The Austin Chronic: The House’s Alternative to SB 3 Would Still Outlaw Flower and Edibles

The THC drink aisle at Spec’s (photo by Kevin Curtin)

Among the bills arriving at the eleventh hour of the Texas Legislature’s mid-March filing deadline was House Bill 28. The proposal, authored by GOP Rep. Ken King, is, on its face, a major regulatory cleanup of the consumable hemp industry in Texas.

It calls for many of the various regulations that business owners and cannabis industry advocates have been asking lawmakers for: 21+ age restrictions on purchases, banning synthetic cannabinoids, more stringent testing of products, packaging that is child-resistant and responsibly marketed, and limits on the milligrams of THC in a serving.

Following HB 28’s introduction and instantaneous referral to the State Affairs Committee – of which Rep. King is the chair – an echo chamber of lazy reporting couched it as an agreeable alternative to the total THC ban of SB 3 that would spare Texas’ consumable hemp industry. The Houston-based news website Chron.com even characterized it, in a headline, as “Saving THC from proposed ban,” apparently failing to grasp that it’s a beverage-only bill.

As readers have already heard me whine about this session, legislation is tedious as fuck to read, but if you scroll deep into HB 28 it plainly bans “the manufacture, distribution, or sale of consumable hemp products for smoking or inhaling” as well as products that are “intended for eating, including foods, gummies, and candies.”

Thus, HB 28 – as it’s currently written – would ban flower and edibles, the two most prominent categories of consumable hemp products that Texans currently enjoy legal access to.

The bill would still permit beverages with certain cannabinoids, CBD, CBG, and THC – the latter with 10mg limits. Cannabis-infused beverages, typically seltzers, have been an extraordinarily fast-growing market sector nationwide and in Texas over the past year.

The legislative logic behind allowing THC drinks, while banning THC edibles, remains a mystery. They both go into your mouth, through your digestive system, into your bloodstream, and then produce the same psychoactive effects. I reached out to Rep. King and his chief of staff, asking for an explanation on why orally ingested THC should be legal in liquid form, but illegal in solid form. I did not receive a reply.

Still, multiple sources who are insiders on cannabis legislation and have been privy to internal discussions about HB 28 tell me that it’s now being viewed as the House’s main vehicle for passable cannabis legislation this session. According to those sources, THC-A flower is likely off the table, but the goal is that edibles, like gummies, can be written back in as the bill goes through committee and is revised.

As it stands, the best thing about HB 28 is that it’s not SB 3 – a blanket ban on THC (and every other cannabinoid except CBD) that’s been breathlessly promoted by Lt. Gov. Dan Patrick, who presides over the Senate. His chamber passed SB 3 on March 19 with a vote of 24-7, but it’s expected to have a much tougher road in the House.

“While the Senate eagerly passed SB 3, a draconian bill to ban all THC and effectively shut down the hemp industry, the House is more inclined to support regulation,” explains Heather Fazio, director for the Texas Cannabis Policy Center. “We’ve worked for years to help them understand the harm caused by cannabis prohibition and we’re optimistic that our representatives will pass a bill that better reflects the people of Texas.”

The most intriguing aspect of HB 28 is that consumable hemp beverages would be incorporated into the regulatory infrastructure of the Texas Alcoholic Beverage Commission. TABC is the agency that regulates, inspects, and taxes the sale and production of alcohol in Texas.

Specifically, the bill calls for consumable hemp products to go through the same three-tiered system that already applies to alcohol in Texas. That framework requires manufacturers to use a wholesaler as a middleman between themselves and the businesses that retail their product. The wholesaler typically takes a 30% cut of gross profits.

Expect this aspect to be hotly debated as HB 28 continues to take shape. Certainly there’s some logistical benefit to using an existing framework with a built-in licensing structure to oversee consumable hemp, but it would drastically alter the landscape of how business is done in every aspect of that industry and give the state liquor authority broad oversight of cannabis – a tough pill to swallow.

Aaron Owens, a Dripping Springs-based farmer who founded the state’s first cannabis seltzer, Tejas Tonic, says HB 28’s current language would pose major challenges for brands like his. He’d no longer be able to ship any product, self-distribute, sell directly to consumers, or retail at convenience stores, dispensaries, and boutique shops.

“The consumable THC industry would belong to liquor distributors and liquor stores overnight,” says Owens, adding that he’s already been in meetings with one of the largest local liquor retailers, whose offer to carry his product was on the condition of them acquiring partial ownership in his company – a deal he was not willing to make.

Owens, a founding board member of the Texas Hemp Coalition, is concerned that a power play by lobbyists from the liquor industry will result in legislative language that hurts independent businesses.

“Big liquor just walked in, stroked a check, and got themselves in the front of the line,” he says of the legislation. “Which basically blew off the hard work of all the different people in the hemp industry who’ve worked for years to get themselves in position.”

Owens, a licensed hemp grower who cultivates the full-spectrum plant material used in his beverages, believes that HB 28 has given Texas’ hemp industry something to unite over, which is working to get the bill’s language rewritten. A key problem point, to him, is how it disallows all delivery mechanisms for consumable hemp other than beverages.

“It bans edibles, it bans prerolls, it bans flower. It bans everything except for drinks,” says Owens. “No consumable hemp is allowed other than a beverage – that’s just not right ... and I own a beverage company. In the end, I’m just a farmer trying to find a way for my crop to get to market. We need all the help we can get!”