Texas health officials are proposing a significant increase in annual licensing fees for hemp retailers and manufacturers. Critics argue that this change could drive small businesses out of the market while benefiting larger corporations.
This proposal is part of a broader effort to impose stricter regulations on consumable hemp products.
The Texas Department of State Health Services late last month released proposed regulations that would raise retailer registration fees from $150 to $20,000 per location and manufacturer license fees from $250 to $25,000 per facility. Amendments for ownership changes would also cost $25,000, with a $1,000 delinquency penalty for late renewals, up from $100.
The changes, published on December 26, 2025, in the Texas Register, include setting a minimum purchase age of 21, age verification, and mandatory recalls — measures backed by the industry. But new THC testing standards could bar use of natural hemp flower in edibles and smokeables due to inherently higher THC levels, potentially boosting synthetically derived options like Delta-9.
“The proposed rules wipe out about 80% of what all shops sell, including ours, which is natural hemp flower, and the total THC rule would definitely just wipe that out,” Scott Stubb, owner of Kemah-based Sublingwell Cannabinoids and Euphorics, told the agency at a public hearing Friday, The Texas Tribune reported.
“Then you add the fees being $20,000 for each shop, I don’t know, honestly, how we would be able to stay open.”
Heather Fazio, director of the Texas Cannabis Policy Center, called the fees a fundamental restructuring in submitted comments, arguing the agency’s assumption that most of the 8,000 registered retailers would pay — generating over $200 million yearly — is “unrealistic.”
“Many small businesses simply cannot absorb this level of cost and will be forced to shut down rather than renew,” Fazio said, per The Texas Tribune.
She added that fees should cover reasonable regulatory costs, not drive operations underground, noting the department’s estimates show minimal added administrative expenses.
“The department’s own estimates show that the increased costs of administering these rules are minimal. In that context, it is unclear why such dramatic fee increases are necessary or justified,” she said.
Advocates like Betsy Jones, director of policy and strategy at Texans for Safe and Drug-Free Youth, defended the hikes as essential for child protection and covering regulatory burdens in a “billion-dollar industry.”
“Cannabis advocates say this is a billion-dollar industry. It’s fair and appropriate for the people who profit from selling a billion dollars in intoxicating products to create fees that help cover the cost associated with the regulation and societal burden of the product,” Jones told the agency, The Texas Tribune reported.
Aubree Adams, director of Citizens for a Safe and Healthy Texas, pushed for even tougher rules, such as raising the minimum age to buy to 25 and requiring hemp firms to fund education, data collection, treatment, and infrastructure.
“This issue before the state is the normalization and promotion of retail teams driven by chemical manipulation and misleading information,” she said.
Veterans opposed curbing hemp flower-derived products, citing benefits for PTSD, anxiety, and sleep over risky pharmaceuticals.
“I spent 16 months overseas and used a lot of different pharmaceuticals that were dangerous and caused seizures and physical harm to me. These health products have given me my life back and allowed me to go back to work,” said Adam Peterson, a combat veteran from San Antonio, per the Tribune. “A total ban on the THC will basically eliminate access to good medicine that is actually helpful for me.”
Fazio warned that restricting regulated hemp flower would shift demand to black markets, undermining public health goals.
“The outcome runs counter to the public-health objectives these rules are meant to advance,” she said.
The proposals stem from Gov. Greg Abbott’s executive order to regulate the market after vetoing a legislative ban last summer, despite its passage in both chambers.
Abbott added THC rules to two special sessions, but no agreement emerged, leading him to bypass lawmakers — a move clashing with Lt. Gov. Dan Patrick, a ban proponent.
The Texas Alcoholic Beverage Commission is also drafting rules, but without proposed fee changes for its 60,000 licensees, like restaurants and liquor stores. The agencies collaborate due to split jurisdiction over hemp sellers, including smoke shops, gas stations, and online outlets under health services.
Industry leaders initially welcomed Abbott’s order to legitimize the sector, but now see the rules as akin to a ban.
“When the governor vetoed that bill, he was amplifying our voices and adopting the fee structure from that same bill undermines that outcome,” said Hayden Meek, owner of Denton-based Delta Denton.
“A $20,000 fee is dropped in the bucket for multi-state corporations; for a single location shop like mine, it’s a death by 20,000 cuts.”
Public comments end on January 26, with possible adoption as early as January 25, though implementation timing remains unclear.
Written input can be mailed to the Rules Coordination Office in Austin or emailed to [email protected], marked “Comments on Proposed Rule 26R008.”
