Texas Considers Dramatic 13,000% Fee Increase for Hemp THC Retailers
Texas state health officials are proposing a staggering increase in licensing fees for hemp businesses, with some fees rising by as much as 13,000%. This move has raised concerns among industry members and advocates, who argue that it could lead to the closure of small operations, favoring larger out-of-state companies instead.
Proponents of the fee increase argue that it is essential for enhancing oversight in an industry they believe has spiraled out of control. Recently, the Texas Department of State Health Services released a set of proposed rules aimed at tightening regulations on consumable hemp products. These include establishing a minimum purchasing age of 21, implementing age verification requirements, and mandating product recalls—measures that many in the hemp industry support.
However, two proposed rules have sparked significant backlash: new testing requirements and the dramatic increase in licensing fees. Under the new regulations, manufacturer licenses would jump from $250 to $25,000 per facility annually, while retail registrations would rise from $150 to $20,000 per location per year. This represents an increase of over 13,000%.
Industry members contend that the new THC testing requirements for consumable hemp products would effectively eliminate the use of hemp flowers in manufacturing items like edibles and smokeables. Hemp flowers naturally contain THC levels that exceed the proposed limits, which could pave the way for the proliferation of synthetically derived THC products.
Scott Stubb, owner of Kemah-based Sublingwell Cannabinoids and Euphorics, expressed his concerns during a public hearing. “The proposed rules wipe out about 80% of what all shops sell, including ours, which is natural hemp flower,” he stated. “With fees at $20,000 for each shop, I honestly don’t know how we would be able to stay open.”
Hemp distributors have voiced that the new licensing fee structure fundamentally alters who can afford to operate legally in Texas. Heather Fazio, director of the Texas Cannabis Policy Center, criticized the assumption that nearly all currently registered retailers would pay the proposed $20,000 fee, arguing that many small businesses would be forced to shut down rather than renew their licenses.
Fazio emphasized that licensing and registration fees should be designed to recover reasonable regulatory costs, not serve as a revenue mechanism that drives businesses out of the market. “The department’s own estimates show that the increased costs of administering these rules are minimal. It’s unclear why such dramatic fee increases are necessary,” she added.
Supporters of the fee increase argue that it is a necessary measure to protect children from hemp products and advocate for stricter penalties on unlicensed hemp stores. Betsy Jones, director of policy and strategy at Texans for Safe and Drug-Free Youth, stated, “It’s fair and appropriate for those profiting from a billion-dollar industry to contribute fees that help cover regulatory costs.”
Aubree Adams, director of Citizens for a Safe and Healthy Texas, called for even stricter regulations, including raising the minimum purchase age to 25 and requiring hemp businesses to contribute to public education and infrastructure.
Veterans have also voiced their concerns about the potential elimination of naturally derived hemp flower products, which many rely on for relief from issues like PTSD and anxiety. Adam Peterson, a combat veteran from San Antonio, shared his experience, stating, “These health products have given me my life back.”
Fazio warned that removing regulated access to hemp flower would not eliminate consumer demand; it would merely push people back into the unregulated market, countering the public health objectives these rules aim to achieve.
The Texas Alcoholic Beverage Commission and the Texas Department of State Health Services are collaborating on these proposed rules to fulfill an executive order by Gov. Greg Abbott. This order came after the Texas Legislature debated whether to ban consumable hemp products or impose stricter regulations. Ultimately, Abbott vetoed a total ban and opted for regulatory measures instead.
While some in the industry initially welcomed Abbott’s order, viewing it as a step toward legitimizing the THC market, others now see the proposed rules as akin to a ban. Hayden Meek, owner of Denton-based Delta Denton, remarked, “A $20,000 fee is a drop in the bucket for multi-state corporations; for a single-location shop like mine, it’s a death by 20,000 cuts.”
The public comment period is set to close on January 26, but it remains uncertain when these rules will be implemented if approved.
Texas state health officials are proposing a staggering increase in licensing fees for hemp businesses, with some fees rising by as much as 13,000%. This move has raised concerns among industry members and advocates, who argue that it could lead to the closure of small operations, favoring larger out-of-state companies instead.
Proponents of the fee increase argue that it is essential for enhancing oversight in an industry they believe has spiraled out of control. Recently, the Texas Department of State Health Services released a set of proposed rules aimed at tightening regulations on consumable hemp products. These include establishing a minimum purchasing age of 21, implementing age verification requirements, and mandating product recalls—measures that many in the hemp industry support.
However, two proposed rules have sparked significant backlash: new testing requirements and the dramatic increase in licensing fees. Under the new regulations, manufacturer licenses would jump from $250 to $25,000 per facility annually, while retail registrations would rise from $150 to $20,000 per location per year. This represents an increase of over 13,000%.
Industry members contend that the new THC testing requirements for consumable hemp products would effectively eliminate the use of hemp flowers in manufacturing items like edibles and smokeables. Hemp flowers naturally contain THC levels that exceed the proposed limits, which could pave the way for the proliferation of synthetically derived THC products.
Scott Stubb, owner of Kemah-based Sublingwell Cannabinoids and Euphorics, expressed his concerns during a public hearing. “The proposed rules wipe out about 80% of what all shops sell, including ours, which is natural hemp flower,” he stated. “With fees at $20,000 for each shop, I honestly don’t know how we would be able to stay open.”
Hemp distributors have voiced that the new licensing fee structure fundamentally alters who can afford to operate legally in Texas. Heather Fazio, director of the Texas Cannabis Policy Center, criticized the assumption that nearly all currently registered retailers would pay the proposed $20,000 fee, arguing that many small businesses would be forced to shut down rather than renew their licenses.
Fazio emphasized that licensing and registration fees should be designed to recover reasonable regulatory costs, not serve as a revenue mechanism that drives businesses out of the market. “The department’s own estimates show that the increased costs of administering these rules are minimal. It’s unclear why such dramatic fee increases are necessary,” she added.
Supporters of the fee increase argue that it is a necessary measure to protect children from hemp products and advocate for stricter penalties on unlicensed hemp stores. Betsy Jones, director of policy and strategy at Texans for Safe and Drug-Free Youth, stated, “It’s fair and appropriate for those profiting from a billion-dollar industry to contribute fees that help cover regulatory costs.”
Aubree Adams, director of Citizens for a Safe and Healthy Texas, called for even stricter regulations, including raising the minimum purchase age to 25 and requiring hemp businesses to contribute to public education and infrastructure.
Veterans have also voiced their concerns about the potential elimination of naturally derived hemp flower products, which many rely on for relief from issues like PTSD and anxiety. Adam Peterson, a combat veteran from San Antonio, shared his experience, stating, “These health products have given me my life back.”
Fazio warned that removing regulated access to hemp flower would not eliminate consumer demand; it would merely push people back into the unregulated market, countering the public health objectives these rules aim to achieve.
The Texas Alcoholic Beverage Commission and the Texas Department of State Health Services are collaborating on these proposed rules to fulfill an executive order by Gov. Greg Abbott. This order came after the Texas Legislature debated whether to ban consumable hemp products or impose stricter regulations. Ultimately, Abbott vetoed a total ban and opted for regulatory measures instead.
While some in the industry initially welcomed Abbott’s order, viewing it as a step toward legitimizing the THC market, others now see the proposed rules as akin to a ban. Hayden Meek, owner of Denton-based Delta Denton, remarked, “A $20,000 fee is a drop in the bucket for multi-state corporations; for a single-location shop like mine, it’s a death by 20,000 cuts.”
The public comment period is set to close on January 26, but it remains uncertain when these rules will be implemented if approved.
