Don’t Worry, Be Hempy: Delta-8 Remains Legal in Texas

Delta-8 THC will remain legal in Texas for now, following an Austin Court of Appeals ruling on Thursday, September 28, 2023. After fighting to ban Delta-8 THC since 2021, the Texas Department of State Health Services (DSHS) was issued a blow when the court of appeals ruled in favor of Hometown Hero CBD. The court of appeals denied the DSHS’s attempt to vacate a temporary junction barring enforcement of a regulation banning sales of Delta-8 and other THC isomers.

In 2019, the Texas Legislature legalized hemp and hemp-derived products to mirror the federal definition of marketable hemp products as anything with less than 0.3% Delta-9 THC. Delta-9 THC (often just called THC) is the chief psychoactive component in cannabis that gets users high. Cannabis with more than 0.3% Delta-9 THC is illegal marijuana, and anything with less is considered legal hemp. The Texas Legislature then passed a similar law in 2019 that legalized hemp in the State, resulting in smoke shops filling their shelves with other forms of THC, including Delta-8, which is generally regarded as Delta-9’s less potent cousin.

In 2020, the U.S. Drug Enforcement Agency (“DEA”) updated its list of controlled substances to align with the 2018 federal Farm Bill. But DSHS commissioner, Dr. Jennifer Shuford, objected to the DEA’s Interim Final Rule, claiming that the DEA’s definitions permitted the presence or addition of THC other than Delta-9 THC: “Multiple THC isomers and variants may have pharmacological or psychoactive properties.” On its hemp-program webpage, Texas’s DSHS declared that Delta-8 and other THC isomers were Schedule 1 controlled substances. This statement prompted the Hometown Hero CBD lawsuit, which secured an injunction to halt the ban; the State appealed the injunction to the Austin Court of Appeals.

Hometown Hero CBD argued that the State wasn’t triggered to do anything with its controlled-substances list, because the DEA wasn’t designating, rescheduling, or deleting anything on the federal controlled-substances list. When the DEA designates, reschedules, or deletes substances from the federal list, such a change triggers the State’s ability to choose whether to adopt these changes. Here, Hometown Hero argued, the DEA hadn’t changed the list but instead merely conformed the controlled substances list in line with the federal hemp law. Justice Rosa Lopez Theofanis agreed, noting in Thursday’s opinion that the DEA rule “did not add additional requirements to the regulations and did no more than incorporate the statutory amendments.”

Further, the company claimed (and the court of appeals ultimately agreed) that Texas DSHS provided neither a proper notice nor a proper hearing about its enforcement change to the Schedule 1 controlled-substances list. In September 2020, the State posted a notice online for a hearing titled “Objection to Implementing DEA Rule Changes.” It also posted the notice in the State’s register. Normally, the register includes text-searchable PDFs, which allows people following the hemp industry to find important updates to hemp laws. But, according to Hometown Hero, because this notice wasn’t text-searchable, no one could have found out about it. The company claimed that DSHS didn’t adhere to the Texas Health & Safety Code and the Administrative Procedure Act’s rulemaking criteria, because the change was able to happen without objection, with no one attending the hearing or sending in public comments.

On September 28, the Austin Court of Appeals ruled in Hometown Hero CBD’s favor, upholding the decision to prevent the State from prohibiting hemp-derived Delta-8 products. The company praised the appellate court’s ruling in a public statement: “We are delighted that the Third Court of Appeals of Texas today upheld the decision to stop the prohibition of hemp-derived delta-8 products. . . . Not only does this ruling help save an $8 billion industry, and thousands of jobs, but it also gives adult consumers and veterans continued access to hemp-based cannabis products that have become vital to their everyday lives.” Support for Hometown Hero CBD included the Texas Veterans of Foreign War, a 68,000-member group, which submitted an amicus curiae brief and whose director of government and public affairs testified to the court of appeals.

The State can now appeal this opinion to the Texas Supreme Court; if it doesn’t, then the case will transition back to the lower court for trial.

While politically connected social conservatives and some law-enforcement groups have derailed past efforts to loosen THC-related laws in Texas, this case might be different. For one, the State usually appeals decisions like this immediately, which didn’t happen here. Second, Tony Buzbee, the lawyer who represented Texas Attorney General Ken Paxton in his impeachment trial, owns a hemp company that sells Delta-8 THC infused seltzer. It seems unlikely that Paxon would have his office work against Mr. Buzbee.

Many hope that this case will mark a turning point for THC-related laws and reignite a conversation to legalize cannabis broadly—not just Delta-8 THC, but also Delta-9 THC. In addition to citing the mental-health benefits of THC products (as groups such as the Texas Veterans of Foreign War did in this case), advocates for greater freedom with respect to cannabis often cite the potential financial benefits to state and local government—and it’s easy to understand why. Just look to Washington State, where cannabis-tax revenues have outpaced alcohol-tax revenues in every fiscal year since 2019, totaling $3.5 billion in cannabis excise and sales taxes since legal sales began.

Cobb & Johns are Special Forces for Complex Property and Government Disputes.