Texas Hemp & CBD: The Next Frontier Is Already Here
Opportunities While The Lone Star State Waits On Cannabis
The cannabis landscape in Texas is changing, but the revolution isn’t where many expected it to be. While full cannabis legalization remains a distant possibility, the hemp and CBD industry offers a unique opportunity for businesses and entrepreneurs to capitalize on a burgeoning market.
Though Texas’ flourishing hemp and CBD industry still faces potential challenges, as Lt. Gov. Dan Patrick recently announced Senate Bill 3, a proposed ban on consumable THC products. Supporters of the bill cite the need to protect consumers, particularly children, and critics argue that a ban would impact jobs, force compliant businesses to close, and drive THC sales back to illegal markets, undoing progress made in establishing a cannabis industry.
The Economic Boom of Hemp-Derived Cannabinoids
The U.S. market for hemp-derived cannabinoids like Delta-8 THC has seen explosive growth, climbing from $200.5 million in 2020 to nearly $2.8 billion in 2023, according to the Brightfield Group. Texas is a significant contributor to this surge, with over 7,000 registered dispensaries for consumable hemp products as of April 2024.
Commercial Production and Licensing
The 2018 Farm Bill laid the groundwork for the commercial production of hemp across the United States, allowing states to establish their own regulatory frameworks. Texas followed suit with House Bill 1325, signed into law in June 2019. This legislation authorized the production, manufacture, and retail sale of industrial hemp and its derivatives, including consumable hemp products (CHPs) such as CBD oil, gummies, and topicals.
The Texas Department of Agriculture began accepting licensing and permit applications for hemp cultivation and production in March 2020. This pivotal moment launched the state’s entry into the hemp industry, opening the door for a variety of consumable hemp products that meet the legal THC limit of 0.3% Delta-9 THC.
Strategic Licensing Insights for Texas Hemp and CBD Businesses
Texas laws strictly regulate the manufacturing and sale of hemp products, particularly those intended for smoking. While the production and white labeling of smokable hemp products are prohibited within the state, businesses can sell and distribute products manufactured elsewhere, provided they comply with local testing and labeling regulations.
Consumable Hemp Products
Consumable Hemp Products (CHPs) encompass a wide range of goods, from CBD oils and gummies to infused beverages and cosmetics. To legally manufacture, process, or distribute CHPs in Texas, businesses must secure a Consumable Hemp Product License from the Department of State Health Services (DSHS). Retailers, too, are subject to specific licensing requirements if they modify packaging or labeling.
Retailers must also navigate licensing requirements carefully. For example, a DSHS Retail Hemp Registration is necessary for selling CHPs directly to consumers, and additional licenses may be required for wholesale distribution or storage.
Steps for Texas Hemp and CBD Entrepreneurs
Hemp and CBD businesses enjoy advantages over the cannabis/marijuana market, such as lower barriers to entry, certain tax deductions, and opportunities to establish a business and brand nationwide, even in jurisdictions where regulated cannabis markets have yet to be legalized.
Building a successful hemp or CBD business in Texas requires a thoughtful approach to navigating the state’s regulatory environment and market dynamics. Here are some key strategies to help entrepreneurs make the most of the opportunity:
1) Understand Your Business
Establish a business plan, go-to-market strategy, and an understanding of the financial feasibility of your new enterprise
2) Comply With Regulatory Framework
Navigate Texas’ licensing and compliance requirements to ensure your business operates legally and efficiently.
3) Leverage White Labeling Opportunities
Partner with out-of-state manufacturers to bring high-quality products to Texas consumers without violating state manufacturing restrictions.
4) Focus On Consumer Education
Build trust and brand loyalty by educating consumers about the benefits and legal nuances of hemp-derived products.
5) Prepare For Expansion
Develop scalable business models that can adapt to adult-use cannabis legalization in Texas or changes in state and federal cannabis and hemp laws.
Texas: We Offer A Gateway to the Future
For entrepreneurs and businesses, Texas’ hemp and CBD industry offers more than just a lucrative opportunity—it provides a stepping stone to the broader cannabis market. By investing in the hemp space today, businesses can position themselves as industry leaders ready to thrive in a post-legalization landscape.
Partner With Our Hemp and CBD Consultants
Our regulatory consulting team is here to help guide you through the process. Whether it’s mapping out a comprehensive launch strategy, testing figures in financial modeling, or ensuring your business complies with applicable regulations, we’ll help you get your help or CBD business started right.
The next frontier in Texas is already here. Reach out to talk to our team, or sign up for the Canna Advisors newsletter to stay in the loop on cannabis and hemp updates in Texas and nationwide.