A Houston CEO is suing the Texas Health Department over the recent ban on Delta-8 THC products.
According to KHOU, the CEO of Sheikhani Group, Ali Sheikhani, is one of the plaintiffs. Sheikhani owns over 100 businesses, including 75 Vape City stores in Texas.
He spoke to KHOU about the ban, saying “it was so random.”
“At first, I did not believe it,” Sheikhani said.
The Delta-8 THC extracts had previously been legal under both state and federal laws. According to Sheikhani, 40 to 50 percent of Vape City sales came from Delta-8 products.
“If I’m gonna shut down some stores, if I’m gonna lose some sales, I have to fire a couple of employees, a couple of hundred employees, as a matter of fact,” the CEO told KHOU. “Not just one, two, three, four, ten, and the unemployment is gonna go up. I’m not just talking about me at the moment. We have 5,000 plus stores all over in Texas who are selling Delta-8.”
The Vape City locations have over 500 employees across Texas. Sheikhani said he hopes their other properties will help with the revenue loss. These include retail stores, gas stations, and a shopping plaza.
Sheikhani said, “Sheikhani Group, we’ll survive somehow, but what’s gonna happen to other stores, other small businesses who took the loan from the bank? How are they gonna survive, (a retailer) who has one store, two stores, three stores?”
On October 15, the state health department added Delta-8 to their list of ‘Schedule 1 controlled substances.’
According to KHOU, the attorney representing Sheikhani is Michelle Donovan.
Donovan said, “Obviously it’s tax revenue that will be lost, and most importantly, where do these products go? To the black market?”
Donovan told KHOU that one issue within the lawsuit was the lack of public notice. There is another lawsuit from an Austin retailer that also says this is an issue.
“To not have anybody show up, to not have any written comments, I think says a lot that the notice just wasn’t adequately given,” Donovan said.
According to lawyers for the Texas DSHS, Delta-8 has been a Schedule 1 controlled substance for over 40 years. In recent court filings, they said when hemp was legalized in 2019, it did not include Delta-8.
In their response to the Austin retailer, the legal team said, “To the extent, there was any confusion about this, especially in light of federal regulations, the Commissioner took several steps over the last year to inform the public that the exception for up to 0.3 percent Delta-9 did not remove other THCs from the Schedules. Plaintiff appeared to have ignored these notices.”
Chris Powers, the owner of Hydroshack Hydroponics, said around 25 percent of their sales come from Delta-8 products.
“We had enough Delta-8 product, Delta-10, Delta-O product in the store to put me away for 99 years,” Powers told KHOU.
“I actually called a few other stores like ours and said, ‘Hey, you know, is this real?” Powers added.
He also spoke to KHOU to say there was no formal notice when regulators made the decision.