Texas hemp businesses are fighting back against state regulators they say rewrote the law without legislative authority, filing a lawsuit that puts the THCA market and the broader hemp industry on the line.

The Texas Hemp Business Council, the Hemp Industry and Farmers of America, and a group of individual businesses filed suit against the Department of State Health Services and the Health and Human Services Commission this week, alleging both agencies exceeded their authority when they adopted new rules redefining which hemp products are legal to sell and manufacture in the state. [Governor Greg Abbott](https://biography.wiki/a/Greg_Abbott) and Attorney General Ken Paxton are listed as defendants.

The technical dispute comes down to a single formula.

Texas law, as passed by the legislature in 2019, defines legal hemp as cannabis containing no more than 0.3 percent delta-9 THC. That number mirrors federal hemp law and has been the operative standard for years. What DSHS and HHSC did, according to the complaint, was quietly adopt a “total delta-9 THC” limit calculated using a post-decarboxylation method. That formula converts THCA into delta-9 THC before measuring the concentration, which effectively reclassifies high-THCA hemp flower as an illegal controlled substance even when raw delta-9 levels fall below the legal ceiling.

This is not a minor regulatory tweak. Post-decarboxylation testing is the same methodology that makes THCA flower commercially viable in non-legal states, because THCA in its raw form is non-intoxicating. When heated, it converts to delta-9 THC, which is why THCA flower has become one of the most popular hemp products in the country. Regulators know exactly what they are doing when they apply that formula. They are not clarifying the law. They are reversing the commercial outcome it produced.

The lawsuit’s attorney, David Sergi, said the agencies are “clearly attempting to create new law in direct contradiction to what the Texas legislature intended.” The complaint notes that the hemp industry does not oppose age verification requirements or consumer safety rules, both of which fall within legitimate agency authority. The objection is to rules that would effectively ban in-state hemp production and retail sales of products the legislature chose not to prohibit.

That last point matters. It is not as though the legislature failed to consider restricting hemp products. Texas lawmakers passed Senate Bill 3 during the 2025 legislative session, a bill that would have imposed exactly the kinds of restrictions the agencies are now trying to implement through rulemaking. Abbott vetoed it. Two subsequent special sessions also failed to produce new restrictions. The complaint frames this sequence as producing “an unambiguous result: no new law,” and argues that administrative agencies cannot override that result by rewriting definitions in their regulatory code.

The fee increases compound the problem for small operators. Under the new rules, a manufacturer license now costs $10,000 per facility, up from $250. A retailer registration fee jumped from $150 per location to $5,000. For a single-location hemp retailer in rural Texas, that is a 33-fold cost increase with no new services or oversight benefits attached. For a small cultivator or processor, the math is worse. A multi-facility operation could face licensing costs that dwarf their equipment budget.

This is the part of the story that rarely surfaces in coverage focused on the legal arguments. Large vertically integrated hemp companies may be able to absorb $10,000 facility fees as a cost of doing business. The business that cannot is the family farm in the Panhandle that planted hemp in 2022 because tobacco margins cratered and the 2019 law looked like an opening. Fee structures like these do not regulate an industry. They consolidate it.

The regulatory strategy on display here is not unique to Texas. Across multiple states, agencies have used post-decarboxylation testing standards and licensing fee structures to achieve through administration what legislators declined to do through statute. California has had its own version of this tension with CDFA and DCC guidance documents that effectively expanded or contracted product categories without formal rulemaking. The difference is that California’s legal cannabis market at least offers a parallel pathway. Texas has no legal cannabis market. Hemp is the only game in the state, and these rules would end it.

Whether the lawsuit succeeds depends on how Texas courts read the boundary between agency rulemaking authority and legislative intent. The complaint’s strongest argument is the procedural one: the legislature ran the full process, the governor vetoed the restricting legislation, and the agencies then implemented equivalent restrictions through rulemaking without that legislative mandate. Courts in multiple states have been willing to block agency action that substitutes administrative judgment for legislative choice. The THCA formula change and the fee increases both look more like policy decisions than technical implementation of existing law.

Marijuana Moment’s original reporting informed this article.

For hemp operators outside Texas watching this play out, the underlying regulatory question is the one that matters: does a post-decarboxylation testing standard represent a legitimate interpretation of a 0.3 percent delta-9 THC limit, or a deliberate workaround designed to eliminate a product category without going through the legislature? The Texas hemp industry has decided to test that question in court. The answer will affect every state where THCA flower is currently sold legally under hemp rules.