Texas Senate wants to ban THC products. Here’s what that could mean for THC-focused businesses in Houston

(Gene Johnson, Copyright 2022 The Associated Press. All rights reserved.)

HOUSTON, Texas – The proposed legislation to ban all forms of consumable tetrahydrocannabinol (THC) in Texas could have significant implications for the state’s cannabis dispensaries and associated businesses.

Since the legalization of consumable hemp in 2019, the industry has seen rapid growth, with thousands of shops opening across Texas.

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These establishments have been selling a variety of THC-infused products, including gummies, beverages, vapes, and more, capitalizing on the legal loophole that allows trace amounts of THC in hemp products.

What happens if this ban is passed?

  • If Senate Bill 3 passes, it would likely lead to the closure of many THC-focused businesses.
  • Business owners could face financial losses due to unsellable inventory and the potential need to pivot their business models to non-THC-related products.
  • The ban could impact employment within the industry, as shop closures and reduced demand for THC products would likely lead to job losses.
  • The ban could disrupt the supply chain and negatively affect ancillary businesses, such as those involved in the production, distribution, and marketing of THC products. The ripple effect might extend to local economies that have benefited from the growth of the hemp market.

Why does the Texas Senate want to ban THC products?

In an announcement by Lt. Gov. Dan Patrick earlier this week, he said lawmakers in the state Senate are moving forward with plans to ban all forms of consumable THC. But why?

Patrick says the law, which was intended to boost Texass’ agriculture by permitting the commercialization of hemp containing trace amounts of non-intoxicating delta-9 THC, has since been abused by retailers who are using loopholes to market products with unsafe levels of THC.

“Dangerously, retailers exploited the agriculture law to sell life-threatening, unregulated forms of THC to the public and made them easily accessible,” Patrick said in a statement announcing the measure late Wednesday. “Since 2023, thousands of stores selling hazardous THC products have popped up in communities across the state, and many sell products, including beverages, that have three to four times the THC content which might be found in marijuana purchased from a drug dealer. ”

Patrick said SB 3 will not impact the state’s current Compassionate Use Program (CUP). Instead, it will promote the use of safe, reliable cannabis products for individuals with serious medical conditions through the regulated CUP framework, overseen by prescribing doctors.

In October, KPRC 2 reported that eight people had been arrested in connection to an alleged criminal operation that laundered over $4 million through a network of 18 marijuana dispensaries in Houston.

Those arrested were owners, investors, and managers of the chain known as the “THC Club.”

The alleged scheme, which spanned from June 2020 to September 2024, funneled funds through at least 57 bank accounts, according to court documents. The THC Club locations, each operating under various business names, were strategically set up throughout Houston, including prominent spots like the Galleria, Heights, Westchase, and Energy Corridor.

During the investigation, authorities conducted undercover purchases and surveillance, eventually leading to search and seizure warrants executed at all THC Club storefronts on Sept. 25. Officers confiscated a total of 20.69 pounds of suspected marijuana from the locations.

Patrick said Texas has not legalized marijuana in any form for broad use.

He added that consumable hemp products are required by law to contain no more than 0.3% THC — the intoxicating part of the cannabis plant that comes in forms known as delta-8, delta-9, and THCA — but he asserts that some items sold in Texas far exceed this limit.

The Legislature is scheduled to reconvene on Jan. 14.


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