Texas Takes Center Stage in Fight For Hemp THC
July 8, 2025With June’s veto of the Texas legislature’s hemp THC ban, Governor Greg Abbott has pushed the Lone Star State into the center of the debate around THC in the U.S. Along with the veto, the governor called for a special legislative session to begin on July 21 to create regulations for the hemp industry. Given the scale of the Texas market—roughly $5 billion with over 8,000 businesses in the industry—the forthcoming hemp THC regulations could set a blueprint for other states or even the federal government. Texas’s approach to hemp THC will reverberate beyond the cannabis and hemp industries, with Texas alcohol retailers and distributors currently offering hemp-derived THC drinks to their consumers.
While specific regulations are still in the works, Whitney Economics has conducted a number of surveys of the Texas hemp THC industry with data showing rising consumer demand for legal products, as well as the growth of the industry itself. With Whitney’s data showing that THC generates over $10 billion in economic impact in the state, a highly restrictive approach (or another attempt at a ban) would create considerable economic disruption.
When Whitney polled retailers, distributors, and manufacturers about the potential for a ban, a majority of respondents said that they would be forced out of business. Manufacturers were most concerned about an all-out ban on hemp THC, with 72.7% of respondents indicating that they would go out of business under that scenario. Just over 63% of retailers and 57% of wholesalers also said that a ban would put them out of business. For wholesalers and manufacturers, moving their businesses out-of-state was the second most popular response to the survey. For retailers, staying open with lower revenue was the second most popular choice.
For now, the only guidance available for how the Texas legislature may proceed comes from a memo attached to Governor Abbott’s veto. In it, he recommended restricting sales to those 21 and older, child-proofing packaging, banning marketing and branding that could appeal to children, and preventing sales on Sundays. These stipulations were present in a bill to regulate hemp that failed in the legislature and are seen as reasonable by much of the hemp-derived industry.
Even with the governor instructing the legislature to reconvene, hemp-derived THC companies still face considerable challenges in the state. While the governor’s veto indicates his willingness to let the industry survive, Texas Lieutenant Governor Dan Patrick is fiercely opposed to allowing any products containing THC to be sold in the state.
Texas has a major opportunity to generate economic activity with a regulated hemp THC industry. Currently, according to an estimate from Whitney, 99.9% of adult-use THC comes from the unregulated market, with the group estimating that Texas has a potential “total addressable market” of nearly $10 billion for THC products, making it the second-largest state for the THC industry, behind California.
While the major battle is over hemp-derived THC drinks and other infused products (Texas has already made THCA flower illegal), Governor Abbott has also expanded Texas’s tiny medical marijuana program, allowing for medical sales of higher-THC products and increasing the number of medically licensed operators to 15, up from three.—Shane English
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