How Texas' booming hemp industry is hamstringing legal marijuana

The state of marijuana laws in Texas can best be described as a tale of two weed shops: on one side of the block, you may see the seedy, neon-lit smoke shop proffering CBD oil and gummies alongside glass pipes and stimulants. On the other side, a sleek, clinical-looking storefront stacked with T-shirts, pamphlets, and a highly curated selection of local edibles. 

If you’ve walked or driven around Houston, you’ve probably seen a lot more of the former. The two dissonant business models offer a glimpse into one of the biggest contradictions in Texas: that as efforts to widen access to medical marijuana stall and legalization bids putter, the thriving Wild West that is the unregulated cannabinoid industry is moving full steam ahead.

Hemp-derived cannabinoids, which include Delta-8 and CBD, first entered the market via a loophole in the 2018 Farm Bill and have fast become a booming industry in the Lone Star State. Advocates credit cannabinoids’ accessibility and efficacy in pain management, while some local officials—most recently our very own Lt. Gov. Dan Patrick—have signaled a willingness to ban intoxicating hemp products. Meanwhile, heavily regulated, by-the-book medical marijuana dispensaries are largely left out of the growth.

“They’re dying on the vine,” Texas lobbyist and cannabis lawyer Susan Hays told Chron. “Meanwhile, you’ve got an extraordinary demand for [cannabinoids], and the vast majority of users are using them for medical reasons…because our medical program is so anemic.”

Hays worked as General Counsel in Nevada during the state’s adult-use marijuana program rollout and has continued to research and advise on regulatory frameworks for the burgeoning industry.

Intoxicating hemp products (IHPs) exist in a legal gray area that comes down to a lesson in chemistry, Hays said. The high from traditional marijuana largely comes from the THC molecule Delta-9. While THC levels of Delta-9 are still regulated under state and federal law, Delta-8—an isomer of Delta-9—is not. Delta-8 occurs naturally at very small levels in hemp and is known to have similar, albeit less powerful psychoactive effects than its mainstream counterpart. To get enough Delta-8 to produce a high, manufacturers synthesize the intoxicating isomer for commercial sale. CBD is another cannabinoid known to reduce pain and produce a relaxing sensation with no intoxicating effects.

In 2022, these products generated over $8 billion in revenue in Texas alone. A quick Google search of Houston-area smoke shops and dispensaries reveals over 100 locations, compared to just seven results for medical marijuana clinics or dispensaries. Across Texas, more than 7,000 businesses hold retail hemp licenses—roughly 1,000 of which are in Harris County, according to the Texas Department of State Health Services.

The popularity of IHPs like Delta-8 blows smoke in the face of conservative officials who have long sought to stymie recreational cannabis in the state. Earlier this year, Attorney General Ken Paxton sued five Texas cities who had voted to decriminalize traditional marijuana, arguing municipalities could not go against Texas state law enforcement policy. 

But by refusing to do anything about IHPs for so long, Hays said Texas has unleashed a grey and black market of its own making.

“You have dosages and products being sold here that would never be allowed in a marijuana-legal state,” Hays said. "This is happening everywhere, but nowhere is it as big as in Texas."

Texas Original, a medical marijuana provider based outside of Austin, manages four pick-up locations in the Greater Houston area, including a newly opened location in Sugar Land. When asked how the booming hemp industry affects broader efforts to legalize marijuana, Texas Original CEO Nico Richardson laughed.

"It’s already legal," Richardson said. "It’s just completely unregulated."

Texas Original is a participant of the state’s Compassionate Use Program, which allows eligible patients to receive prescriptions for medical marijuana. First introduced in 2015, the program includes over 58,000 registered patients with diagnoses ranging from PTSD to some forms of cancer, although only an estimated 8,000 remain active in the program, according to the Texas Department of Public Safety. Texas Original serves 5,000 patients in the Houston area alone, and the new Sugar Land location is expected to serve 1,000 more.

Unlike hemp purveyors, medical marijuana dispensaries must operate under stringent conditions that limit where marijuana can be stored, how it can be distributed, and who can benefit from the plant’s psychoactive properties.

For example, Texas Original is not allowed to store marijuana at any of its East Texas locations long-term, meaning all products must be shipped back and forth between pick-up spots and the company’s headquarters in Central Texas. Hays said the industry’s low numbers are a direct result of over-regulation, compared to what she called the “Wild West” of hemp. 

“You have three licenses, each with only one location, in a state as big as Texas? With our population? That’s bonkers,” Hays said.

Richardson calls the recent explosion of retail hemp “terrifying” for consumers, who often have no idea what exactly is in the products they’re consuming. Texas Original is required by law to test and publish data on all of their cannabis products. Richardson said his team reviewed the results of tests run on IHP samples by a third-party lab to see what was being put on shelves

“The results were truly alarming,” Richardson said, adding lab results found trace metals, solvents, and other harmful chemicals added to dilute the low-THC product. “There was almost no correlation between what was listed on the packaging and what was actually in these products.” 

In 2022, the FDA issued a health warning about Delta-8 products, which are not reviewed or approved by the federal agency. Following over 100 reports of adverse events related to the consumption of Delta-8, the FDA cautioned consumers to keep products out of reach of children and pets and to take caution with manufacturers' claims.

Still, consumers don’t seem likely to part with cannabinoids anytime soon. Hays said the state of Texas would be better off expanding its medical marijuana program and mandating safety testing on existing hemp products than to try and put the cat back in the bag. Consumers, she said, should look for QR codes on over-the-counter products that show whether that particular batch of products has been tested. 

“If the QR code doesn’t lead anywhere, or if it shows a test from 10 years ago, don’t buy it,” Hays warned.

Even if Texas did try to enforce its existing marijuana laws, Hays said local law enforcement simply doesn’t have the resources to keep up with a market as nimble as hemp's. Already, Hays is seeing the rise of new products advertised as containing “THCA.”

“That’s just regular marijuana,” Hays said. "THCA is the natural compound that exists in the marijuana plant. Once smoked, THCA becomes Delta-9, meaning someone likely isn’t being honest about that conversion," Hays explained. 

“When people say, ‘This is perfectly legal,’ they are wrong,” Hays said. “This is absolutely a legal grey area.”

Products like these take advantage of the fact that crime labs across the state are understaffed and underfunded, Hays said, illustrating another gaping hole in the state’s drug enforcement arm. Peter Stout is the president of the Houston Forensic Center, which has been plagued by persistent testing delays in recent years. Stout attributes the delays in his drug unit directly to the day House Bill 1325, the bill that authorized the state’s hemp program, was signed into law on June 11, 2019. 

“Our turnaround time for marijuana testing was about seven days pre-June 2019,” Stout said. “Right now it’s about 120 days.” 

Before the pandora’s box of hemp had been opened, Stout described marijuana testing as “cheap, quick, and dirty,” consisting of a simple qualitative test to determine if cannabinoids were present in the plant. Now, lab analysts must perform a much more expensive and time-consuming quantitative test to determine if a substance contains less than .3 percent of Delta-9 THC, to say nothing of the emerging variety of hemp-derived products, all on a shoestring budget, Stout said.

“People think of cannabis as a plant, which is what it used to be,” Stout said. “But really what cannabis has become is this dizzying landscape of manufactured products.” 

Some hemp manufacturers are trying to take on the testing burden themselves. Leslie Ohayon, the owner of SacredLeaf Wellness Studio, said she only sells products that have been grown organically in the U.S. and tested in third-party independent labs.

“Sometimes you go to the lab results and see the company’s name on it—well that doesn’t mean anything,” Ohayon said.

The bulk of her products, which include both CBD, low-THC, and Delta-8 varieties, are grown seed-to-source at Sacred Leaf in Lawrence, Kansas, Ohayon said. Seed-to-source means the company that grows the hemp also manufactures and bottles it, cutting down on possible cross-contamination. Two of her other suppliers are private growers she’d prefer not to identify, she said.

Ohayon opened Sacred Leaf Wellness Studio in 2019 in a brick-and-mortar location in Rice Village with the goal of selling high-quality cannabinoid products. She said she first turned onto the benefits of hemp with her son, who has Crohn’s disease. After seeing how CBD had eased her son’s pain without harmful side effects, Ohayon entered into the business herself. Nearly three years into owning the shop, Ohayon pulled out of her physical location to run an entirely mail-in or delivery service.

“I don’t do any advertising, my customers keep coming back and refer me to other people,” Ohayon said. “The fact that I’m still selling two and a half years after closing the store I think speaks volumes.” 

Most of Ohayon’s customers are over the age of 40, turning to cannabinoids as they taper off pharmaceutical drugs. In some cases, Ohayon has worked with parents to provide CBD to children with autism and other behavioral disorders. Although she does sell recreational products, Ohayon said the vast majority of her customers use hemp for medicinal purposes.

“Many of my customers have gone to their doctors with one problem and ended up on a drug that creates another problem, so they get on another drug,” Ohayon said. “You go in with one problem and come out with a multitude of solutions…cannabinoids are one solution with a multitude of benefits.”

Ohayon blamed strict medical marijuana regulations for the reason customers might not try to get a prescription for these products. For her part, Ohayon had never heard of the Compassionate Use Program and was not aware that Houston had a medical marijuana dispensary—although she noted that for most of her customers, THC is not necessary to achieve intended benefits.

“My motto is you don’t need to get high to be healthy,” Ohayon said.

Although Ohayon said she tries to sell as high-quality a product as possible, she’s aware of the risks the industry poses to consumers, especially as misinformation and subpar products run rampant. 

“It’s a very important industry, but it can be abused,” Ohayon said. “Like any other industry, just like the pharmaceutical industry, people want to make money.” 

Correction: An earlier version of this story incorrectly stated IHP samples were tested in a Texas Original lab. The story has been corrected to reflect Texas Original reviewed the results of tests run on IHP samples by a third-party lab.