Texas Hemp Business Celebrates Itself Amid Setbacks

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You might not think singer Ky-Mani Marley—son of the reggae legend Bob Marley, who was as famous for his pot smoking and social justice promoting—would have much in common with Texas agriculture commissioner Sid Miller, a conservative Republican known both for suing the Biden administration and for a tweet that called Hillary Clinton a word that rhymes with “blunt.” Yet Miller will open for Marley (with a speech) this Saturday at the first-of-its-kind Texas Hemp Harvest Festival, an event being held amid slumping prices for the crop and a new ruling from the Texas Department of State Health Services that could snuff out sales of the most popular CBD products on the market.

Last week the DSHS announced that it considers a hemp-derived cannabinoid called delta-8 a controlled substance. That news, quietly delivered on the DSHS website, has alarmed some in the hemp and CBD businesses—both of which have been legal only since 2019. “A lot of farmers are using delta-8 to sustain their companies and keep from going under,” says Greg Autry, organizer of the Texas Hemp Harvest Festival and owner of Sweet Sensi, an Austin-based hemp grower and a producer of CBD products. Autry doesn’t sell delta-8 in any of his CBD-infused tinctures, oils, candies, or capsules, but plenty of CBD sellers in Texas do. Some are already plotting a legal challenge to the DSHS stance on delta-8, which some believe creates a euphoria similar to marijuana. “There are stores that are selling it and they’re not going to stop selling it until … someone gets shut down or arrested,” Autry says. “Because if they don’t sell it, they’re going out of business.”

The ban also highlights how tenuous some hemp and CBD businesses have been thanks in part to Texas’s topsy-turvy pot politics. Even though Texas relaxed its medical marijuana laws slightly in September, the state remains one of the strictest in the nation regarding the drug. Hemp growers have struggled to find profits, and CBD sellers have had to navigate an ever-changing regulatory environment and verbal jabs even from Miller, an avowed proponent of the crop.

Miller has planted hemp on a few acres of his own farm near Stephenville, but he also managed to harsh the mellow of the still emerging industry when, in September, he suggested it was “highly probable” that some hemp growers were also illegally growing marijuana—a plant of the same species but containing a higher level of THC, the psychoactive element that delivers a high. Hemp growers, who in Texas have to submit to background checks and pay for sampling of their crops to ensure that the plants don’t contain illicit amounts of THC, felt the comments were a setback for their industry, which is still in its nascent stage and working to win over consumers.

That’s part of the reason why Autry organized the Texas Hemp Harvest Festival, where attendees will pay $40 or $120 to nosh on brisket, sip craft beers, and, one assumes, play hacky sack while Marley, country singer Gary P. Nunn, and others blast tunes at Carson Creek Ranch. “We want all of Texas and all of the South to see that this plant is not something that’s bad for us,” Autry says.https://0a33ef63a822e69dbfdbfcf4dff14b8f.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html#acm-ad-tag-div-gpt-inline-1

There are 1,123 licensed hemp growers in the state, but many of them have seemingly been reticent to fully commit to the crop. Only two thousand of the five thousand acres designated for hemp growing were planted in 2020, according to the Texas Department of Agriculture. Even Miller, the agriculture commissioner, cut back his planting from four acres in 2020 to three in 2021 amid a nationwide glut of hemp. “We missed the sweet spot in Texas,” Miller says.

Average prices for hemp used for CBD extraction in the U.S. have cascaded since the state legalized the crop. They are now $3 per pound—down about 92 percent from the $40 per pound that hemp fetched in April 2019. Calvin Trostle, a hemp specialist with Texas A&M Agrilife, told me “it’s a little ironic” that anyone would be celebrating a hemp harvest festival in Texas, considering that the market has taken a huge hit as a result of overproduction. Autry says another problem for Texas is that most farmers lack the streamlined production techniques of more established operations in states such as Oregon and Colorado, where recreational marijuana is also legal. Out-of-state producers can sell their hemp, often with a higher concentration of CBD, to Texas buyers at lower prices than Texas farmers can.   

Still, Autry sees plenty of reason to cheer this year’s crop. He believes the hemp being grown across the state in 2021 is “one hundred times better than the stuff I saw last year.” He hopes the festival can create a buzz among CBD consumers while also helping persuade the state’s lawmakers to lighten up on marijuana. (Two other big cannabis events, produced by other groups, will promote that same sentiment. The Lucky Leaf Expo takes place November 5–6 in Houston, and the Texas Hemp Convention will be held November 20–21 in Dallas.)

Polls indicate that about 90 percent of Texans support legalizing marijuana in some form, but Texas has been slower to embrace cannabis than many other conservative states, including Oklahoma. The Sooner State’s voters legalized medical marijuana in 2018. Today, two thousand dispensaries dot Oklahoma—more than even California. Texas legalized medical marijuana in 2015 and, in September expanded its use for all types of cancer and post-traumatic stress disorder while doubling the allowable THC levels. But the state still limits medical marijuana use to relatively few ailments compared with other states, making it one of the most restrictive in the country. Only three companies are licensed in Texas to produce and sell medical marijuana.

Hemp and CBD, which are limited in the amount of THC they can contain, are less regulated in Texas than marijuana, and the legalization of both has today led to about one hundred CBD processors doing business in the state. Processors extract CBD from hemp to produce oils, tinctures, and even treats for pets. Those products are sold at about one hundred licensed, consumable hemp businesses that are now operational in Austin, Dallas, Fort Worth, San Antonio, and Houston. CBD sellers I spoke with in some of those cities told me their revenues have been getting higher as more people get acquainted with CBD, although none would provide specifics. But the businesses still have had their struggles with policymakers.

During the pandemic, for instance, liquor stores were deemed essential businesses in Texas during Governor Greg Abbott’s brief COVID shutdown, but CBD stores—most of which had been open only a few months—were not. Legislators also banned smokable hemp in 2019, just as a smokable product known as CBD flower was increasing in popularity. A court ruling from August partially negated that ban, but in the meantime CBD flower’s popularity was surpassed by products containing delta-8 THC. Delta-8 has been sold in smokable form as well as packed into gummies and mixed into organic lemonade, and it had been a hit with Texas CBD consumers before the DSHS declared it a controlled substance last week.

Even before then, delta-8 was in the crosshairs of some legislators who want to limit consumption of potent forms of cannabinoids. Republican senator Charles Perry tried inserting an amendment into a House bill last May that would have banned delta-8. The Texas Hemp Growers, a trade association, balked, saying CBD sellers across the state would lose a combined $51 million if the ban went into effect. In the end, Perry’s amendment was rejected by a joint House and Senate conference.

Then the DSHS stepped in and made legislation unnecessary. As soon as news of the DSHS rule broke this week, CBD sellers across the state began pulling delta-8 products from their shelves—even though the agency has no regulatory enforcement arm to make them do so. Even with the demise of delta-8, though, Shayda Torabi, co-owner of Austin-based CBD retailer Restart CBD, says she expects some other product could, soon enough, be the new rage. Since Abbott signed legislation that expanded medical marijuana access, she’s seen more clients coming into her store asking about the medicinal benefits of CBD for family members with cancer. Torabi says the appetite of CBD buyers seems always to be in flux: “It’s kind of like you’re chasing, so to speak, the next high.”