150 today. Hemp manufacturers will pay an annual fee of $10,000 per facility, up from $250 today.

The DSHS previously proposed $20,000 in annual fees for retailers and $25,000 for manufacturers, but reduced them after hearing feedback from business owners who said the fees were too high for them to remain in business.

“These proposed fees don’t regulate small businesses, they eliminate them,” Estella Castro, the owner of Austinite Cannabis Co., said Jan. 9. “After six years of me operating legally, creating jobs and contributing to the Texas economy, this proposal would force me to close, despite doing everything right. I respectfully ask you to reconsider the fee increase and consider the impact on small, Texas-owned businesses.”

In a written response to public comments, the agency said it set the licensing fees by estimating how much it would cost to regularly inspect consumable hemp facilities, “including inspector salaries and travel, laboratory testing costs, related legal and State Office of Administrative Hearing costs for resulting compliance actions, and assistance from the [Texas Alcoholic Beverage Commission] and the Texas Department of Public Safety.”

The DSHS said it will evaluate hemp licensing fees “periodically” to ensure they do not exceed inspection costs.

Community Impact reached out to the DSHS for clarification on how much the agency expects regulatory and enforcement costs to increase under the new rules and what portion of the annual licensing fees will go toward those initiatives, but did not receive a response before press time.

In December, the agency said costs were expected to increase by about $69,000 this year and $5,600 in future years, Community Impact previously reported.

The local impact

Fazio said about half of the consumable hemp products sold by Texas retailers contain the natural hemp flower.

Outlawing these products could have a “chilling effect” on the industry and lead some retailers to go out of business, said Cynthia Cabrera, president of the Texas Hemp Business Council.

“If [the state] wanted to derail people from staying in business, well, they’re achieving their objective,” Cabrera told Community Impact.

In a March 19 Facebook post, Dallas hemp retailer CBD Farmhouse said it would close its doors March 31, citing the new state regulations.

“Because of new [rules] in Texas, banning THCA in smokable products, we are now faced with an incredibly painful and heartbreaking decision—we will be closing our doors at the end of this month,” the post reads.

“It is really tragic that these entrepreneurs are being faced with this, especially in a state like Texas that touts being pro-business, being pro-free enterprise … and here we are shutting down businesses and relegating consumers to an illicit market,” Fazio said.

Looking ahead

Texas lawmakers will return to the state Capitol in January, and Fazio said she expects to see legislation filed on consumable hemp regulations.

“They are definitely going to be hearing from their constituents about this and deciding what path to move forward on: Should they make a course correction from what the [DSHS] has adopted here, or will they lean into this more prohibitionist approach?” Fazio said. “We hope that lawmakers will continue to look at this from the side of free markets and allowing adults to be adults.”

However, legislative action may be preceded by an impending federal ban on intoxicating hemp products. That ban, which the U.S. Congress approved late last year as part of a federal funding package, is set to take effect in November barring changes to the law, Community Impact previously reported.