Texas Hemp Fee Hike Threatens Small Businesses

Texas health officials have proposed raising hemp licensing fees by up to 13,000%, a move industry advocates warn could force many small businesses to close.

The dramatic fee increase is part of a regulatory overhaul by the Texas Department of State Health Services, which oversees the state's hemp program. Public hearings are expected in coming months before any final decision.

"Many small businesses simply cannot absorb this level of cost and will be forced to shut down rather than renew," said a spokesperson for the Texas Hemp Coalition.

The Numbers

Current licensing fees for hemp businesses in Texas are relatively low compared to many states. The proposed increases would bring some fees from hundreds of dollars to tens of thousands—a jump that even larger operators would notice, but that could be prohibitive for small businesses.

State officials argue the increases are necessary to cover the actual cost of regulatory oversight, including inspections, testing, and compliance monitoring. But industry representatives counter that the increases far exceed reasonable cost recovery.

Context

Texas legalized hemp production in 2019 following the federal 2018 Farm Bill. The state's hemp industry has grown rapidly, with hundreds of businesses obtaining licenses for cultivation, processing, and retail sales.

But the hemp market faces broader challenges, including regulatory uncertainty around intoxicating hemp-derived products and competition with the state's more restrictive medical marijuana program.

The fee increase proposal comes as Texas lawmakers are also considering how to regulate hemp-derived THC products, which have proliferated despite questions about their legal status.

Industry Response

Hemp businesses are organizing to oppose the fee increases, arguing they would eliminate many operators just as the industry is establishing itself. Small farmers and processors say they're already operating on thin margins and couldn't survive a massive fee hike.

Some larger operators have expressed willingness to pay higher fees if the increases are more modest and tied to clear regulatory improvements. But even they question whether a 13,000% increase is justified.

The Texas Department of State Health Services will accept public comments before making a final decision. Industry groups are encouraging stakeholders to participate in upcoming hearings and submit written feedback.

This article is based on original reporting by Marijuana Moment.