Texas Hemp Industry Sues State Over New THC Ban, Warns of Felony Charges for Possession

Texas's hemp industry is fighting back in federal court after the state effectively criminalized most of the THC products it has sold legally for the past five years.

The ban traces back to a Texas Supreme Court decision in May, which allowed the Texas Department of State Health Services (DSHS) to reclassify nearly all hemp-derived THC as a Schedule I drug — ending a 2021 injunction that had, for five years, allowed retailers to stock a wide range of hemp-derived products without state interference. The reclassification covers synthetic THC variants including delta-8, delta-10, THCP, and THCA flower. The only exception is delta-9 THC products containing less than 0.3% THC by dry weight — meaning the most commonly sold THC product in Texas remains legal, while most of the rest of the market does not.

The stakes for consumers are steep. Now that these THC variants are classified as Schedule I substances, possession of the newly illegal products is treated as a state jail felony, carrying a punishment of 180 days to two years in prison and fines of up to $10,000, according to cannabis law experts. With roughly 14,000 retail stores statewide licensed to sell consumable hemp, and cannabis experts estimating more than half of THC products currently on shelves could be affected, the practical impact could be sweeping.

In response, two hemp retailers and a distributor filed a federal lawsuit Friday in the U.S. District Court for the Southern District of Texas, naming DSHS, Attorney General Ken Paxton, and Galveston County's district attorney and sheriff as defendants. The suit argues the state's reclassification violates the 2018 federal Farm Bill, which explicitly removed hemp from the federal Controlled Substances Act, and that Texas's new definitions fail to meaningfully distinguish lawful hemp from unlawful marijuana. The complaint further alleges the ban is preempted by the Farm Bill's protections for the interstate hemp market and imposes an unconstitutional burden on interstate commerce. Attorney Steel, representing the plaintiffs, put it bluntly: "Our Constitution does not allow the government to jail a person under a framework no one can make sense of."

The plaintiffs have also moved for a temporary restraining order, seeking to block enforcement while the case proceeds — meaning the immediate fate of Texas's hemp retailers, and potentially thousands of consumers, may hinge on how quickly a federal judge decides to act.