Texas’ hemp retail sector is preparing for major changes as new state regulations are set to take effect on March 31. The Texas Department of State Health Services will introduce stricter limits on THC content, higher compliance standards, and significantly increased licensing fees.
The changes are expected to have a large impact on the $8 billion industry that has grown rapidly since hemp was legalized in Texas in 2019. Many retailers and manufacturers say these rules could force closures and disrupt a market that has become important for both business owners and landlords.
The new regulations cap total THC in consumable hemp products at 0.3 percent, shifting from previous interpretations that only focused on Delta-9 THC. This adjustment means products containing THCA, which turns into intoxicating THC when heated, would be banned under the updated testing requirements. Popular items such as flowers and pre-rolls would no longer be allowed.
Retailers may feel the effects immediately because about 1,500 stores across Texas currently occupy millions of square feet in shopping centers and rely heavily on smokable products now at risk of disappearing. Licensing costs will also rise sharply: manufacturer licenses will increase from $258 to $10,000 per facility annually, while retail registrations jump from $155 to $5,000 per year according to the Texas Hemp Business Council. Some operators warn this could push businesses out or drive sales underground.
While edibles and beverages may still be sold under the new rules—offering some hope for retailers—the loss of higher-margin smokable products could make it difficult for many shops to survive. The regulatory overhaul follows last year’s legislative efforts that nearly resulted in a statewide ban before Governor Greg Abbott issued a veto; instead agencies were directed to tighten oversight.
Landlords with significant exposure to hemp tenants could also see an impact if widespread store closures occur, especially in strip malls where these businesses have been reliable occupants.
