Businesses in state’s budding THC sector applaud move to regulate instead of ban their products
Gov. Greg Abbott has called a special session devoted to the issue
Texas lawmakers will debate regulations for hemp-derived THC products during an upcoming special legislative session.
The billion-dollar-plus industry in Texas that has sprung up around hemp-derived THC is applauding the last-minute stay of execution by Gov. Greg Abbott, who vetoed an all-out ban of the products late June 22 just before a deadline for him to do so.
Instead, Abbott has called a special session of the state Legislature beginning July 21 to regulate the industry — a move many businesses that sell the products have advocated.
“Basic common-sense regulation instead of banning — and that right there just secures our whole fate,” said Aaron Owens, founder of Austin-based Tejas Tonic, a THC-infused beverage maker that recently expanded its operations to THC-infused gummies. “The special session, to me, is an opportunity to get in there and actually look at this and regulate it the way we need to.”
Abbott’s veto of Senate Bill 3 — the legislation that would have enacted the ban — had Owens grinning ear to ear, he said. It has elicited similar reactions from others in the sector.
Sarah Kerver, founder of THC retail shop Custom Botanical Dispensary and THC manufacturing business 1937 Apothecary, was planning to close down had the ban become law but said she’ll keep her business going in the wake of the veto. Shayda Torabi, co-founder of Restart CBD and vice president of The Texas Hemp Coalition, said she’s grateful for Abbott’s decision, although she added she’s now gearing up for the special session.
“I haven’t exhaled fully, if that’s fair to say, because I know that we still have some work to be done. But I think that we have set ourselves up for a great opportunity,” Torabi said.
Lt. Gov. Dan Patrick, who made approval of SB 3 a priority for the recently ended regular legislative session, took issue with Abbott’s veto. Patrick contended that Abbott essentially is legalizing recreational marijuana, even though the THC in question is derived from hemp, a cousin of the marijuana plant.
“It puzzles me why my friend, Governor Abbott, would at the last minute … decide to veto this bill. I know he gave the reasons in his proclamation, but our team simply doesn’t agree with those reasons,” Patrick said during a June 23 press conference.
In his veto proclamation, Abbott said Texans raised “serious concerns” on both sides of the issue.
“But one thing is clear — to ensure the highest level of safety for minors, as well as for adults, who obtain a product more dangerous than what they expected, Texas must strongly regulate hemp, and it must do so immediately,” his proclamation said.
Texas Gov. Greg Abbott | MIKE CHRISTEN / AUSTIN BUSINESS JOURNAL
The governor outlined multiple reasons for his veto. Among them, he said Texas hemp farmers could be entrapped by the ban, while veterans and others using the products medicinally would be criminalized. He also cited the potential for lengthy legal battles.
But Patrick said during his June 23 news conference that he will not sign a bill that legalizes marijuana in Texas, adding later that he’s uncertain if he can override the decision.
The special session will be devoted to regulating hemp-derived tetrahydrocannabinol — known as THC, the psychoactive component in cannabis — which currently can be sold to minors and isn’t illegal.
A ban on such hemp-derived THC products would have sunk an industry that employs more than 53,000 workers in Texas and generated $4.3 billion in retail revenue in 2025, according to data by Whitney Economics.
The governor laid out a sample of potential regulations. They include criminalizing sales to minors; mandating that packaging be child-resistant and not marketed in an attractive manner to children; prohibiting sales of THC products near schools, churches, playgrounds, parks and other areas frequented by children; enacting testing requirements; limiting sales hours; putting in place excise taxes and permit fees; and providing options to local governments to prohibit or limit stores that sell the products.
Many businesses that sell or make the products have called for just such regulations as a means of bringing certainty to the industry and fending off an outright ban.
THC is used by a wide range of people in Texas. It’s consumed as a replacement for pain medication, while others enjoy THC-infused drinks instead of alcoholic beverages, a growing trend among Gen Z.
Some operators, including Owens, Kerver and Torabi, already self-regulate by not selling to people under 21 years of age. Still, hemp-derived THC products are also sold in gas stations or smoke shops that may not do so.
Patrick said the state can’t regulate the approximately 8,000 THC retailers that have sprung up in recent years.
But Torabi said Abbott’s proclamation on regulation is on par with the work that the Texas Hemp Coalition previously worked on with the House. Issues that remain up in the air include how far shops will need to be from aforementioned sites in proximity to children, potential caps on THC percentages and the regulating body for THC, she said.
“What Abbott has at least outlined and set the tone for is within bounds for what we as the coalition had really been fighting for, not only this session, but previous sessions,” Torabi said. “We are happy to see some regulation actually.”