Texas House Changed SB 3 Dramatically… before a Late-Night Amendment Slashed it to Match Senate’s Version for Approval

The complete ban on consumable hemp will soon head to Governor Abbott’s desk and go into effect September 1, 2025.

Two months and three public hearings lead to an SB 3 that still allowed the sale of consumables with 2018 Farm Bill-levels of THC, excluding vapes. The House Committee on State Affairs, chaired by the author of its version of SB 3 Rep. Ken King (R-88) aimed to regulate low-THC hemp, rather than ban it.

“I read about the 1920s. I don’t think Prohibition worked in [the] 1920[s]. It’s not gonna work in [the] 2020[s].”

Rep. King offered his counter option after considering the failure of Prohibition in the United States. As advocates and businessowners in the hemp industry started to believe that the House would pass the “regulation instead of elimination” version of SB 3, however, Rep. Oliverson (R-130) introduced an amendment that set SB 3 back to its original, senate-approved form. The amendment bans consumable hemp with any trace of THC.

“As a physician, I cannot in good conscience support a system where Texans self-medicate with unregulated, inconsistent and highly potent intoxicants.”

Rep. Oliverson was met with over an hour of discussion, during which many members stated plainly that Texans will still have options for hemp and cannabis if a total ban is approved—but those options will be found underground and from the illicit market.

According to Rep. James Talarico (D-50), “This ban is a gift to the cartels.”

Rep. Talarico was a final speaker in opposition before the third and final vote to approve SB 3. After discussing how helpful SB 3 will be to cartels, he stressed the importance of legal hemp to adults looking to relax, seniors looking to manage chronic pain, and veterans looking to manage symptoms of PTSD. Despite Rep. Talarico’s message, House Representatives approved Rep. Oliverson’s amendment before approving the final version of SB 3 with a 95-44 vote. Though SB 3 will travel through the Senate again because of the addition of a “stair-step” approach to enforcement and punishment, its original author, Senator Perry (R-28) announced his support for the minor changes while Lieutenant Governor Dan Patrick thanked the House for approving the bill and “protect[ing] Texas children and adults.”

We will continue to monitor and provide updates on the status of SB 3, particularly as businesses and industry leaders begin responding to the new law.

Federal Court Affirms Crackdown on Intoxicating Substances Synthesized from Hemp

In the absence of federal enforcement action, state legislatures have stepped into the breach, enacting laws regulating products containing intoxicating  substances that are chemically synthesized versions of chemicals in hemp. Those substances are referred to here as hemp-synthesized intoxicants or HSIs.  Challenges to state authority to regulate HSI are being filed. In a recent decision that may foreshadow what is to come, a federal court declined to enjoin Wyoming’s hemp law.

As we have previously reported, the passage of the Agriculture Improvement Act, commonly referred to as the 2018 Farm Bill, opened the floodgates to unregulated intoxicating hemp products across the country. Though the 2018 Farm Bill authorized the U.S. Food and Drug Administration to regulate hemp-derived products intended for human consumption, the FDA has yet to promulgate rules for such products or HSIs. In the absence of federal regulations, states have begun to enact their own rules.

In Green Room LLC, et al. v. State of Wyoming, et al., a group of HSI wholesalers, retailers, and manufacturers filed a federal suit challenging amendments to Wyoming’s hemp laws and requesting a preliminary injunction. In pertinent part, the amendments expanded the definition of THC to include any psychoactive structural, optical, or geometric isomers of THC, encompassing both CBD and the popular Delta-8 THC. Because cannabis remains illegal in Wyoming, the amendments effectively prohibited the possession, sale, transport, and production of intoxicating substances synthesized from hemp. The plaintiffs argued, in part, that the amendments were unconstitutional because they were preempted by the 2018 Farm Bill, which they claim legalized all hemp substances, including intoxicating substances synthesized from hemp, for intrastate and interstate purposes.

On July 19, 2024, the federal court denied plaintiffs’ request to enjoin enforcement of the new law, finding that they do not have a substantial likelihood of success on the merits.

Specifically, the court found that the 2018 Farm Bill does not prevent states from regulating HSIs. The court found the 2018 Farm Bill did not confer any right on plaintiffs to manufacture or sell intoxicating products resulting from hemp, but merely redefined the term hemp. Most important, it held the 2018 Farm Bill contains an express “no preemption” clause permitting states to regulate hemp more stringently than federal law. The no preemption clause expressly permits a state to enact laws regulating intoxicating substances synthesized from hemp in a manner “more stringent” than the 2018 Farm Bill.  The court further concluded that Wyoming’s amendments do not violate the dormant commerce clause, do not amount to a regulatory taking, and are not unconstitutionally vague or overbroad.

Green Room is not the first challenge to state restrictions on HSIs.  In Bio Gen LLC et al. v. Sanders et al., the State of Arkansas appealed a trial court decision enjoining Arkansas regulations that restrict the manufacture and distribution of products that contain synthetic cannabinoids that could be intoxicating, such as Delta-8 THC.  In Northern Virginia Hemp and Agriculture LLC, et al. v. Commonwealth of Virginia, et al., the plaintiffs, an HSI product manufacturer/distributor and consumer, appealed a trial court decision that denied their motion to enjoin the State of Virginia from enforcing Virginia regulations that restrict the manufacture and distribution of products that contain synthetic cannabinoids that could be intoxicating, such as Delta-8 THC.

Those pending appeals present the possibility of a federal circuit split on the question whether the 2018 Farm Bill legalized intoxicating substances that could be derived from hemp.  On behalf of the American Trade Association for Cannabis & Hemp, Duane Morris filed an amicus brief in each case that asserts that the 2018 Farm Bill did not legalize hemp-synthesized intoxicants, and it reserved for states the right to regulate such substances in the interest of public safety.

As more states roll out new restrictions on intoxicating hemp products and operators, we expect to see more challenges. Though not a final ruling on the merits of the suit, the court’s decision suggests these plaintiffs and others challenging state intoxicating hemp laws have an uphill battle ahead.

Congress Could Redefine Hemp to Exclude Intoxicating Substances in Upcoming Farm Bill

There are countless strains of the plant Cannabis sativa L. Depending on the strain, the plant will contain a range of different chemicals called cannabinoids. New cannabinoids are still being discovered. Some of those, such as delta-9 tetrahydrocannabinol (D-9 THC), can cause psychoactive effects, while others such as cannabidiol (CBD) do not cause psychoactive effects. Nonpsychoactive cannabinoids like CBD can be chemically altered to become substances, such as delta-8 tetrahydrocannabinol (D-8 THC), that cause psychoactive effects.

In 2018, Congress passed a Farm Bill that defined “hemp” as:

[T]he plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.

Read the full Alert on the Duane Morris LLP website.

Webinar Replay: The Hemp Loophole and 2023 Farm Bill

A replay of The Hemp Loophole: The Legal Landscape and the Impact of the 2023 Farm Bill  webinar is now available.

 

 

Why Hemp-Synthesized Intoxicants Need Uniform Regs

Dylan Anderson and Seth Goldberg authored the Law360 article “Why Hemp-Synthesized Intoxicants Need Uniform Regs.”

They write, “The next time you find yourself at a gas station loading up for a road trip on your snack or energy drink of choice, you may notice a surprising offering at the counter: products made from cannabis that have an intoxicating effect, but that are not governed under a state’s recreational or medical marijuana laws and regulations.” Read the full article.

New York Conditional Cultivation License – Advanced Preparation (What You Can Do Now To Be Ready)

As we noted is our blog post earlier this week, New York recently adopted legislation to allow licensed hemp farmers to grow and process cannabis for the adult use market with the aim to have product available once retail sales are permitted.

While the New York Office of Cannabis Management has yet to release the form of application (and any implementing regulations), that doesn’t mean that potential applicants should sit idly by and wait.  In reviewing the legislation, its clear that there is plenty of work that can be done now. Continue reading “New York Conditional Cultivation License – Advanced Preparation (What You Can Do Now To Be Ready)”

Report of Office of Cannabis Management Board Meeting, November 3, 2021

By Jerome T.  Levy

The meeting was called to order at 1:00 p.m. by the Chairperson, Tremaine Wright, noting that all parties were present and Ms. Garcia was attending via remote contact. Ms. Wright stated that the meeting was being recorded and will be available on the Cannabis Control Board website. Ms. Wright indicated that the agenda would include opening remarks, approval of the minutes of the previous meeting and then a report by the Executive Director of the Office of Cannabis Management, Chris Alexander. She reminded the audience and the Board members that the law was passed March 31, 2021 and as a result, while some aspects were moving swiftly, much of the work being done was still preliminary. The work has been mostly staffing, hiring new employees and moving staff from other New York State departments, principally the Department of Health. Continue reading “Report of Office of Cannabis Management Board Meeting, November 3, 2021”

Notes from New York Cannabis Control Board Meeting, October 2021

By Michael D. Schwamm and Joy Karugu

There were several outcomes of the inaugural New York Cannabis Control Board (CCB) Meeting held on October 5, 2021. The Meeting revealed that the CCB and the Office of Cannabis Management (OCM) will be increasing their staff and taking steps to extend the medical cannabis program and cannabinoid hemp licensing. Also during the Meeting, Jason Starr was announced and voted in as the Chief Equity Officer of the OCM. He will work with Executive Director Chris Alexander in building New York’s social equity program. Continue reading “Notes from New York Cannabis Control Board Meeting, October 2021”

New FDA Draft Guidance on Cannabis-Related Clinical Research Omits Discussion of Nondrug CBD Products

On July 21, 2020, the U.S. Food & Drug Administration (FDA) issued draft guidance outlining the agency’s current thinking on the development of drugs containing cannabis or cannabis-derived compounds. The new guidance is disappointing to many in the cannabis industry because it does not provide insight into the FDA’s views on the marketing of nondrug, hemp-derived CBD products.

To read the full text of this Duane Morris Alert, please visit the firm website.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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