Texas Hemp Businesses File Lawsuit to Block New Regulations, Requests Temporary Restraining Order Over THC Formula and Fee Hikes
- A coalition of Texas hemp business leaders and advocacy groups filed a lawsuit and sought a Temporary Restraining Order (TRO) against the Texas Department of State Health Services (DSHS) and Texas Health and Human Services Commission (HHSC) to block new rules restricting the manufacture and sale of consumable hemp products.
- The lawsuit argues that the new rules, effective March 31, 2026, unlawfully bypass the Texas Legislature by redefining hemp using a “total delta-9 THC” formula that includes THCA, effectively criminalizing products legally defined as hemp under Texas law (HB 1325).
- The plaintiffs also challenge increased licensing fees—manufacturer fees rising from $250 to $10,000 and retail fees from $150 to $5,000—which they contend are economic barriers aimed at shutting down the hemp industry.
- The lawsuit, supported by a broad spectrum of Texas hemp businesses, contends that the agencies have exceeded their constitutional authority and seeks a TRO to prevent irreparable harm to the state’s hemp industry, emphasizing that they support regulations related to consumer protection but oppose rules that would halt in-state hemp production and sales.
A coalition of Texas hemp business leaders and advocacy groups filed a Verified Original Petition and Application for a Temporary Restraining Order (TRO) today against the Texas Department of State Health Services (DSHS) and the Texas Health and Human Services Commission (HHSC) in an effort to block newly enacted rules they say unlawfully restrict the manufacture and sale of consumable hemp products across the state.
Their attorney, David Sergi, of San Marcos, TX, alleges in the lawsuit that new administrative rules, effective March 31, 2026, bypass the Texas Legislature to illegally restrict the sale and manufacture of consumable hemp products (CHPs). A copy of the lawsuit is attached.
The plaintiffs—including the Texas Hemp Business Council (THBC), Hemp Industry & Farmers of America (HIFA), and several Texas-based dispensaries and manufacturers—argue that the state agencies have overstepped their constitutional authority by rewriting statutory definitions that were previously established by the Texas Legislature in 2019.
“At the heart of the legal challenge is the state’s attempt to replace the statutory definition of hemp. Under current Texas law (HB 1325), hemp is defined by its delta-9 THCconcentration of not more than 0.3%,” stated Sergi. “These Texas officials and state agencies are clearly attempting to create new law in direct contradiction to what the Texas legislature intended.”
The new agency rules, however, impose a “total delta-9 THC” limit using a post-decarboxylation formula:
[Total delta-9 THC]=[(0.877×THCA)+delta-9 THC]
By including THCA (tetrahydrocannabinolic acid) in this calculation, the agencies have effectively criminalized products that are legally defined as hemp by the Legislature.
“This case is about constitutional process,” the petition states. “An administrative agency may not substitute its own policy judgment for the outcome produced by the constitutional lawmaking process… The Texas Constitution vests legislative power in the Legislature, not administrative agencies.”
Additionally, the lawsuit challenges the increase in licensing fees that are economic barriers designed to shutter the industry.
Manufacturer License Fees: Rose from $250 to $10,000 per facility.
Retail Registration Fees: Rose from $150 to $5,000 per location.
“The Texas hemp business community is not challenging rules related to age verification or consumer protections. They wholeheartedly support those regulations, as they fall within the agency’s authority. We are seeking to halt rules that would effectively end the in-state production of hemp and the sale of hemp products—items the Legislature chose not to ban during recent legislative and special sessions,” added Sergi.
The lawsuit seeks an immediate Temporary Restraining Order to prevent these rules from causing irreparable harm to thousands of Texas small businesses, farmers, and consumers. The lawsuit was filed against the Texas Department of State Health Services (“DSHS”), its Commissioner Jennifer Shuford in her official capacity; the Texas Health and Human Services Commission; its Executive Commissioner Stephanie Muth in her official capacity (together the “Administrative Defendants”); and Warren Kenneth Paxton Jr., in his official capacity as the Attorney General of Texas (the“Attorney General”).
Those bringing the lawsuit include a broad spectrum of the Texas hemp industry including: Alchemy TX Consulting, LLC; A To Z Investments and Wholesale, LLC (Burners – Vape, Smoke, and Herb); CPRT and company, LLC dba Serenity Organics – Your CBD Apothecary; Texas Green Craft, LLC aka TexaKana Organics; Elevate One TX, LLC dba Elevate Wellness Dispensary, LLC; Clutch City Gas LLC dba Texas High Council; Salganik Services, Inc.; and, Wyatt Purp LLC. Their mission is to ensure a stable, predictable, and lawful regulatory environment for the hemp industry in the State of Texas.
In addition to Sergi, the lawyers include: Amanda G. Taylor and J.R. Johnson of Butler Snow LLP in Austin TX; Jason W. Snell of Snell Law in Austin TX.; Andrea Steel of The Banks Law Firm, P.A. in Houston, TX; Andrew J. Alvarado of Dickinson Wright PLLC in Austin, TX; Anthony J. Fusco of David K. Sergi & Associates P.C. in of San Marcos, TX; Charles (“Chad”) Baruch of Johnston Tobey Baruch, P.C. in Dallas, TX