13,000% Fee Increase Hits 8,000 Texas Hemp Shops as Workers Face Fallout

Texas health officials proposed a staggering fee increase for hemp retailers, jumping from $150 to $20,000 annually—a 13,233% hike—along with manufacturer fees rising from $250 to $25,000. State projections anticipated $200 million in revenue, presuming businesses would endure the costs.

The Immediate Fallout

The Texas Department of State Health Services’ rules ignited widespread protests from the hemp sector. Around 8,000 licensed retailers, including smoke shops and gas stations, confronted potential closure. Small operators, veterans’ groups, and trade associations packed public hearings, labeling the measures a hidden prohibition on their operations.

Origins of the Overhaul

Governor Greg Abbott’s executive order triggered the changes after the legislature deadlocked on hemp policy in two special sessions. The order directed the Department of State Health Services and Texas Alcoholic Beverage Commission to oversee consumable hemp products. Critics described the resulting framework as aggressive intervention targeting independent sellers, while the TABC managed 60,000 licensees without similar fee escalations.

Small Businesses on the Brink

Hayden Meek, owner of Delta Denton, testified that the $20,000 fee amounted to “a death by 20,000 cuts” for single-location stores, contrasting it with minimal impact on large corporations. Small retailers calculated that these costs would achieve what outright bans failed to do in the legislature.

Beyond Fees: Product Restrictions

Stricter THC testing rules threatened to outlaw hemp flowers in manufacturing, despite their natural origins. Scott Stubb, owner of Sublingwell Cannabinoids and Euphorics, noted the proposals would eliminate about 80% of shop inventory, including natural hemp flower. Flowers’ inherent THC levels exceeded limits, potentially favoring synthetic alternatives over plant-based options.

Revenue Projections Questioned

Heather Fazio, director of the Texas Cannabis Policy Center, deemed the $200 million forecast unrealistic, as many small firms could not afford renewal and would close. She advocated fees that cover only actual regulatory expenses, citing the department’s low projected administrative costs. Fazio warned that driving out regulated sellers would funnel demand to unsafe black markets, undermining public health aims.

Opposing Views and Veteran Impacts

Supporters like Betsy Jones of Texans for Safe and Drug-Free Youth justified the fees, arguing a billion-dollar industry selling intoxicating products should fund oversight. Aubree Adams of Citizens for a Safe and Healthy Texas called for harsher steps, such as a 25-year-old purchase minimum and industry-funded education and treatment programs.

Veterans highlighted personal stakes. Adam Peterson from San Antonio described hemp products restoring his life after pharmaceuticals caused seizures during 16 months overseas. Many relied on them for PTSD, anxiety, pain, and sleep issues without severe side effects, fearing loss of vital, natural treatments.

Path Forward and Supported Measures

The saga stemmed from legislative battles: both chambers passed bans, vetoed by Abbott, who then pursued agency rules amid tensions with Lieutenant Governor Dan Patrick. Industry groups backed some elements, like a 21-year-old buying age, verification, and recall protocols, seeing them as balanced safety steps.

Public comments gathered extensive input on fees, testing, and economics. Officials must now weigh this feedback as rules near finalization, with outcomes determining whether small operators persist or if the sector consolidates under heavier burdens.