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August 6, 2020Client Alert

New Texas Hemp Product Regulations – Four Things to Know Right Now

While Texas was late to the party to legalize the cultivation of hemp, it is now one of the first major states to pass a regulatory program that governs not just the production of hemp, but the manufacturing, distribution, and sale of hemp products. This week, the Texas Department of State Health Services (DSHS) started accepting applications for the manufacturing, processing, distribution, and retail sale of consumable hemp products. If you are an existing hemp business in Texas or are looking to start soon, here are four key things to know about these recent changes.

As of August 2, 2020, manufacturers, processors and distributors of consumable hemp products need to obtain a consumable hemp product license. Texas stopped viewing hemp as a controlled substance allowed the sale of consumable hemp products through HB 1325 in summer of 2019. However, that law required manufacturers and processors of consumable hemp products to operate under a license from DSHS, but DSHS still needed to develop its regulatory scheme to license hemp businesses. As of August 2, 2020, DSHS license regulations are effective and DSHS is accepting applications for manufacturers, processors, and distributors of consumable hemp products in Texas.  

If you are already operating a hemp retail business, you have until October 2, 2020 to obtain a consumable hemp product license or register your retail facility with DSHS. HB 1325 specifically allowed the sale of consumable hemp products in the state, and retailers who were already in operation as of August 2, 2020, the effective date of the new DSHS regulations, may keep operating so long as they register their retail operations with DSHS within 60 days of the effective date, which is about October 2, 2020.

Manufacturers and distributors face a more complicated application process than retail establishments. Manufacturers and distributors may only obtain a license to manufacture or distribute hemp products after submitting fingerprints and consenting to a background check. This level of scrutiny for manufactures and distributors is similar to that required of hemp farmers in Texas and across the United States. Information on what is required for the application, and a link to start the application process can be found on DSHS’s hemp FAQ website.  Retailers are only required to register their retail locations with DSHS and do not need to submit to fingerprinting or a background check.

Texas has adopted labelling requirements for consumable hemp products. All hemp products marketed as containing CBD must meet certain labelling requirements contained in the DSHS regulations, such as listing the address of the manufacturer and having a QR code or other traceable barcode that leads a consumer to further information on the product. The requirements are relatively straightforward and match labelling laws passed in Indiana and Florida. Before ordering packaging for your hemp product, double check it meets the state regulations so it doesn’t get pulled from shelves. Michael Best has experienced attorneys who counsel cannabis clients through the label development process.

If you have any questions about the licensing process or the new DSHS regulations, don’t hesitate to contact an attorney in the Michael Best cannabis industry group.

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