Texas Hemp Regulatory Advisory: DSHS Final Rules and What Texas Hemp Businesses Should Expect Next

Operator Alert

The new DSHS rules take effect March 31, 2026. Legal action is being prepared and an injunction will be sought. Operators should prepare for regulatory uncertainty and increased inspections.

Executive Summary

The Texas Department of State Health Services (DSHS) has finalized amendments to Chapter 300 of the Texas Administrative Code, introducing significant regulatory changes to the Texas consumable hemp program.

These Texas hemp rules are scheduled to take effect March 31, 2026.

The changes will directly impact hemp manufacturers, distributors, and retailers operating across Texas and represent one of the most significant regulatory shifts the industry has faced since hemp legalization under the 2018 Farm Bill.

Key changes include:

• New age restrictions for hemp sales

• Significant licensing fee increases

• A Total THC testing requirement that includes THCA

• Expanded recordkeeping and production tracking requirements

• Stricter packaging and labeling standards

• Expanded inspection authority for regulators

• New enforcement provisions and administrative penalties

Because of the scope of these changes, legal action is now being prepared to challenge the rules in federal court.

Operators should expect a period of legal activity, regulatory uncertainty, and increased enforcement scrutiny as these issues move through the courts.

When These Rules Take Effect

Effective Date: March 31, 2026

This leaves businesses with a limited window to understand the changes and begin evaluating how they may affect operations.

Major Regulatory Changes Explained in Plain English

Below is a simplified explanation of the key provisions and how they may affect hemp businesses.

1. Age Restrictions for Hemp Products

The new rules prohibit the sale of consumable hemp products to anyone under the age of 21.

Businesses must now:

• Verify age using government-issued identification

• Refuse sales to customers under 21

Violations may result in license suspension or revocation.

These rules are codified under §300.701 and §300.702.

2. Licensing Fees Are Increasing Significantly

The new rules dramatically increase licensing fees.

License Type	Previous Fee	New Fee
Retail Hemp Registration	$155	$5,000 per location annually
Manufacturer License	$258	$10,000 per facility annually

These increases represent a substantial cost escalation for hemp operators, particularly businesses operating multiple locations.

3. THCA Now Counts Toward THC Limits

One of the most significant changes involves testing standards.

The state will now calculate Total THC using the following formula:

Total THC = (0.877 × THCA) + Delta-9 THC

This means products must remain under 0.3% total THC, including THCA conversion.

This change will significantly impact high-THCA flower and pre-roll products, which have represented a large portion of the Texas hemp market.

4. Expanded Recordkeeping Requirements

Manufacturers must now maintain significantly more detailed records, including:

• Master Production Records for each product type

• Batch Production Records for every production run

• Ingredient traceability documentation

• Product recall plans

• Consumer complaint logs

These requirements significantly increase compliance documentation obligations.

5. Packaging and Labeling Requirements

• The rules introduce new packaging and labeling standards, including:

• Warning statements on labels

• Child-resistant packaging

• Tamper-evident packaging

• Packaging that does not appeal to children

• Labels must include a URL linking to the product’s Certificate of Analysis (COA).

A QR code may also be used but is not required.

6. Inspection Authority for Regulators

Businesses applying for licenses must now provide written consent allowing inspections.

This includes allowing regulators from the Texas Alcoholic Beverage Commission (TABC) to enter premises and conduct inspections.

Inspectors may:

• Collect product samples

• Photograph products

• Review business records

  
  

7. Expanded Enforcement Powers

The rules significantly expand enforcement authority.

Each violation may now be counted individually when calculating administrative penalties.

New prohibited acts include:

• Refusing inspections

• Refusing product sampling

• Refusing documentation review

• Aggressive or threatening behavior toward inspectors

If DSHS determines a violation occurred, it will issue a Notice of Violation by certified mail.

Businesses then have 20 business days to accept the penalty or request a hearing.

Hearings are handled by the State Office of Administrative Hearings (SOAH).

8. Transport Restrictions

The rules also prohibit transporting ingredients into Texas containing more than 0.3% THC for further processing.

This provision could affect supply chains that previously relied on processing higher-THC hemp inputs before dilution.

Legal Action Is Now Being Prepared

Because of the scope of these regulatory changes, legal action is now being prepared to challenge the rules in federal court.

CRAFT Strategies is actively coordinating with David Sergi, Jay Maguire, and an experienced legal team involved in major hemp regulatory litigation.

This legal team played a role in the landmark Sky Marketing case, which successfully challenged earlier attempts to restrict hemp products in Texas.

The upcoming lawsuit will challenge several aspects of the new rules and seek relief through the federal court system.

Why the Injunction Could Pause These Rules for Years

As part of the lawsuit, plaintiffs will seek a temporary injunction in federal district court.

An injunction asks the court to pause enforcement of the rules while the case is reviewed.

Courts evaluate several factors when deciding whether to grant an injunction:

• likelihood of success on the merits

• whether businesses would suffer irreparable harm

• the balance of harm between the parties

• whether the injunction serves the public interest

  
  

In this situation, the irreparable harm argument is significant.

Immediate enforcement could force businesses to:

• destroy inventory

• discontinue major product lines

• lay off employees

• close retail locations

Courts often recognize that sudden economic disruption across an entire industry can justify maintaining the status quo while legal questions are resolved.

If granted, the injunction could pause enforcement while litigation proceeds.

Cases of this scale can take months or even years to fully resolve, especially if appeals are involved.

What Businesses Should Expect

Regardless of the legal outcome, operators should prepare for a period of:

• Regulatory uncertainty

• Increased inspections

• Heightened enforcement scrutiny

During litigation windows like this, regulators often focus enforcement on businesses that appear careless or poorly documented.

Businesses that can demonstrate organized compliance systems, documented procedures, and trained staff are typically in a stronger position if enforcement actions occur.

Recommended Preparations

Businesses should focus on strengthening operational compliance.

Inventory & Product Controls

• Verify products match Certificates of Analysis

• Maintain batch and intake documentation

• Confirm testing accuracy

Documentation

• Maintain vendor due diligence records

• Organize testing documentation

• Maintain recall plans and complaint logs

Workforce Training

• Train employees on age verification

• Train staff on compliant customer interactions

Operational Governance

• Designate compliance oversight responsibilities

• Maintain inspection-ready documentation

  
  

The Role of CRAFT

CRAFT Strategies was designed specifically to help hemp operators navigate complex regulatory environments.

The CRAFT framework helps businesses implement:

• Structured compliance documentation

• Operational SOP systems

• Workforce certification and training

• COA verification and product intake protocols

• Regulatory monitoring and governance systems

These systems provide businesses with defensible operational infrastructure during periods of regulatory uncertainty.

What the Next 90 Days Could Look Like

The coming months will be one of the most important periods the Texas hemp industry has faced since legalization.

Businesses should prepare for a combination of regulatory changes, legal challenges, and increased scrutiny.

March 2026 — Rules Take Effect

The amended rules take effect March 31, 2026.

During this period:

• Businesses will evaluate operational impacts

• Legal teams finalize filings

• Regulators may prepare enforcement actions

March 2026 — Lawsuit Filed

Industry legal teams are preparing to file the lawsuit challenging the rules and request a temporary injunction.

The goal is to pause enforcement while the court reviews whether the agency acted within its authority.

March–May 2026 — Court Reviews Injunction Request

The court will review legal briefs, evidence, and declarations from both sides.

A hearing may be scheduled depending on the judge’s timeline.

April–June 2026 — Early Court Decision

The court may issue a decision on the injunction within weeks or months.

Possible outcomes include:

Temporary injunction granted

Enforcement pauses

Litigation continues

Businesses continue operating

Partial injunction

Some provisions paused

Others remain in effect

No injunction

Rules remain in place while litigation proceeds

Why This Period Matters

The coming months will likely determine how the Texas hemp regulatory framework evolves.

Legal challenges could significantly influence how these rules are implemented or interpreted.

For operators, the best approach right now is preparation, documentation, and responsible operations.

Businesses that want structured compliance systems can learn more about CRAFT certification and operational standards here.

CRAFT is not organizing or fundraising for any legal action. Our role is to help hemp operators understand regulatory developments and strengthen their compliance infrastructure so they are prepared regardless of how the legal process unfolds.